Chevron, Engine No. 1, and GE Vernova have announced a joint venture to develop natural gas power plants adjacent to data centers, capitalizing on the growing energy demands of artificial intelligence. This strategic partnership aims to address the significant increase in electricity consumption driven by the rapid expansion of AI technologies.
The first multi-gigawatt facility is projected to be operational by the end of 2027, directly supplying power to a neighboring data center. This initiative comes in response to a projected surge in US electricity demand, anticipated to increase by nearly 16% over the next five years, largely fueled by data centers, new manufacturing facilities, and the ongoing electrification of various sectors. However, recent advancements by Chinese AI firm DeepSeek have introduced uncertainty into these forecasts, as their AI model boasts significantly higher energy efficiency compared to competitors like OpenAI.
While tech giants like Microsoft and Amazon are exploring nuclear and renewable energy sources for their data centers, natural gas plants currently offer a more practical solution. Their lower construction costs and shorter development timelines, combined with the ability to provide consistent power output, make them a compelling option compared to nuclear reactors and intermittent renewable sources. This presents a significant opportunity for gas plant operators, natural gas producers, and pipeline companies.
The planned power plants will be strategically located alongside data centers in the Southeast, West, and Midwest regions of the United States. By initially bypassing established transmission grids and delivering power directly to data centers, the partnership aims to maximize efficiency and reliability. The facilities will utilize GE Vernova’s advanced gas turbine technology.
The joint venture has set an ambitious target of constructing plants with a combined capacity of up to four gigawatts by the end of 2027, sufficient to power approximately 3.5 million American households. Chevron CEO Mike Wirth emphasized the importance of pro-American energy policies and the pursuit of leadership in AI and energy sectors as key drivers for this investment. He highlighted the potential for job creation and national security enhancement.
GE Vernova, a recent spin-off from General Electric, specializes in equipment for gas and wind power generation. Before DeepSeek’s disruptive technology entered the market, GE Vernova was poised to significantly benefit from the AI-driven power boom. Engine No. 1, a San Francisco-based investment firm, gained recognition for its successful proxy battle with Exxon Mobil in 2021, resulting in a substantial board overhaul.
Following the announcement, Chevron’s stock price remained relatively stable, while GE Vernova experienced a slight rebound after a previous decline. This initiative follows Exxon’s recent announcement to provide emission-free electricity to data centers by incorporating carbon capture technology into a large gas-fired power plant. This highlights the growing trend of energy companies seeking innovative solutions to meet the increasing power demands of the digital age.
