Oil supermajor adds to renewables' competition for data centre power bounty
Rapid adoption of AI technology is triggering a surge in data centre development, and in turn increasing demand for electricity
Oil supermajor Chevron is to partner with US investment firm Engine No. 1 to develop scalable gas-fired power generation to supply US-based data centres, in another sign of the competition renewables will face in what is predicted to be a sharply growing market.
In conjunction with energy equipment manufacturer GE Verona, the companies said they aim to develop up to 4GW of electricity via “power foundries” that will supply electricity to co-located data centres in the US Southeast, Midwest and West regions, with initial in-service by the end of 2027.
The projects — which will provide enough power to supply up to 3.5 million US homes — are expected to be designed with flexibility to integrate lower carbon solutions, such as carbon capture and storage (CCS) capable of capturing more than 90% of the carbon dioxide from the gas turbines, as well as renewable energy resources, the companies said.
Rapid adoption of AI technology is triggering a surge in data centre development, and in turn increasing demand for electricity. According to analysts at Boston Consulting Group, global demand for data centre power will grow at about 16% on a compound annual basis from 2023 to 2028.
“By using abundant domestic natural gas to generate electricity directly connected to data centers, we can secure AI leadership, drive productivity gains across our economy and restore America’s standing as an industrial superpower,” Chris James, founder and chief investment officer of Engine No. 1 said in a statement on Tuesday.
The companies said that the joint development “aims to establish the first multi gigawatt-scale co-located power plant and data centre during President Trump’s second term”.
US President Donald Trump has championed both the country’s dominance of AI and use of domestically-sourced energy.
One of his first actions on returning to the presidency was to revoke his predecessor’s AI policies, and he threw his support behind the Stargate joint venture, formed by OpenAI, Oracle and SoftBank, which intends to invest up to $500 billion for infrastructure tied to artificial intelligence.
“President Trump’s pro-American energy policies and commitment to energy and AI dominance give us the confidence to invest in projects that will create American jobs and strengthen our national security,” said Chevron chief executive Mike Wirth.
Speaking to reporters aboard Air Force One on Monday, Trump called the rise of Chinese company DeepSeek “a wake-up call” for the US tech industry, the BBC reported.
Though Chevron should be able to work the capital expenditures for the project into its existing budget, the project’s execution could be contingent upon finalising power purchase agreements, TD Cowen analysts Jason Gabelman and Michael Laupheimer wrote in a report about the supermajor’s announcement.
However, “recent DeepSeek developments could result in more tempered market reception than this would otherwise receive,” Gabelman and Laupheimer wrote.
Chevron is the latest among oil and gas majors to explore the market for electricity to cater to data centre demand.
ExxonMobil announced in December it is designing a gas-fired power plant to directly supply data centres. Meanwhile Spanish daily Expansion reported on Monday that Repsol is planning to invest up to €4 billion ($4.2 billion) in data centres near a planned major cloud-computing hub in the north of Spain.