alt.hn

6/22/2026 at 1:43:38 PM

Chevron signs 20-year power agreement with Microsoft for West Texas data center

 https://www.chevron.com/newsroom/2026/q2/chevron-signs-20-year-power-agreement-with-microsoft-for-west-texas-data-center

by cdrnsf

6/22/2026 at 3:43:31 PM

The current natural gas price in West Texas (the WaHa hub, north of Coyanosa, TX) is negative. And has been for a while. The price peaked (dipped?) to -$9/MCF a couple months ago. That means gas producers had to pay $9 per MCF for it to be taken away. Oil in the Permian comes with gas, a lot of it, so to produce oil, you need to get rid of gas. Wells I'm familiar with have 4000-5000 cubic feet of gas per barrel of oil. Recall in oilfield M = thousand, so that's 4-5 MCF per bbl of oil.

There is no free gas pipeline capacity to get gas out of West Texas. Any time new pipelines are built, they are filled within months.

This makes a ton of sense for oil producers (which are also gas producers) who can sell their gas for less of a loss (potentially a profit!) and also for MSFT who can lock in long term contracts for minimal cost. I'd guess these contracts are for $1-2/MCF which is win/win for the oil companies in the area and MSFT.

by auspiv

6/22/2026 at 4:27:17 PM

This might make sense for oil producers to get rid of their natural gas, which is nearly a waste material, but I'm struggling to understand how it makes sense for Microsoft. Despite the cheap natural gas, and an abundance of investors and builders with natural gas expertise, in the competitive electricity generation market everybody is deploying solar and batteries in west Texas because it's still more profitable than gas generation.

Further, there's a gas turbine shortage so Microsoft choosing to put their (presumably limited) allocation of gas turbines in West Texas, where they have good alternatives, seems a bit mysterious. Why not save that massive amount of turbines for the northeast DCs, where renewables work far poorer yet gas is more reliable?

The reasons that seem most convincing to me:

1. Political environment is hostile to renewables and Microsoft doesn't want to paint a target on their back by choosing solar plus batteries, the choice others are making in West Texas.

2. Grid connection drastically changes economics, but pipelines for gas are cheap or something, so the massive cost and delay from grid interconnection simply isn't worth it

3. There are particular political favors going on with Chevron, e.g. Chevron wants gas in the area and is willing to increase MS's turbine allocation if they do it in west Texas, or Chevron is helping get around pesky local political approvals for data centers, or something like that.

The cost of gas does not seem like a justification for this, though.

by epistasis

6/22/2026 at 6:30:22 PM

They will also want reliable power, which seems like justification enough to keep their options open. A “phased, modular approach” sounds like it would give them options. Maybe Microsoft could install solar and/or batteries later and use their natural gas turbines for backup?

With enough batteries they might get through the night, but seasonal shortages are much harder to handle that way.

I bet a carbon tax on data centers would be popular if the Democrats get back in.

by skybrian

6/22/2026 at 9:48:44 PM

You can generally solve seasonal shortfalls cheaply by simply adding more solar / wind until you no longer have a seasonal shortfall just a massive surplus in a different part of the year.

Put another way if you want to store power say 1GWh for the worst month, well a solar panel provides a lot of power over even the worst month. 20MW of solar panel averaging even 40MWh/day * 30 days = 1.2GWh and cost way less than 1GWh of batteries.

Near the arctic circle Wind fill the same niche.

by Retric

6/23/2026 at 12:07:51 AM

> Near the arctic circle Wind fill the same niche.

What do you mean? Long periods of calm weather during cold temperatures is not unheard of in Finland and does cause issues at times due to amount of wind energy that has been built in recent times.

by buzer

6/23/2026 at 12:48:30 AM

Long periods of low output isn’t 0 energy output over a ~3 month long winter.

Beyond that wind for each location is somewhat seasonal so if you’re doing this for winter energy you pick areas with better wind in winter.

by Retric

6/23/2026 at 3:16:43 AM

Not 3 month period, but looking at e.g. capacity factor over 5 day period can be under 3% and even 10 day period can be under 5%. Capacity factor for whole year is around 30% (22TWh produced with 9433MW in 2025, rounded it up since some capacity came online during 2025). That's a lot of extra power or storage.

by buzer

6/23/2026 at 3:58:30 AM

We’re optimizing for cost here, nothing else matters. You can always turn off a wind turbine.

If you’re proposing seasonal storage as a viable option then cutting total storage needs by 90% (to handle a 10 day lull vs 90 day gap) is inherently cheaper.

Hell traditional hydro is well suited for such situations as annual output and storage is limited but nontrivial. Doubling output for 10 days isn’t nearly as problematic as trying to cover a 90 day shortfall.

by Retric

6/23/2026 at 11:20:53 AM

You can't replace batteries with more solar, additional solar only increases the energy produced while the sun is out.

That can help on overcast days, or the middle of winter when days are shorter, but you still need battery capacity to run for stretches when there is no sun producing energy.

For residential its often recommended to have 3 days of storage capacity + the option for a backup generator. I'm not sure what the recommendation is for industrial projects, but I expect they would still need a backup generator. If they already have to put in a generator to handle the full load of the server farm, and they have cheap local gas, why bother with the solar? At a minimum you have both, but the generator (or power from a contracted gap generator) is a given.

by _heimdall

6/23/2026 at 2:01:27 PM

Nightly storage is cost effective because you use it 365 times a year. Seasonal storage is solving a different problem.

by Retric

6/23/2026 at 2:28:49 PM

Nightly storage depends on being able to recharge to full capacity every day. That isn't a risk they could possibly accept, they would have to have an alternative source that could sustain when the sun doesn't come out or equipment fails.

by _heimdall

6/23/2026 at 4:07:37 PM

> to full capacity every day.

A common misconception you don’t need to hit 100%, you need enough energy to make it either from that day or from prior days.

At grid scale daily production is never 0 and it’s never 100%. You can guarantee a surplus all 365 days a year, it’s just a cost vs benefit function, that’s however different from always fully charging your energy storage. If hypothetically the minimum was 99.9% of nighttime needs the odds you cover that gap the next day is extremely high to the point where a little extra storage makes sense vs aiming for 100% every day.

So now you’re just trying to optimize something for minimum cost. Utilities do this all the time with traditional generation you have random equipment failures and shifting seasonal demand. Thus they optimize maintenance schedules around seasonal demand etc.

by Retric

6/23/2026 at 10:19:17 PM

Not a misconception, just a discrepancy in what we were describing. I well understand that you shouldn't hit 0% for battery health and that the last 10-20% charge takes much longer than the middle of the charge cycle. I was responding to the idea of only having capacity for a night and using it 365 days per year, I took that to mean a full charge/discharge cycle every day since otherwise you have more capacity than a single night and don't use it fully every day.

Regardless, that buffer doesn't make a big difference in the topic here. My panel regularly show 0Wh on rainy days, PR effectively 0 as they may be getting only a few percent of real capacity.

How do you propose industrial scale would allow a series of arrays could both not be oversized on sunny days and cover usage on cludy days?

If I'm misunderstanding your argument I apologize. I just don't see how a data center could possibly be okay with having only a single day worth of storage and generation without having backup power scaled to cover their full usage demands.

by _heimdall

6/23/2026 at 11:14:38 PM

Edit: Grid scale solar is its own thing for many reasons, one of which is not sticking things in a roof tends to dramatically lower risks and costs. But another is they are significantly more optimized.

> could both not be oversized on sunny days and cover usage on cludy days?

That isn’t a problem that’s worth trying to solve. Grid solar power is so cheap you can waste 70% over a year (even more on sunny days) and in many areas still be paying less than coal per kWh.

Ultimately the grid doesn’t care about being oversized for specific days. There’s a wild difference in demand on sunny day in the summer vs a day that’s 70f. When it was 70f in the 1970’s they didn’t go out and destroy nuclear reactors or coal plants because they are unnecessary in May. That’s valuable infrastructure even when not in current use.

The only metric grid operators care about is does this grid design need the demand and what does it cost. Peaking power plants exist to fit edge case demands even if not used for months at a time, “peaking solar” isn’t a term anyone uses but solar + batteries can fit that niche.

by Retric

6/22/2026 at 10:53:26 PM

I don’t believe the “cheaply” part. You end up building storage that only gets used for one cycle a year, so the capital cost is very high per watt.

by skybrian

6/23/2026 at 12:46:13 AM

I think you misunderstood, I am saying 20MW of solar power is less expensive than 1GWh of energy storage.

Nothing in my post suggests 1GWh of storage is cheap.

by Retric

6/23/2026 at 2:26:19 AM

> They will also want reliable power

Given the state of the power grid in Texas, this could be the most important consideration. Why? Texas is not connected to the national power grid, and only electricity from plants operating in Texas is available. The last winter and summer, demands on the grid have severely stressed, as reported in many places. In 2021 there as a state-wide crisis and almost a complete failure. https://en.wikipedia.org/wiki/2021_Texas_power_crisis

by cratermoon

6/23/2026 at 2:51:39 AM

These power gen facilities wouldn’t be connected to the grid, only the datacenter.

by chasd00

6/23/2026 at 3:05:11 PM

Exactly. The data center gets it's own power, isolated from the flaky grid, and never has to deal with statewide crises.

by cratermoon

6/22/2026 at 4:38:21 PM

The cost of gas is completely irrelevant. In order to bring a new large load onto the grid, you have to coordinate with ERCOT, and they just made that process more tedious. Once you get your grid connection approved and built out, you have to source your own power anyway, and frankly there just isn't enough power on the market to realize the stated datacenter buildout goals in this country.

In short, you're going to have to build your own power plant anyway, so why bother with the grid? Gas is the cheapest, fastest zero-to-production choice for onsite power generation, and has been for a long time. Unless you're dealing with nuclear, the fuel cost just doesn't matter compared to the rest of the buildout, and gas wins because you can take off-the-shelf turbines and bolt them down.

You can only get away with it in places that don't care about environmental regulations, which are the places most likely to approve new buildout of gas infrastructure anyway. Nobody in the northeast is going to approve the creation of a brand new carcinogen factory.

by stonogo

6/22/2026 at 4:44:37 PM

> Gas is the cheapest, fastest zero-to-production choice for onsite power generation, and has been for a long time.

Is it, though? There's a ton of projects out there waiting to get their solar on the grid in west Texas, partnering with one of them and launching the project early while waiting on the interconnection queue, and adding enough batteries, gives a more robust solution right now without the SPOF nature of large single generators.

Add to that the long backorder list for gas turbines right now, with no end in sight, and I'm surprised that Microsoft would power this particular location with turbines because it's probably their best chance to do off-grid massive solar projects.

Massive off-grid solar is what China is choosing for some absolutely massive new industrial projects. Nuclear is a no-go because it takes so long to deploy, but solar + batteries are cheap COTS and available in abundance, unlike gas turbines.

by epistasis

6/22/2026 at 4:51:24 PM

> Is it, though?

Yes.

There is no point in waiting for interconnection when you can just... not do that, and do all your generation behind the meter, with complete control of the generation to match your load. Solar wants an interconnect so they can sell off surplus; with gas you just turn the dial down to meet the load and walk away.

The clock is running on the datacenter goldrush. 70-90% of the capex window is going to be soaked up just with construction time. Introducing a capricious ERCOT permit process and shopping around for friendly solar projects to hop in bed with makes no sense when you can just write a check and solve the problem forever.

I'd bet the deal with Chevron was to enable Microsoft to hop the queue here and get those GEV turbines soonest.

by stonogo

6/22/2026 at 4:55:43 PM

I'm not saying wait for an interconnection, I'm saying take a project that already has a fully developed plan, that's waiting for interconnection, and build the DC right there next to it, beef up the battery component of the plan and go to town. Interconnection happens some time in the future, giving far more financial opportunities for everyone, but in the interim the electricity goes fully to the DC.

by epistasis

6/22/2026 at 5:15:44 PM

Because I expect the economics of enough batteries to carry a data center’s worth of demand through the night and morning is too expensive compared to essentially free natural gas.

Data centers would ideally run at ~100% utilization, so any drop in solar output needs to be fully met by batteries.

by alex43578

6/22/2026 at 5:24:46 PM

> Data centers would ideally run at ~100% utilization

I don't think this is broadly accepted among major data center operators.

by jeffbee

6/22/2026 at 10:33:52 PM

Of conventional data centers or one's running GPUs? If you're not saturating your GPUs you're likely leaving money on the table.

by pixl97

6/22/2026 at 11:00:56 PM

I don't really agree. The energy component of opex still dominates over the depreciation.

by jeffbee

6/23/2026 at 12:15:57 PM

For AI data centers? Depreciation on the GPUs and AI accelerators is a bigger cost than electricity.

Now it might be that a new data center will find it more difficult to obtain a reliable supply of electricity than to obtain GPUs, but your statement was about expenses.

by hollerith

6/22/2026 at 6:58:26 PM

IIRC ERCOT estimated from their experience it was something like 85% on average?

by Matticus_Rex

6/22/2026 at 5:47:53 PM

What makes you think you can change the facility that's in the ERCOT queue while keeping your place in line?

by rayiner

6/22/2026 at 5:24:38 PM

> Is it, though? There's a ton of projects out there waiting to get their solar on the grid in west Texas,

gas turbines run at night too so there's no storage/backup supply issue to consider. They also take up significantly less space than wind or solar and those data centers are already gigantic.

by chasd00

6/22/2026 at 7:44:15 PM

>Is it, though?

When you can colocate across the street from someone who's otherwise paying to get rid of it is.

When the fuel is free-ish who cares about backorder on turbines. You can run big diesels on NG (just like the pipeline people do).

by cucumber3732842

6/23/2026 at 6:49:03 AM

Gas turbine production is fully committed for years to come. There is no way to speed up production quickly. And for manufacturers of turbines, building new production capacity is a highly risky proposition because demand might well evaporate for these things. So they are reluctant to do that.

If you want power quickly, wind, solar, and battery can be planned, installed, and producing power within a couple of years. Nothing else comes close to being that quick. If you want power this decade, that's pretty much the only thing available.

by jillesvangurp

6/22/2026 at 7:29:57 PM

Good luck. The renewables overbuild required to firm baseload demand for a datacenter is insane. You need something like 4x solar and 1.5x storage in a 10hr battery.

Respectfully, the laws of NPV and IRR hurdles don't matter in Chinese infrastructure.

Whatever you choose in the US, it's not cheap, and developers crawl over each other to sign up hyperscalers. Race to the bottom.

by caminante

6/22/2026 at 7:17:06 PM

>Add to that the long backorder list for gas turbines right now

If demand > supply then the price goes up. Doesn't mean you can't buy something though.

by dopa42365

6/23/2026 at 4:14:22 AM

> Gas is the cheapest, fastest zero-to-production choice for onsite power generation, and has been for a long time.

Last I heard the wait time for turbines was ~5 years at the moment. I'm sure MSFT has some inside baseball with Chevron but it doesn't work as a general rule of thumb.

by jtbaker

6/23/2026 at 12:41:07 AM

>so why bother with the grid?

To sell excess back to the grid when funny things happen to texans in the winter?

by protocolture

6/22/2026 at 6:35:53 PM

hopefully when the Ai bubble burst, all those new renewable plantals will be feeding the grid. and power will be the Aeron chairs of 2030.

by iririririr

6/23/2026 at 12:13:00 AM

Do any huge datacenters run on solar + battery? I thought the point of gas turbines was to have reliable power that's set up quickly.

by frollogaston

6/22/2026 at 7:40:04 PM

Natural gas is cleaner to burn than coal, if I had to guess this is lazy half-done greenwashing, i.e. 'at least it's not coal!' Similar to California's measures for cleaner power generation.

by whaleofatw2022

6/22/2026 at 7:06:43 PM

There is also probably a balance of payments aspect of this. Chevron uses a ton of Azure. They probably asked for Microsoft to use some amount of Chevron in exchange. This is probably that deal.

by outside1234

6/23/2026 at 7:58:00 AM

There's an efficient gas turbine shortage. If you're willing to run older inefficient gas turbines it's not so bad, and when the gas is free it doesn't matter how inefficient they are.

Oy vey, what a perverse incentive.

by pseudohadamard

6/22/2026 at 4:42:31 PM

Profits still ain't easy.

Cheap gas is great, but 2.67GW of new build natural gas in this market will cost $6-8 billion in fixed costs. You need wholesale pricing of ~$50-60/MWh ... OVER 25 years! ... to recover just the fixed costs.

For West Texas, prices averaged mid-$30s over the last year.

Microsoft has all of the leverage here, and Chevron wants a big announcement in an area where they don't have a lot of experience.

by caminante

6/22/2026 at 8:31:29 PM

I don't understand why datacenters especially shouldn't be able to run mostly on renewables.

This won't apply to every datacenter, but the AI inference ones especially, should be seeing most demand during the day. So what's built in north America is used when it's daylight there?

If so, isn't that a perfect case for solar?

To be clear, I'm not saying it can power down, but at night it should be able to scale down significantly?

by hvb2

6/22/2026 at 11:32:06 PM

> should be seeing most demand during the day

I don't know if this is necessarily true - latency isn't really important for inference in the same way as many other services (at least the max ~300ms latency you get from hitting something on the other side of the globe) - compute in NA can serve all the other timezones just fine.

by p1necone

6/23/2026 at 6:16:14 AM

The most of the cost is GPU, not power.

Demand for AI is global (except for Anthropic, haha).

When you build a DC that works only when the sun is shining, you are wasting half of you GPU capacity

by drysine

6/23/2026 at 7:33:09 AM

That's why you build batteries that can store electricity for the other half. Or maybe nuclear power.

by rwyinuse

6/23/2026 at 5:04:35 PM

The batteries are expensive. Otherwise I'd expect to see wholesale electricity prices fluctuate a lot less.

by frollogaston

6/23/2026 at 7:08:31 AM

Gas and petrol are technically by products of oil refineries that produce all sorts of chemicals. Before cars took off, refineries used to dump petrol in rivers as it was worthless. Petrol is still in demand but facing world wide double digit percentage declines as a quarter of the vehicles being sold is now electric. These vehicles don't require any petrol/diesel. That is closer to 50% in China and the rest of the world is buying lots of these things. By the mid 2030s, most vehicles sold will be electric world wide. That means a lot of refineries that are currently subsidizing chemical production with petrol and gas sales, are going to face some serious demand issues for these by products over the next decades.

Texas is going to be somewhat shielded from this because of US policy on this front. But probably only for a few short years. Mostly LNG exports are currently very lucrative. But LNG production is bottlenecked on expensive infrastructure and shipping. And of course lots of importers of LNG are looking for more affordable alternatives as well because it is expensive. Doubly so since the recent Gulf conflict. A lot of planned infrastructure expansion just got cancelled.

So, there's probably a bit of gas overproduction happening in Texas currently and that's going to cause predictable issues when demand is going to be structurally lower. And the double whammy of petrol/diesel also going into structural decline is going to leave Texas with a lot of over production.

by jillesvangurp

6/22/2026 at 4:05:32 PM

Even corporate ESG policies bend the knee to cheap Texas energy!

by declan_roberts

6/23/2026 at 2:50:27 AM

Is all natural gas the same or are there grades? Like is the gas that comes out of oil pumping the same kind I pay for to heat my house?

by supertroop

6/22/2026 at 3:08:12 PM

Fascinating they're going this direction when solar and batteries are so cheap in Texas...

Nearly all new additions to the grid are solar, wind, and storage right now on Texas' grid. Not because of Texas regulations, but because Texas' grid is one of the few grids where generation decisions are all made by independent investors trying to make money.

Especially with the shortage in gas turbine manufacturing, very surprising! Not sure if this says more about Microsoft or datacenters.

by epistasis

6/22/2026 at 3:29:37 PM

West Texas is like Costco for natural gas.

There are cases where the fields can produce more than the pipelines can carry away. If you put your gigantic gas turbines right next to the fields you can obtain access to some extremely cheap fuel. They might even pay you to burn it sometimes. Negative gas prices are a thing.

by bob1029

6/22/2026 at 3:33:24 PM

And despite that, when there's any sort of price pressure, like there is for new electricity grid additions from investors, solar and batteries completely dominate the choice over natural gas in Texas.

Look at the map for 2026 of the grid buildout in Texas at the bottom of this page:

https://www.eia.gov/todayinenergy/detail.php?id=67205

All solar and batteries (yellow and black), with a few tiny blue dots for gas. It was the same story in 2025. And it will be the same story in 2027 because solar and batteries are getting even cheaper.

These are all decisions from private investors, trying to make money, and choosing solar and batteries over gas in the market where gas is the cheapest in the world, gas is like a waste product that's hard to get rid of.

Why would Microsoft choose dirty energy when all the profit-driven investors are choosing cheaper solar and storage?

by epistasis

6/22/2026 at 3:38:43 PM

This is just a guess, but is the reason the same one that the gas is cheap all the way out in BFE west Texas? In other words, even if you could generate electricity from wellhead gas more cheaply than a bunch of wind turbines, solar panels, and batteries just west of Fort Worth, can you actually export it to east Texas where all the demand is? The solution here being: let's build our giant demand machine directly on the steppe and skip all that expensive infra, because data is much cheaper to move than energy.

by ElevenLathe

6/22/2026 at 3:47:09 PM

> data is much cheaper to move than energy

It's something like 5-10 orders of magnitude cheaper to move information over fiber than it is to move the energy required to produce that same information through a [pipe/power]line.

by bob1029

6/22/2026 at 7:04:41 PM

I know this is nitpicking, but as a Texan I have to correct you on a point of grammar. The “west” in “West Texas” (and similarly for the other regions) isn’t an adjective; it’s part of the proper noun and should be capitalized. So it’s “West Texas,” not “west Texas.”

Yes, this is weird and no, I have no idea why we do it, but it’s really weird to read “export it to east Texas” — to the extent that I had to re-parse the sentence to figure out what you meant.

by Doches

6/22/2026 at 8:07:39 PM

Thanks for this. I'm past the edit window now, but both ways felt wrong and I just picked one. I suppose "western Texas" and "eastern Texas" is what I should have written to avoid the problem.

by ElevenLathe

6/22/2026 at 7:50:30 PM

> let's build our giant demand machine directly on the steppe and skip all that expensive infra, because data is much cheaper to move than energy.

Who cares if it's cheaper. It's that you're moving less of it. The more processing you can do near the source the smaller and cheaper your pipe out to the consumer can be.

Cut the tree on the hillside. Mill it in the valley. Then spend your precious boxcar volume shipping only the finished lumber out of the valley.

by cucumber3732842

6/22/2026 at 8:06:10 PM

Right, shipping finished lumber is cheaper (per dollar of value) than shipping logs. That's exactly my point, but the lumber is bits and the electricity is the logs. A datacenter is a mill for turning electricity into bits!

by ElevenLathe

6/22/2026 at 7:51:40 PM

Because management at big tech could give any shits about you or where they live.

It’s easy to see.

by qsxfthnkp2322

6/23/2026 at 8:19:04 AM

Does that graph take into account capacity factor ?

by SJC_Hacker

6/22/2026 at 7:38:08 PM

Replace "extremely cheap" with "zero cost" and you've got it correct. Texas at night is an endless sea of flare stacks. We burn off an unbelievable amount of natural gas just to get rid of it.

by sidewndr46

6/23/2026 at 5:49:33 AM

I've often wondered how this is lawful under the EPA. Obviously it must be, but it seems like a gross oversight to allow people to just burn natural gas and allow its byproducts to escape into the atmosphere yet not get any useful work out of it.

by otterley

6/23/2026 at 12:38:41 PM

It's legal because the government allows it. How else would it work?

by sidewndr46

6/23/2026 at 1:27:21 PM

Thanks, Captain Obvious. ;) the underlying question was why (although I used the word how and that’s on me).

by otterley

6/23/2026 at 6:07:53 PM

The alternative is significantly worse.

by bob1029

6/23/2026 at 10:11:30 PM

Which alternative are you thinking of?

by otterley

6/24/2026 at 12:30:17 AM

Allowing methane to escape unburned

by bob1029

6/24/2026 at 5:00:03 AM

I would assume that if we were banning the uncontrolled release of its combustion products, we’d also be banning the uncontrolled release of methane into the atmosphere.

by otterley

6/22/2026 at 4:17:49 PM

West Texas is also a basket of methane leakage -- see CarbonMapper et al

by gnerd00

6/22/2026 at 6:30:17 PM

looks like a terrible idea from my perspective also.

by jambalaya8

6/22/2026 at 3:24:54 PM

While the US stays oil rich, we should expect the US to be a laggard in ending use of fossil fuels. China and EU are not oil rich, they’ll make a faster transition.

Of course it’s idiotic to actively hobble clean energy. Or to put your finger on the scale for one source of energy, like the current administration does.

But it’s not crazy to argue for “energy abundance” where the market just picks the cheapest energy on the market in the US and that just gradually moves cleaner over time.

by softwaredoug

6/22/2026 at 3:30:16 PM

Well what I'm saying that is that on the Texas grid, solar and storage and wind are the cheapest energy, and being deployed in massive amounts because only on the Texas can an investor make money by providing the cheapest energy. (For most utilities, they take a fixed rate of profit and are incentivized to use the most expensive possible energy if they can get away with it.)

So Texas is not a laggard when it comes to clean energy, they are actually driving clean energy forward the most, because clean energy is the cheapest and most profitable energy. And that's despite Texas having natural gas that's insanely cheap right from Henry Hub.

What this tells me is that like most hyperscalers, Microsoft is not price sensitive on the electricity side, because energy costs are tiny compared to the massive capital costs of the GPUs. But why would they go this direction? What political influence would make Microsoft choose more expensive electricity, when in the past they've been fairly good at driving clean energy forward in their data center power choices, and they'd pay a premium on energy costs to go with clean energy?

by epistasis

6/22/2026 at 3:36:27 PM

I can think of a few angles that might have pushed them towards gas, mainly (a) they wanted on-demand generation cap, (b) they didn't want to get into the batteries game at the volume they'd require, or (c) they didn't want to deal with securing the space needed to produce 2.6GW of solar. Also yeah they're definitely not price-sensitive, any of the hyperscalars is more than happy to pay extra to get exactly what they want.

edit: for example that EIA list of new solar projects you linked indicates that the largest battery installations going up in '26 are all ~500MW, and that there are only four of them (of that size). I think the energy intensity of a multi-GW datacenter is the main reason that they're not going for solar here.

by tech_ken

6/22/2026 at 5:33:37 PM

> But why would they go this direction?

sibling comment has it, they want to do power generation on site and not connected to the grid and all the PITA that come with that. Further, they can pitch power independence to the locals which removes a big argument from the anti-datacenter crowd. Finally, the power gen i saw at Stargate in Abilene TX which was maybe 10 units (if that's what they're called) took up maybe 30 acres of land so they're not very big compared to the rest of the campus.

by chasd00

6/22/2026 at 6:44:35 PM

Solar makes sense for utility generation because demand goes down at night. For datacenter usage demand is effectively constant, so theyd need a fuckload of batteries which is where all the cost goes. It doesnt make sense to power 2.6 GW overnight fully on batteries. Much simpler, a.k.a faster, to just buy a plot next to an area with excess gas and build the whole thing there.

by HDThoreaun

6/22/2026 at 7:13:08 PM

> What this tells me is that like most hyperscalers, Microsoft is not price sensitive on the electricity side,

What this should likely tell you, is that you are missing information and have an incomplete picture of the situation.

Or it could be MSFT just likes to spend extra money for no reason because they are simply stupid. I'm gonna go with the former though.

I'd be interested in all these behind the meter setups for large 24x7 loads that are being built using solar+battery though. I haven't heard of one personally, but I must be lacking information on the subject since you seem so certain these are common?

by phil21

6/22/2026 at 8:00:52 PM

Maybe this counts, although it isn't built yet:

https://www.datacenter-forum.com/edora/eurowind-energy-and-e...

There are many datacenters in Denmark with decade-plus power purchase agreements from a specific wind farm, but with so much news recently I can't find if there's any operational with their own supply.

by Symbiote

6/23/2026 at 4:13:22 PM

Certainly interesting! Much closer to what I feel is actual green power w/o the greenwashing such as the PPA's other facilities tend to use while actually just buying from the grid as a whole to deal with the "hard" parts of reliable power.

My frustration is that reliable power is the expensive part. Anyone can stand up some nameplate capacity in renewables, net out their numbers and pretend they are 100% green power in a press release. All while drawing from the "free" battery the grid supplies them at night or seasonally and letting someone else deal with the dirty part of it all. It's just not very interesting to me, as it's mostly marketing.

This one does seem to be grid-tied, but is much closer to the vision of actually being powered down to that last 5% via on-site batteries and wind. Power is like many things - the last 5% of reliability (or 1%, whatever) is the hard and expensive solve.

I remain skeptical batteries are going to end up being a solution for major datacenter buildouts in most locations. But I've been wrong before, and would love to be wrong about this one perhaps the most!

by phil21

6/22/2026 at 8:37:36 PM

> But it’s not crazy to argue for “energy abundance” where the market just picks the cheapest energy on the market

Except that there's externalities not priced in. The consequences of those are becoming increasingly visible and very expensive to address

by hvb2

6/23/2026 at 5:08:40 PM

There's also no first mover advantage with clean energy, maybe the opposite

by frollogaston

6/22/2026 at 11:33:53 PM

Oil is readily transportable and there is a global market.

by wbl

6/23/2026 at 12:21:32 AM

Yet here in California, people keep making fun of Texas's power grid. California of all places.

by frollogaston

6/22/2026 at 4:50:08 PM

But they are using wind:

> A majority of the generation will come from large GE Vernova (NYSE: GEV) turbines.

by credit_guy

6/22/2026 at 5:18:46 PM

Unless the article specifies wind, GE Vernova makes gas turbines too.

by alex43578

6/23/2026 at 3:07:33 AM

It's gotta be gas turbines, not wind.

by nielsbot

6/22/2026 at 3:19:44 PM

Mostly it says that the oil business runs the show here in Texas, and in Washington.

by dtagames

6/22/2026 at 3:23:52 PM

But I'm curious how oil could run the show for Microsoft though. Even if Microsoft wanted gas backup, they could add solar to the build, shut off the turbines during the day, and save money over an all gas setup.

Perhaps Microsoft had better ability to overturn local opposition to data centers if they had Chevron's political influence over the politicians too?

by epistasis

6/22/2026 at 3:29:02 PM

What I meant was that all political and economic decisions here go in favor of oil. The war, the proposed laws to make Chinese EVs illegal, the softening of environmental regulations, etc.

Chevron and the US Government are joined at the hip, so these kind of deals "flow" naturally.

by dtagames

6/22/2026 at 4:39:25 PM

DC?

by rconti

6/22/2026 at 5:40:24 PM

[flagged]

by teepo

6/22/2026 at 4:14:19 PM

Microsoft says [1] they're going to be carbon negative by 2030. Hard to see them doing that while deploying gigawatts of new fossil fuels.

[1] https://www.microsoft.com/en-us/corporate-responsibility/sus...

by advisedwang

6/22/2026 at 4:22:44 PM

Its easy, they are going to use fancy accounting to make it come true. Produce a ton of carbon, then buy a cheap, under-priced carbon credit to make it be a zero.

by ecshafer

6/22/2026 at 5:56:30 PM

Or they'll use the greenhouse potential difference between released unburned methane and CO2 to greenwash the project.

by speed_spread

6/22/2026 at 4:27:42 PM

it's easy ... they'll just change the definition of "carbon negative"!

by ray_v

6/22/2026 at 5:13:28 PM

I love how they are using a company named 'Solar Turbines'. Such an obviously misleading name. (From their website)[1]:

Powering the future through innovative, sustainable energy solutions.

Solar Turbines Incorporated, headquartered in San Diego, California, is a wholly owned subsidiary of Caterpillar Inc. Solar manufactures the world’s most widely used family of mid-sized industrial gas turbines, ranging from 1 to 39 megawatts. More than 17,000 Solar units are installed in more than 100 countries with more than 3 billion operating hours. Solar is a leading provider of energy solutions, featuring an extensive line of gas turbine-powered compressor sets, mechanical drive packages, and generator sets.

[1] https://www.solarturbines.com/en_US/about-us.html

by jmward01

6/22/2026 at 5:21:28 PM

To be fair, solar turbines has had the name since 1929 (they were then called solar aircraft company). It’s not like they’re being intentionally misleading.

by mlsu

6/22/2026 at 5:28:44 PM

Thanks for point that out. I missed that context.

by jmward01

6/23/2026 at 4:45:09 AM

Maybe you should have looked it up before posting?

by acheron

6/23/2026 at 5:41:45 AM

I'll take a minute to respond here. Would you rather live in a world where people admit they made a mistake and thanked people that pointed it out or one where they didn't? You just sent a reward signal to the 'don't ever admit your mistakes' world in case you didn't realize.

by jmward01

6/23/2026 at 7:17:26 AM

It’s also fair to say that there’s another possible world you haven’t mentioned: one where you’re both right.

In such a world, you would have looked it up before posting, and your comment, their reply to you, yours to them, and mine to you, wouldn’t exist.

Perhaps they were trying to send a reward signal to all of us in this thread in order to induce a shift from where we find ourselves now in order to arrive upon the “look it up before posting” world line?

by aspenmayer

6/22/2026 at 8:57:49 PM

They’ve said the company name comes from San Diego being so sunny.

by matthewmcg

6/22/2026 at 3:00:46 PM

> A majority of the generation will come from large GE Vernova (NYSE: GEV) turbines and associated electrical infrastructure, with additional capacity provided by Solar Turbines, a wholly owned subsidiary of Caterpillar Inc. (NYSE: CAT).

When they say "large GE Verona", they mean the 7HA. This is an actual power plant with proper emissions controls. Not the aeroderivatives in parking lots we've seen so far.

> Their plan includes the use of seven U.S.-made GE Vernova Inc. GEV 7HA natural gas turbines to deliver the plant's initial capacity.

https://finance.yahoo.com/sectors/energy/articles/chevron-mi...

by bob1029

6/22/2026 at 4:31:44 PM

With all the fracking in the USA, literally exponential growth, one of the things they do is gas burn off for months, sometimes years at all the sites

Why not use all that wasted heat energy to power all these datacenters?

(and why not build the datacenters at the Bakken formation)

You can see the burnoff from SPACE and it's for months at a time at each location, tell me that does nothing to global temperatures?

(look at the date on these photos, two decades of burnoff wasted energy)

* https://www.cnbc.com/2013/01/28/shale-gas-boom-now-visible-f...

* https://www.smithsonianmag.com/smart-news/at-night-giant-fie...

by ck2

6/23/2026 at 2:40:26 AM

We're getting a data center just north of Fargo, on the other side of the state from all the oil. I agree with you, not sure why they don't build out west instead.

Pretty sure the flares aren't anything like that anymore because some regulations changed where they can't flare so much, but yeah that was a crazy time period.

by NDlurker

6/22/2026 at 7:42:33 PM

> Why not use all that wasted heat energy to power all these datacenters?

Probably not profitable enough to set up the infrastructure to capture, store, transport, and sell that as a product. Profit potential is the only factor that matters to decision makers.

by iAMkenough

6/22/2026 at 8:02:35 PM

Search "datacentre district heat Denmark" and you'll find several examples, such as Facebook's datacentre in Odense.

Or one in Copenhagen, I didn't realize some small amount of my hot water (and heating in the winter) came from a datacentre. Neat.

by Symbiote

6/22/2026 at 8:14:50 PM

That makes sense for existing infrastructure, taking waste heat from data centers and piping it through existing public systems. Especially for government environments like Denmark.

I wonder what profits would need to be for a private energy company to install additional equipment at a remote fracking site to capture the burn off energy to then sell to a data center to then use.

by iAMkenough

6/23/2026 at 4:56:28 PM

The problem is finding a well-located user of the waste heat. Homes and offices are great in colder countries. Some industry can use it, but the examples I can think of (food/drink, heat for drying paint, making paper, some chemical/drug processes) aren't usually sited in the middle of nowhere.

by Symbiote

6/22/2026 at 3:46:16 PM

I guess that whole carbon negative by 2030 goal got shuffled down the priority list

by mixdup

6/22/2026 at 5:29:38 PM

Another illustration that corporations do not have morals or ideologies. Do not anthropomorphize the lawnmower.

by tencentshill

6/23/2026 at 3:10:26 AM

And yet they are operated by people and people pull the levers. Interesting and confounding psychology there.

This is where government regulation, ideally a smart representative of the people's interests, comes into play. Hence the effort for companies to do regulatory capture. (See point #1)

by nielsbot

6/22/2026 at 10:48:34 PM

Chevron and Microsoft agree to keep smoking crack and buy it for each other when needed and not tell anyone.

by jackbucks

6/22/2026 at 7:30:04 PM

Yes, the planet got destroyed. But for a beautiful moment in time we created a lot of value for shareholders

- A Microsoft employee 2080

by happosai

6/22/2026 at 10:58:13 PM

The planet go destroyed millions of times during its 4 billion history. I'm pretty sure it will survive this time as well.

by sajithdilshan

6/23/2026 at 3:11:04 AM

I'm not really worried about the planet, but humanity. But I get your point.

by nielsbot

6/23/2026 at 9:07:50 PM

maybe the demise of humanity would be the best thing that can happen to the planet

by sajithdilshan

6/23/2026 at 7:17:35 AM

Shareholder value has been destroyed millions of times and they survived just fine too.

by blitzar

6/23/2026 at 9:08:11 PM

who survived?

by sajithdilshan

6/22/2026 at 4:29:54 PM

And in the mean time, western europe is having its second heat wave even before summer starts.

by julosflb

6/22/2026 at 7:39:17 PM

If Europe was as willing to drill for gas as the US is, they'd probably be able to run more ACs and save thousands of lives every year.

by nba456_

6/22/2026 at 9:31:38 PM

> If Europe was as willing to drill for gas as the US is, they'd probably be able to run more ACs and save thousands of lives every year.

They'd also be accelerating the collapse of AMOC... after which they won't need ACs anymore.

So I guess, yeah, this solves the problem of too much heat, in a fashion!

by bayarearefugee

6/23/2026 at 7:37:24 AM

No need for that when solar power and nuclear exist. The problem in Poland, Germany etc is prematurely getting rid of perfectly good nuclear power plants, not lack of gas drilling.

by rwyinuse

6/23/2026 at 9:50:48 PM

Poland? Poland is currently building its first nuclear power plant (there was another attempt before, but it was abandoned in the 90s).

There are also a lot of smaller nuclear power plants planned: https://en.wikipedia.org/wiki/Nuclear_power_in_Poland

by msm_

6/23/2026 at 8:46:52 AM

Please explain how we run AC to avoid our forests burning, agricultural fields and orchards from drying, and the Mediterranean ecosystem from collapsing.

We must stop using fossil fuels as fast as possible, globally.

by wazoox

6/22/2026 at 4:44:17 PM

Mhm... meteorological summer starts 1st of June. Solstice was yesterday as well.

by BoredPositron

6/22/2026 at 5:28:04 PM

capex certainty for 20 years. smart if AI demand holds, very expensive if it doesn't

by clearstack

6/23/2026 at 9:47:09 AM

Why?

They aren’t building data centres just for Ai but building that can be repurposed.

They can use it for research or as new location as part of Azure and so on?

by fsuts

6/24/2026 at 5:18:59 PM

repurpose theory works for a building. not for a 20-year power contract

by clearstack

6/23/2026 at 5:23:21 AM

I think one of the highest-leverage U.S. economic strategies right now is to maximize the upside from the AI data-center boom.

That means reducing any bottlenecks around not just data-center construction, but also adjacent industries like power generation and transmission.

If the U.S. can scale the infrastructure around AI faster than other countries, it can gain a decisive economies of scale advantage in numerous industries that could lead to export boom.

by ETH_start

6/23/2026 at 2:01:39 PM

When you say "it", I suspect it will pan out to American Elites, as opposed to America the nation, or Americans the people.

by foo42

6/23/2026 at 10:05:13 PM

If you look at countries that have experienced export booms, you see broad-based wage gains correlated with it.

by ETH_start

6/23/2026 at 9:56:21 AM

So we should expect even more AI bullshit in Windows 12.

by egorfine

6/23/2026 at 7:20:14 AM

chevron 6 is locked in place

by yobid20

6/22/2026 at 4:41:09 PM

lol no way it lasts that long

by theredleft

6/22/2026 at 4:12:00 PM

[flagged]

by flixspiek

6/23/2026 at 3:10:57 AM

[flagged]

by jocelyner

6/22/2026 at 4:24:43 PM

[flagged]

by 1-6

6/22/2026 at 4:34:48 PM

Yeah, why would a governor be proud of pushing out two things that are unpopular with his constituents...

by ZebulonP

6/22/2026 at 4:31:15 PM

Newsom aside, the idea is to change from oil to non-oil, efficient from mono-industrial.. The US Oil minions claim to be blind to this and cite quarterly profits, again

by gnerd00

6/22/2026 at 7:42:15 PM

Then why does Texas install more solar?

by nba456_

6/22/2026 at 11:45:09 PM

Cause California is #2 in that stat.

by undersuit

6/22/2026 at 5:56:12 PM

Good riddance to both.

by cdrnsf

6/22/2026 at 6:31:27 PM

yeah. good riddance to east texas also.

by jambalaya8

6/22/2026 at 4:16:01 PM

Sorry, but who in his right mind, signs contracts for 20 years - could you have imagined the world today 20 years ago? No and no. All one should do is sign snippet contracts of 5 years with the offer of an option to predefined condition. Split it into 4 sequences with a renewal.

by 21asdffdsa12

6/22/2026 at 4:24:57 PM

Very normal. Here in Europe (well nordics at least) pretty much all the capacity of any wind farm is already sold before construction begins. The PPA (power purchasing agreement) is usually pretty much required to get the loan/funding anyway.

Basically most projects start with the wind company using its own money to find a site and get it approved and then they go and try to find someone to sell the electricity to at a fixed rate before construction begins as selling directly to the spot market has way too much risk for the banks to give loans.

Not sure how different it is in Central Europe with solar as there isn’t much solar up here in the north (just doesn’t make much sense as during the 3 to 4 months in the winter when electricity price is at the yearly maximum you produce effectively nothing)

by doikor

6/22/2026 at 4:57:54 PM

Many people. My house loan was 30 years. Commercial real estate is often 20. Commercial 30 year bonds are common.

Many investments won't pay off unless there is a 30 year plan so lots of investors work on that long term. Even if an investment pays off sooner you often are accounting better off longer terms - see an accountant

by bluGill

6/22/2026 at 6:18:21 PM

The power plant probably amortizes over roughly that period. Price would be higher without a matching purchase guarantee, and so on.

by maxerickson

6/23/2026 at 6:09:04 PM

This reminds me of startups signing 10 year leases on giant corporate campuses at the tail end of dotcom anticipating stonks perpetual growth.

by burnt-resistor

6/22/2026 at 2:48:58 PM

> A majority of the generation will come from large GE Vernova turbines and associated electrical infrastructure, with additional capacity provided by Solar Turbines, a wholly owned subsidiary of Caterpillar Inc.

Solar turbines is an interesting name for a gas turbine company. "It's green energy, we put solar in our name"

by whalesalad

6/22/2026 at 2:57:51 PM

Quick search shows the reason is nothing to do with your sarcasm.

Its origin is traced back to a 1929 company, Solar Aircraft Company.

https://en.wikipedia.org/wiki/Solar_Turbines

by infecto

6/22/2026 at 7:50:36 PM

How is this sarcasm? I had almost the exact same thought in earnest: A gas turbine company being called Solar Turbines is quite interesting and unexpected if you're not familiar with that particular corporate history.

by oasisbob

6/22/2026 at 8:01:32 PM

Not sure why it would be so contentious. I simply provided a reference to the why instead of commenting with a joke, sarcasm or whatever you feel like calling it.

by infecto

6/22/2026 at 3:08:22 PM

I agree with OP that the name, while maybe not deliberately, is really confusing in 2026. I thought that was a wind turbines or a solar panel technology, definitely not gas.

by Kayou

6/22/2026 at 3:10:53 PM

And it takes all of 30seconds to look up instead of posting sarcastic hyperbole that the company is trying to greenwash their product by name when it’s a 100 year old company name.

Confusing as it may be for people like yourself, I don’t think it really defends posting sarcasm that is not based in reality.

by infecto

6/22/2026 at 3:23:07 PM

I didn't really think it was greenwashing, just hilarious to have one of the largest gas turbine companies in the world named "solar turbines"

by whalesalad

6/22/2026 at 3:30:47 PM

> "It's green energy, we put solar in our name"

You can call this whatever you want.

by infecto

6/22/2026 at 4:39:16 PM

We call them "jokes"

by skupig

6/22/2026 at 4:55:35 PM

It's 2026 - they should change their fucking name.

by anon7725

6/22/2026 at 6:28:20 PM

How did that work out for X? I mean, Twitter. Or Meta? You mean Facebook?

Name recognition matters especially to people in particular segments.

by esseph

6/22/2026 at 2:57:29 PM

Solar Turbines is one of the world's leading manufacturers of industrial gas turbines, with more than 17,000 installed in 100 countries

by thelastgallon

6/22/2026 at 3:09:22 PM

Much like that scoundrel Aurelian reviving the cult of Sol Invictus to greenwash the late roman empire. /s

by tokai