Microsoft, Chevron and Engine No. 1 Reach Exclusivity Agreement on Power Supply

Microsoft has signed an exclusivity pact with Chevron and the activist investment firm Engine No. 1 covering electricity generation and delivery.

Companies form exclusivity pact for data center electricity. The three parties disclosed the arrangement on March 31. It focuses on supplying electricity for data centers that run generative AI tools including ChatGPT and Copilot.

Major technology firms such as Microsoft are racing to lock in reliable power sources as their data center footprints expand rapidly. The parties released a joint statement to confirm the exclusivity arrangement.

No commercial terms or definitive agreement reached yet. According to the companies, commercial details remain unresolved and no binding contract exists at present.

Project builds on prior Chevron and Engine No. 1 partnership. Last year the oil major and the investment fund disclosed plans to develop natural gas-fired generation facilities adjacent to U.S. data centers, employing turbines supplied by GE Vernova.

West Texas plant tied to long-term Microsoft supply. Bloomberg News reported that the potential long-term supply deal revolves around a planned natural gas-fired facility in West Texas. The project is estimated to cost roughly $7 billion and would initially produce 2,500 megawatts to serve a large data center campus.

Chevron said in November that its inaugural effort to fuel an AI data center with natural gas would be located in West Texas, with operations targeted to begin by 2027.

Microsoft secures Texas data center capacity. Microsoft has committed to lease a Texas data center development that had originally been pursued for Oracle and OpenAI, Bloomberg News reported last week.