Microsoft Enters Long-Term Power Agreement with Chevron for AI Data Center
On June 22, Microsoft signed a 20-year power purchase agreement with Energy Forge One LLC, a subsidiary of Chevron, to support its planned data center in West Texas. The Kilby project aims to generate up to 2.67 gigawatts and is expected to begin delivering power by 2028. This deal highlights the growing importance of securing reliable energy for AI infrastructure as much as hardware components like chips. The agreement allows Microsoft access to a stable electricity supply in an area with grid constraints, using natural gas generation that complements renewable sources. For Chevron, this represents a strategic move into integrated power solutions and provides new demand for its gas output. However, the project is still pending final investment decisions and faces risks related to construction costs, regulatory changes, emissions policies, and evolving AI hardware needs. Both companies have seen slight declines in hedge fund ownership during Q2 2026. While Microsoft's stake was increased by Arrowstreet Capital, Chevron saw a reduction from Fisher Asset Management. Short interest remains low for Chevron as of August 14.
Topics: AI Chevron Data Centers Microsoft Power Purchase Agreement