Main oil the company is seeking a Texas tax credit worth hundreds of millions of dollars to build a massive power plant. However, the energy will not go to individual consumers. Instead, the gas plant will be used to power a data center whose final tenant could be Microsoft.
Chevron’s subsidiary, Energy Forge One, has submitted an application with the State Comptroller’s board to obtain a tax break for a power plant it is building in West Texas. In slow January, the comptroller’s office recommended support for approval of the application, the first such approval under a program for a power plant designated exclusively for data center utilize.
In March the following press reports that Microsoft was looking for buying power in the Energy Forge project, Chevron he said that it had entered into an “exclusive agreement” with Microsoft and the Engine 1 investment fund involved in the project. In January, Microsoft pledged to be a “good neighbor” in the communities where it builds data centers, promising to pay “its full and fair share of local property taxes.”
The potential tax cuts for the project come as gigantic tech companies grapple with growing public anger over data centers and electricity costs. It also comes as lawmakers begin to look more critically at increasing incentives for data centers, some of which cost some states – including Texas – at least $1 billion a year.
Chevron spokeswoman Paula Beasley told WIRED in an email that all tax incentives being considered for the Energy Forge project “apply only to power plants” to “support new energy infrastructure and do not cover any future data center facilities that may be supported.” Beasley also said there is currently “no final agreement” with Microsoft regarding the plant.
“Microsoft is in discussions with Chevron,” Rima Alaily, Microsoft corporate vice president and general counsel for infrastructure, said in a statement to WIRED. “No commercial terms have yet been finalized and there is no final agreement at this time.”
Chevron is seeking a tax credit related to the project under the Texas Jobs, Energy, Technology and Innovation (JETI) Act. The program, adopted in 2023, is intended to encourage companies to build vast infrastructure projects in the country in exchange for guarantees that will bring jobs and income. Approved projects have a cap on the amount of taxable property that can be levied against local school district taxes.
Pecos-Barstow-Toyah School Board approved submitting the project at the February meeting. The state pays for the tax break, so the school district itself doesn’t lose any money.
According to state documents, the Chevron project could save the company more than $227 million over 10 years, depending on the final project size and investment. App says the plant will provide “more than 25 permanent, full-time jobs,” although there is no requirement to do so because it is considered an electricity generating facility.
The planned gas plant will not be connected to the grid, instead, in line with its utilize, it will provide “electricity for direct consumption by the data center.” The so-called gasworks behind the meter. Nearly 100 gigawatts of gas-fired power was being prepared in the U.S. at the start of the year to solely power data centers, according to the nonprofit Global Energy Monitor, and several more massive gas projects have been announced since the data was released.
A WIRED analysis of a dozen power plants built specifically to run data centers, including the Chevron project, found that these plants may emit more greenhouse gases than many diminutive and medium-sized countries. The Energy Forge power plant alone could emit over 11.5 million tons of CO22 equivalent per year – more than Jamaica emitted in 2024. Beasley told WIRED that the plant “is being designed to be compliant with applicable environmental regulations, including all applicable federal and state air quality standards.”