Application Submitted For Data Center Power Station
May 14, 2026 – Chevron is seeking a massive Texas tax break for a natural gas power plant tied to the exploding energy demands of artificial intelligence data centers, according to a new report from Mother Jones. The project, led by Chevron subsidiary Energy Forge One, would supply electricity directly to a proposed data center campus in West Texas that could ultimately serve Microsoft.
The company is applying under Texas’ Jobs, Energy, Technology, and Innovation (JETI) program, which allows large industrial projects to sharply reduce their local school property tax obligations. State documents indicate Chevron could save more than $227 million over a decade if the deal is approved.
Behind-the-meter (BTM) gas plants are on-site power generation facilities built directly at the site of high-demand users, such as data centers, to provide electricity directly without relying on the public utility grid. These systems, frequently used in AI data center development to bypass multi-year grid connection delays, use natural gas turbines to offer reliable, on-demand power in months rather than years.
The proposed facility would be located near Pecos in the Permian Basin and initially generate about 2,500 megawatts of electricity — enough to power hundreds of thousands of homes. But unlike traditional power plants, the electricity would bypass the public grid entirely and flow straight to an adjacent AI-focused data center through what is known as a “behind-the-meter” arrangement.
Critics argue the arrangement highlights a growing contradiction in the AI boom: tech companies are pledging sustainability while increasingly relying on fossil-fuel infrastructure to secure reliable electricity. Environmental groups warn the plant could emit more than 11 million tons of greenhouse gases annually, making it one of the larger industrial emissions sources in the region.
Chevron says no final agreement with Microsoft has been completed and maintains the tax incentives apply only to the power facility, not the data center itself. Microsoft has separately promised to pay a “full and fair share” of local taxes in communities where it builds data centers.
The debate arrives as Texas lawmakers from both parties begin scrutinizing the enormous public subsidies flowing to AI infrastructure projects, especially as electricity demand and consumer power prices continue rising statewide.
