The scale of what is being built across the United States right now is genuinely difficult to put into context. As of March 2026, there are 4,011 data centers operating in the U.S., more than any other country by a wide margin, and together they exceeded 50 gigawatts of combined capacity at the end of 2025, representing 24% compound annual growth. Those facilities are not just growing. They are being consumed faster than they can be built. Vacancy across North American data centers sat at a record low of 1% for the second consecutive year at the end of 2025, and 92% of capacity currently under construction is already pre-committed through binding lease agreements or owner-occupied development.
The driving force behind this buildout is artificial intelligence, and the companies funding it are spending at levels that would have seemed implausible just a few years ago. Google, Amazon, Microsoft (NASDAQ: MSFT), and Meta (NASDAQ: META) collectively plan to spend $725 billion on capital expenditures in 2026, up 77% from last year’s already record-breaking $410 billion. The U.S. data center market witnessed investments of roughly $299 billion in 2025, and that figure is projected to reach nearly $495 billion by 2031. To put the broader trajectory in perspective, the global data center sector is expected to require up to $3 trillion in investment by 2030, with roughly 100 gigawatts of new capacity anticipated to come online between 2026 and 2030, effectively doubling current global capacity.
Geographically, the growth is no longer confined to the traditional data center hubs. Northern Virginia remains the largest single market globally, but capacity constraints are pushing developers into new territory. The U.S. data center market absorbed 1,173 megawatts of capacity in the second quarter of 2025 alone, with nearly half of the quarter’s largest transactions occurring in rural or non-traditional markets. Texas has emerged as one of the clearest beneficiaries of that shift, ranking as the second-largest data center market in the country, with cities like Dallas, Austin, and San Antonio attracting both colocation and hyperscale investment. West Texas, in particular, has become a focal point, given its combination of cheap land, proximity to Permian Basin natural gas, and some of the best solar resources in the country.
That is precisely the backdrop for one of the most significant data center power deals announced in 2026. On June 22, Chevron Corporation (NYSE: CVX) disclosed a 20-year power purchase agreement with Microsoft Corporation to supply electricity to a large new data center in Reeves County, deep in the Permian Basin. The project, called Project Kilby, is expected to consume nearly 2.7 gigawatts of electricity, enough to power roughly 2 million homes, and would span more than 2,000 acres.
What makes the arrangement structurally distinct is that it operates entirely off the public grid. Rather than connecting to the Texas power network, Project Kilby will generate its own electricity on site using natural gas drawn from Chevron’s existing Permian Basin production. The plant will use brackish groundwater rather than freshwater and will incorporate catalytic reduction systems to cut nitrogen-oxide emissions. The majority of generation capacity will come from large turbines supplied by GE Vernova (NYSE: GEV), with additional capacity provided by Solar Turbines, a wholly owned subsidiary of Caterpillar Inc. (NYSE: CAT). The facility will be built through a phased, modular approach that allows for incremental expansion over time.
Chevron is developing the project through Energy Forge One LLC, a wholly owned subsidiary, in partnership with Joulent, an energy company backed by activist investment firm Engine No. 1. Engine No. 1 holds an option to acquire half the project and cover the same share of costs. No total construction cost has been publicly disclosed, though people familiar with the matter estimated the figure at approximately $7 billion when Bloomberg first reported on the discussions in April. Chevron expects a final investment decision by the end of 2026, with the project targeting mid-teen returns, and first power delivery anticipated in 2028.
Once operational, the plant plans to sell excess generation into the Texas power market after establishing a grid connection at a later stage of the project’s development. Project Kilby is also expected to generate more than $10 billion in state and local tax revenue over its life and support nearly 2,000 jobs in the region. For Microsoft, whose capital expenditure plan for 2026 sits at $190 billion, the project reflects a broader strategy of securing dedicated, large-scale power sources capable of meeting the 24-hour-a-day reliability demands that AI infrastructure requires, a need that the existing grid, in many parts of the country, has so far struggled to meet at scale.
