Chevron Texas power plant is seeking a school district tax break

Main oil The company is seeking a state tax break in Texas worth hundreds of millions of dollars to build a massive power plant. However, the power will not go to residential customers. Instead, the gas plant will be used to power a data center whose eventual tenant could be Microsoft.

Energy Forge One is owned by Chevron I submitted an application With the State Board of Controller to obtain a tax break for a power plant it is building in West Texas. In late January, the Comptroller’s Office made a recommendation to support approval of the application, the first such approval under the program for a power plant dedicated solely to data center use.

Next March News reports That Microsoft was looking to buy power from the Energy Forge project, Chevron He said It has entered into an “exclusive agreement” with Microsoft and Engine 1, an investment fund involved in the project. In January, Microsoft pledged to be a “good neighbor” in the communities where it builds data centers, including promising to pay a “full and fair share of local property taxes.”

The potential tax break for the project comes as big technology companies grapple with growing public anger over data centers and electricity costs. It also comes as lawmakers have begun to take a more critical look at bloated incentives for data centers, some of which have cost some states — including Texas — $1 billion or more each year.

All tax incentives under consideration for the Energy Forge project “apply only to the power generation facility” to “support new energy infrastructure, and do not extend to any future data center facilities that may be served,” Chevron spokeswoman Paula Beasley told WIRED in an email. Beasley also said that there is currently no “final agreement” with Microsoft regarding this power plant.

“Microsoft is in discussions with Chevron,” Rima Al-Alayli, Microsoft’s corporate vice president and general counsel for infrastructure, said in a statement to WIRED. “Commercial terms have not been finalized, and there is no final agreement at this time.”

Chevron is applying for a tax abatement for the project under the Texas Jobs, Energy, Technology and Innovation (JETI) Act. The program, approved in 2023, aims to incentivize companies to build large infrastructure projects in the state in exchange for guarantees to create jobs and revenues. Accepted projects receive a maximum amount of taxable property that can be collected through local school district taxes.

Pecos-Barstow-Toyah School Board consent Project application at a meeting in February. The state pays for the tax abatement, so the school district itself doesn’t lose any money.

According to documents from the state, the Chevron project could generate savings for the company of more than $227 million over 10 years, depending on the final size of the project and investment. Application He says The plant will create “more than 25 permanent, full-time jobs,” although there is no requirement to do so because it is considered a power generation facility.

The planned gas plant will not connect to the grid, instead providing “electricity for direct consumption through a data centre,” according to its application. So-called behind-the-meter gas stations have become increasingly popular for data center developers who face long waits for a network connection. According to data from the non-profit Global Energy Watch, the United States at the beginning of the year had done just that Nearly 100 gigawatts of gas-fired power In the development pipeline just to power data centres, with several large gas projects announced since the data was published.

A Wire analysis Of the fewer than a dozen power plants being built to explicitly serve data centers, including the Chevron project, it found that these power plants are allowed to emit more greenhouse gases than many small and medium-sized countries. The Energy Forge plant alone could emit more than 11.5 million tons of carbon dioxide₂ That’s the equivalent annually — more than the nation of Jamaica would emit in 2024. The plant “was designed to comply with applicable environmental regulations, including all applicable federal and state air quality standards,” Beasley told WIRED.