Chevron Power Plant in Texas Seeks School District Tax Break

A lot of oil The company is seeking hundreds of millions of dollars in Texas state tax breaks to build the power plant. Power does not go to residential customers, however. Instead, the gas station will be used to power a data center whose tenant will be Microsoft.

Chevron subsidiary Energy Forge One has he hired and the State Comptroller’s board to reduce the tax rate for the power plant being built in West Texas. In late January, the comptroller’s office issued a decision supporting approval of the request—the first such approval under the data center’s dedicated power generation program.

In March, later news reports that Microsoft wants to buy energy from the Energy Forge project, Chevron he said that it entered into an “exclusion agreement” with Microsoft and Engine 1, the investment fund involved in the project. In January, Microsoft pledged to be a “good neighbor” in areas where it is building data centers, including pledging to pay a “full share of real estate taxes.”

The project’s tax cuts come as major tech companies grapple with public anger over data centers and the cost of electricity. It also comes as lawmakers are beginning to focus on incentives for data centers, some of which cost some states — including Texas — $1 billion or more each year.

Chevron spokeswoman Paula Beasley told WIRED in an email that the tax incentives being considered for the Energy Forge project “apply to the power plant” to “support new energy facilities, and not extend to any future facilities that may be used.” Beasley also said that at this time there is “no definite agreement” with Microsoft for this power supply.

“Microsoft is in talks with Chevron,” Rima Alaily, Microsoft’s corporate vice president and general counsel for infrastructure, said in a statement to WIRED. “No commercial terms have been finalized, and there is no definitive agreement at this time.”

Chevron is requesting a tax break for the project under Texas’ Jobs, Energy, Technology, and Innovation (JETI) Act. Through 2023, the program aims to encourage businesses to develop major projects in the state to guarantee employment and income. Accepted projects receive tax credits that can be paid for through school district taxes.

Pecos-Barstow-Toyah school board to be accepted request for this project at the meeting in February. The state provides tax credits, so the school district itself does not lose any money.

According to government documents, Chevron’s project could save the company more than $227 million over 10 years, depending on the project’s size and cost. Work he says the building will provide “more than 25 permanent, full-time jobs,” although there is no reason to do so because it is considered a power plant.

The proposed gas plant will not be connected to the grid, instead providing “electricity for direct use by data centers,” according to the utility. The so-called behind-the-scenes gas meter has become a hot topic for data center developers who have been waiting years to connect to the grid. According to research by the non-profit Global Energy Monitor, the US at the beginning of the year had about 100 gigawatts of gas power in the development path to the power plant, with several gas projects announced since publication.

A WIRED analysis less than a dozen power plants under construction to provide clear information, including the Chevron project, found that these power plants are allowed to emit more greenhouse gases than many small to medium-sized countries. The Energy Forge plant alone can emit more than 11.5 million tons of CO₂ equivalent per year—more than Jamaica’s output in 2024. Beasley told WIRED that the plant “is being designed to comply with environmental regulations, including all federal and state regulations.”