Key facts
- Joulent, an energy investment firm's power development arm, secured gas turbine supply years before signing customers.
- This early procurement was critical to securing a deal with Chevron and Microsoft for a West Texas data center.
- The Kilby project is a planned 2.67GW gas-fired facility designed to operate 'behind-the-meter' initially.
- Chevron will supply electricity directly to the Microsoft data center under a 20-year power purchase agreement.
- The project aims to insulate ratepayers from increased costs due to data center power demand.
- Chevron will also build gas infrastructure, connecting to the Waha Hub for cost-advantaged Permian Basin gas.
A power development project in West Texas, known as the Kilby project, has secured a significant advantage in meeting future energy demands by procuring scarce gas turbine supply years in advance. This strategic move by Joulent, the power development arm of energy investment firm Engine No. 1, was critical in finalizing a 20-year power purchase agreement with Chevron and Microsoft.
Brian Boland, CFO of Joulent, stated that having the supply chain secured allowed them to meet an aggressive timetable. The early procurement of gas turbines and high-voltage equipment was essential for the 2.67GW gas-fired facility, which is planned to operate initially without a connection to the local grid. This 'behind-the-meter' approach is becoming more common as data center developers face extended wait times for traditional grid interconnections.
The global rush to build gas-fired plants to meet surging data center power demand has led to significant backlogs and lead times of up to 7-8 years for major turbine manufacturers. Engine No. 1 anticipated this by locking in approximately 4GW of gas turbines and related equipment over the past three years, before even partnering with Chevron. This foresight was crucial for meeting Microsoft's 2028 operational deadline.
While the Kilby project will begin operations independently, it is designed for eventual grid connection, with the necessary equipment already secured. The facility will utilize a combination of gas turbines, battery storage, and multiple generation units for reliability. The battery system will act as a 'synthetic reserve' to manage demand fluctuations and system stability. Boland emphasized that this arrangement shields regular ratepayers from the costs associated with Microsoft's power needs, with the potential to supply excess power to the grid later.
Chevron will manage the gas infrastructure, including a roughly 20-mile connection to the Waha Hub, a key pricing point for Permian Basin gas. This location provides access to abundant associated gas, offering a cost advantage and mitigating fuel availability concerns. Joulent intends to replicate this successful model, with about 25GW of similar projects in its development pipeline across multiple markets.