The current natural gas price in West Texas (the WaHa hub, north of Coyanosa, TX) is negative. And has been for a while. The price peaked (dipped?) to -$9/MCF a couple months ago. That means gas producers had to pay $9 per MCF for it to be taken away. Oil in the Permian comes with gas, a lot of it, so to produce oil, you need to get rid of gas. Wells I'm familiar with have 4000-5000 cubic feet of gas per barrel of oil. Recall in oilfield M = thousand, so that's 4-5 MCF per bbl of oil.
There is no free gas pipeline capacity to get gas out of West Texas. Any time new pipelines are built, they are filled within months.
This makes a ton of sense for oil producers (which are also gas producers) who can sell their gas for less of a loss (potentially a profit!) and also for MSFT who can lock in long term contracts for minimal cost. I'd guess these contracts are for $1-2/MCF which is win/win for the oil companies in the area and MSFT.
This might make sense for oil producers to get rid of their natural gas, which is nearly a waste material, but I'm struggling to understand how it makes sense for Microsoft. Despite the cheap natural gas, and an abundance of investors and builders with natural gas expertise, in the competitive electricity generation market everybody is deploying solar and batteries in west Texas because it's still more profitable than gas generation.
Further, there's a gas turbine shortage so Microsoft choosing to put their (presumably limited) allocation of gas turbines in West Texas, where they have good alternatives, seems a bit mysterious. Why not save that massive amount of turbines for the northeast DCs, where renewables work far poorer yet gas is more reliable?
The reasons that seem most convincing to me:
1. Political environment is hostile to renewables and Microsoft doesn't want to paint a target on their back by choosing solar plus batteries, the choice others are making in West Texas.
2. Grid connection drastically changes economics, but pipelines for gas are cheap or something, so the massive cost and delay from grid interconnection simply isn't worth it
3. There are particular political favors going on with Chevron, e.g. Chevron wants gas in the area and is willing to increase MS's turbine allocation if they do it in west Texas, or Chevron is helping get around pesky local political approvals for data centers, or something like that.
The cost of gas does not seem like a justification for this, though.
Its easy, they are going to use fancy accounting to make it come true. Produce a ton of carbon, then buy a cheap, under-priced carbon credit to make it be a zero.
Fascinating they're going this direction when solar and batteries are so cheap in Texas...
Nearly all new additions to the grid are solar, wind, and storage right now on Texas' grid. Not because of Texas regulations, but because Texas' grid is one of the few grids where generation decisions are all made by independent investors trying to make money.
Especially with the shortage in gas turbine manufacturing, very surprising! Not sure if this says more about Microsoft or datacenters.
There are cases where the fields can produce more than the pipelines can carry away. If you put your gigantic gas turbines right next to the fields you can obtain access to some extremely cheap fuel. They might even pay you to burn it sometimes. Negative gas prices are a thing.
And despite that, when there's any sort of price pressure, like there is for new electricity grid additions from investors, solar and batteries completely dominate the choice over natural gas in Texas.
Look at the map for 2026 of the grid buildout in Texas at the bottom of this page:
All solar and batteries (yellow and black), with a few tiny blue dots for gas. It was the same story in 2025. And it will be the same story in 2027 because solar and batteries are getting even cheaper.
These are all decisions from private investors, trying to make money, and choosing solar and batteries over gas in the market where gas is the cheapest in the world, gas is like a waste product that's hard to get rid of.
Why would Microsoft choose dirty energy when all the profit-driven investors are choosing cheaper solar and storage?
This is just a guess, but is the reason the same one that the gas is cheap all the way out in BFE west Texas? In other words, even if you could generate electricity from wellhead gas more cheaply than a bunch of wind turbines, solar panels, and batteries just west of Fort Worth, can you actually export it to east Texas where all the demand is? The solution here being: let's build our giant demand machine directly on the steppe and skip all that expensive infra, because data is much cheaper to move than energy.
It's something like 5-10 orders of magnitude cheaper to move information over fiber than it is to move the energy required to produce that same information through a [pipe/power]line.
But I'm curious how oil could run the show for Microsoft though. Even if Microsoft wanted gas backup, they could add solar to the build, shut off the turbines during the day, and save money over an all gas setup.
Perhaps Microsoft had better ability to overturn local opposition to data centers if they had Chevron's political influence over the politicians too?
What I meant was that all political and economic decisions here go in favor of oil. The war, the proposed laws to make Chinese EVs illegal, the softening of environmental regulations, etc.
Chevron and the US Government are joined at the hip, so these kind of deals "flow" naturally.
While the US stays oil rich, we should expect the US to be a laggard in ending use of fossil fuels. China and EU are not oil rich, they’ll make a faster transition.
Of course it’s idiotic to actively hobble clean energy. Or to put your finger on the scale for one source of energy, like the current administration does.
But it’s not crazy to argue for “energy abundance” where the market just picks the cheapest energy on the market in the US and that just gradually moves cleaner over time.
Well what I'm saying that is that on the Texas grid, solar and storage and wind are the cheapest energy, and being deployed in massive amounts because only on the Texas can an investor make money by providing the cheapest energy. (For most utilities, they take a fixed rate of profit and are incentivized to use the most expensive possible energy if they can get away with it.)
So Texas is not a laggard when it comes to clean energy, they are actually driving clean energy forward the most, because clean energy is the cheapest and most profitable energy. And that's despite Texas having natural gas that's insanely cheap right from Henry Hub.
What this tells me is that like most hyperscalers, Microsoft is not price sensitive on the electricity side, because energy costs are tiny compared to the massive capital costs of the GPUs. But why would they go this direction? What political influence would make Microsoft choose more expensive electricity, when in the past they've been fairly good at driving clean energy forward in their data center power choices, and they'd pay a premium on energy costs to go with clean energy?
I can think of a few angles that might have pushed them towards gas, mainly (a) they wanted on-demand generation cap, (b) they didn't want to get into the batteries game at the volume they'd require, or (c) they didn't want to deal with securing the space needed to produce 2.6GW of solar. Also yeah they're definitely not price-sensitive, any of the hyperscalars is more than happy to pay extra to get exactly what they want.
edit: for example that EIA list of new solar projects you linked indicates that the largest battery installations going up in '26 are all ~500MW, and that there are only four of them. I think the energy intensity of a multi-GW datacenter is the main reason that they're not going for solar here.
California's progressive policies have pushed out both data centers and Chevron out of the area. I'm sitting here wondering why Newsom is so proud of his achievements.
> A majority of the generation will come from large GE Vernova (NYSE: GEV) turbines and associated electrical infrastructure, with additional capacity provided by Solar Turbines, a wholly owned subsidiary of Caterpillar Inc. (NYSE: CAT).
When they say "large GE Verona", they mean the 7HA. This is an actual power plant with proper emissions controls. Not the aeroderivatives in parking lots we've seen so far.
> Their plan includes the use of seven U.S.-made GE Vernova Inc. GEV 7HA natural gas turbines to deliver the plant's initial capacity.
I had to go read the article to check because other operators have been entering into PPAs with oil companies, but for photovoltaic power. E.g. Google and TotalEnergies.
Sorry, but who in his right mind, signs contracts for 20 years - could you have imagined the world today 20 years ago? No and no. All one should do is sign snippet contracts of 5 years with the offer of an option to predefined condition. Split it into 4 sequences with a renewal.
Very normal. Here in Europe (well nordics at least) pretty much all the capacity of any wind farm is already sold before construction begins. The PPA (power purchasing agreement) is usually pretty much required to get the loan/funding anyway.
Basically most projects start with the wind/solar company using its own money to find a site and get it approved and then they go and try to find someone to sell the electricity to at a fixed rate before construction begins as selling directly to the spot market has way too much risk for the banks to give loans.
> A majority of the generation will come from large GE Vernova turbines and associated electrical infrastructure, with additional capacity provided by Solar Turbines, a wholly owned subsidiary of Caterpillar Inc.
Solar turbines is an interesting name for a gas turbine company. "It's green energy, we put solar in our name"
I agree with OP that the name, while maybe not deliberately, is really confusing in 2026. I thought that was a wind turbines or a solar panel technology, definitely not gas.
And it takes all of 30seconds to look up instead of posting sarcastic hyperbole that the company is trying to greenwash their product by name when it’s a 100 year old company name.
Confusing as it may be for people like yourself, I don’t think it really defends posting sarcasm that is not based in reality.
There is no free gas pipeline capacity to get gas out of West Texas. Any time new pipelines are built, they are filled within months.
This makes a ton of sense for oil producers (which are also gas producers) who can sell their gas for less of a loss (potentially a profit!) and also for MSFT who can lock in long term contracts for minimal cost. I'd guess these contracts are for $1-2/MCF which is win/win for the oil companies in the area and MSFT.
Further, there's a gas turbine shortage so Microsoft choosing to put their (presumably limited) allocation of gas turbines in West Texas, where they have good alternatives, seems a bit mysterious. Why not save that massive amount of turbines for the northeast DCs, where renewables work far poorer yet gas is more reliable?
The reasons that seem most convincing to me:
1. Political environment is hostile to renewables and Microsoft doesn't want to paint a target on their back by choosing solar plus batteries, the choice others are making in West Texas.
2. Grid connection drastically changes economics, but pipelines for gas are cheap or something, so the massive cost and delay from grid interconnection simply isn't worth it
3. There are particular political favors going on with Chevron, e.g. Chevron wants gas in the area and is willing to increase MS's turbine allocation if they do it in west Texas, or Chevron is helping get around pesky local political approvals for data centers, or something like that.
The cost of gas does not seem like a justification for this, though.
[1] https://www.microsoft.com/en-us/corporate-responsibility/sus...
Nearly all new additions to the grid are solar, wind, and storage right now on Texas' grid. Not because of Texas regulations, but because Texas' grid is one of the few grids where generation decisions are all made by independent investors trying to make money.
Especially with the shortage in gas turbine manufacturing, very surprising! Not sure if this says more about Microsoft or datacenters.
There are cases where the fields can produce more than the pipelines can carry away. If you put your gigantic gas turbines right next to the fields you can obtain access to some extremely cheap fuel. They might even pay you to burn it sometimes. Negative gas prices are a thing.
Look at the map for 2026 of the grid buildout in Texas at the bottom of this page:
https://www.eia.gov/todayinenergy/detail.php?id=67205
All solar and batteries (yellow and black), with a few tiny blue dots for gas. It was the same story in 2025. And it will be the same story in 2027 because solar and batteries are getting even cheaper.
These are all decisions from private investors, trying to make money, and choosing solar and batteries over gas in the market where gas is the cheapest in the world, gas is like a waste product that's hard to get rid of.
Why would Microsoft choose dirty energy when all the profit-driven investors are choosing cheaper solar and storage?
It's something like 5-10 orders of magnitude cheaper to move information over fiber than it is to move the energy required to produce that same information through a [pipe/power]line.
Perhaps Microsoft had better ability to overturn local opposition to data centers if they had Chevron's political influence over the politicians too?
Chevron and the US Government are joined at the hip, so these kind of deals "flow" naturally.
Of course it’s idiotic to actively hobble clean energy. Or to put your finger on the scale for one source of energy, like the current administration does.
But it’s not crazy to argue for “energy abundance” where the market just picks the cheapest energy on the market in the US and that just gradually moves cleaner over time.
So Texas is not a laggard when it comes to clean energy, they are actually driving clean energy forward the most, because clean energy is the cheapest and most profitable energy. And that's despite Texas having natural gas that's insanely cheap right from Henry Hub.
What this tells me is that like most hyperscalers, Microsoft is not price sensitive on the electricity side, because energy costs are tiny compared to the massive capital costs of the GPUs. But why would they go this direction? What political influence would make Microsoft choose more expensive electricity, when in the past they've been fairly good at driving clean energy forward in their data center power choices, and they'd pay a premium on energy costs to go with clean energy?
edit: for example that EIA list of new solar projects you linked indicates that the largest battery installations going up in '26 are all ~500MW, and that there are only four of them. I think the energy intensity of a multi-GW datacenter is the main reason that they're not going for solar here.
When they say "large GE Verona", they mean the 7HA. This is an actual power plant with proper emissions controls. Not the aeroderivatives in parking lots we've seen so far.
> Their plan includes the use of seven U.S.-made GE Vernova Inc. GEV 7HA natural gas turbines to deliver the plant's initial capacity.
https://finance.yahoo.com/sectors/energy/articles/chevron-mi...
https://pv-magazine-usa.com/2026/02/09/totalenergies-signs-1...
Also Google and itself. I guess there's a difference between Google and Microsoft after all.
https://storage.googleapis.com/gweb-uniblog-publish-prod/doc...
Basically most projects start with the wind/solar company using its own money to find a site and get it approved and then they go and try to find someone to sell the electricity to at a fixed rate before construction begins as selling directly to the spot market has way too much risk for the banks to give loans.
Solar turbines is an interesting name for a gas turbine company. "It's green energy, we put solar in our name"
Its origin is traced back to a 1929 company, Solar Aircraft Company.
https://en.wikipedia.org/wiki/Solar_Turbines
Confusing as it may be for people like yourself, I don’t think it really defends posting sarcasm that is not based in reality.
You can call this whatever you want.