Inside Microsoft's Data Centre Build in Pecos, West Texas

How do you build the next generation of data centres when power availability is becoming one of the industry's biggest constraints?

Microsoft believes the answer may lie in building energy and data centre infrastructure side by side.

The company is planning a new data centre campus in Pecos, West Texas, that will add approximately 2GW of capacity while pairing digital infrastructure with dedicated power generation. 

Microsoft describes the project as one of the largest capacity additions in its history.

The announcement coincides with a related agreement from Chevron. The company revealed that its subsidiary, Energy Forge One LLC, has signed a 20-year agreement with Microsoft to develop a co-located power facility that will provide dedicated electricity to the new campus.

One of Microsoft's largest capacity expansions

The centrepiece of the project is a new campus that Microsoft says will expand its global data centre footprint by around 2GW.

Noelle Walsh, President of Cloud Operations and Innovation at Microsoft, described the scale of the development in a company blog post announcing the project.

“Today, Microsoft is announcing one of the largest single capacity additions in our history," Noelle said.

“In Pecos, Texas, we will build a new data centre campus, expanding our global data centre capacity by approximately 2 gigawatts (GW) to meet strong and sustained customer demand for AI and cloud services across industries and regions.”

The investment will be delivered over the next five to seven years and is expected to support more than 6,000 construction jobs at peak build-out, alongside hundreds of permanent operational roles once the campus is fully operational.

Microsoft said that the development reflects both current customer requirements and longer-term infrastructure planning.

“This multibillion-dollar data centre campus investment over the next five to seven years reflects both the immediate needs we are seeing today and the future trajectory of AI and advanced compute, where reliable infrastructure at scale is essential to unlocking the next generation of innovation,” Noelle said.

Building power alongside capacity

A defining feature of the project is Microsoft's decision to pair the new campus with dedicated power generation located on site.

The company says the facility will initially operate with a co-located natural gas power plant using a behind-the-meter arrangement, allowing the campus to receive electricity directly rather than drawing power from the public grid.

According to Microsoft, the energy infrastructure required for the site is being funded by the company itself.

The approach is designed to help bring new capacity online quickly while ensuring operational reliability.

“By pairing new data centre infrastructure with dedicated energy supply located onsite, we can bring capacity online at the pace our customers require while maintaining operational reliability,” Noelle explained.

The company also stressed that the project is intended to meet Microsoft's own demand without placing additional pressure on existing community energy resources.

Chevron's involvement has drawn attention from across the energy and digital infrastructure sectors because it represents a growing convergence between power generation and data centre development.

Jeff Gustavson, President of Chevron New Energies, said: “AI is reshaping the global economy, and abundant, affordable, reliable energy is essential to fuelling that transformation.

“We are uniquely positioned to deliver power to customers with certainty, speed and at a competitive cost, leveraging Permian natural gas and our proven execution capabilities.”

Industry analysts believe the agreement could have wider implications for the region.

Linhua G, CEO of Surge Energy, said: “Chevron’s announcement today of a 20-year partnership with Microsoft to develop an approximately 2.7-gigawatt data centre in Pecos, Texas highlights a significant structural shift in the Permian Basin gas market: bringing demand directly to one of the most oversupplied natural gas regions in North America.

“By pairing large-scale data centre infrastructure with gas-fired power generation, Chevron is creating a new pathway to monetise excess associated gas that has historically suffered from pipeline constraints, limited takeaway capacity, and depressed regional pricing.”

A long-term commitment to West Texas

While capacity and power dominate the headlines, Microsoft is also positioning the project as a long-term investment in the local community.

The company says its Community First approach will guide the development, with a focus on local engagement and workforce development.

“This expansion is grounded in a simple principle: we build where our customers need us, and we build for the long term,” Noelle said.

The company says its Texas operations have generated billions of dollars in economic activity and supported thousands of jobs.

Programmes such as Microsoft's Datacenter Academy have also partnered with local colleges to help prepare students for careers in the sector.

In Pecos, Microsoft plans to replicate many of those initiatives, including local hiring programmes and support for small businesses.

The wider community investment strategy will also include education programmes and partnerships with local organisations.

Sustainability and resource management

The project has been designed around a series of sustainability measures.

Microsoft says it will continue building on the 4.7GW of renewable electricity it has already contracted in Texas while improving energy efficiency across its infrastructure portfolio.

The company expects the Pecos power facility to evolve over time, with both the plant and the campus potentially becoming connected to the broader regional grid in the future.

Water stewardship

Microsoft plans to deploy closed-loop cooling systems that significantly reduce the facility's water requirements.

According to the company, the systems will require an initial charge of water when operations begin but no additional water consumption during steady-state operation.

The company also intends to use non-potable water where possible to reduce pressure on local freshwater resources.

This builds on existing water stewardship initiatives in Texas, including Microsoft's support for the protection of more than 1,500 acres in the Edwards Aquifer recharge zone near San Antonio.

Taken together, these sustainable features with a PPA and behind-the-meter generation model make Pecos one of Microsoft's most ambitious infrastructure projects to date.