Powering Texas Data Centers
National Grid Pours $1.75 Billion into Joulent for Texas Data Center Power Expansion
Anonymous
Key Points
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Kilby is a 50/50 partnership with Chevron to build the 2.67 GW West Texas gas-fired power facility that will supply a Microsoft data center campus under a 20-year contract.
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National Grid Ventures will bring strategic value beyond cash, including high-impact capital, expertise in power management for large-scale projects, and critical supply chain capabilities to accelerate Joulent’s growth.
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Market reaction: National Grid’s shares fell about 1.3% in London on the day of the announcement.
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Joulent focuses on contracted power generation and high-voltage infrastructure for US large-load customers, aligning with the expanding demand from AI-driven and data-center power needs.
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National Grid’s liquidity position shows a current ratio of 0.76, indicating potential liquidity concerns related to the deal.
National Grid will pay $1.75 billion for a 35% stake in Joulent, a U.S. energy startup built to power AI data centers, valuing the company at roughly $5 billion, according to Business Wire. The deal marks a sharp strategic turn for the UK utility, which has historically focused on regulated power networks in Britain and the northeastern United States.
Joulent's centerpiece is Project Kilby — a 2.67 gigawatt gas-fired plant in West Texas being built with Chevron to supply a Microsoft data center campus under a 20-year contract. That is enough capacity to power hundreds of thousands of homes. Operations are targeted to begin in 2028, Investegate reported.
A $5 Billion Startup Built to Close America's Power Gap
Joulent launched on June 22, 2026 — the same day Chevron and Microsoft announced the 20-year power deal for Project Kilby. Engine No. 1, an activist investment firm, founded the company alongside GE Vernova. CEO Chris James said the company was designed to meet demand that the traditional grid simply cannot handle fast enough. "American innovation is moving faster than the power infrastructure built to support it," James said. "Joulent was created to close that gap."
The project uses what Joulent calls an "across-the-meter" model. Instead of feeding power into the public grid, the plant will send electricity directly to Microsoft's campus. This skips the years-long queue for grid connection permits. It also shields everyday Texas consumers from potential rate hikes caused by massive new industrial loads, PR Newswire reported. The plant will sit on more than 2,000 acres in Reeves County, near Pecos, in the heart of the Permian Basin.
National Grid Bets on Contracted Cash Flows Far From Home
National Grid is making the investment through its commercial arm, National Grid Ventures. CEO Zoë Yujnovich called it "a disciplined, partner-led investment in contracted critical infrastructure for the AI-driven large load economy." The company says the deal fits its strategy of locking in long-term, predictable returns — the same logic behind its regulated UK transmission business, just applied to private U.S. power deals.
National Grid says the $1.75 billion will come from existing balance sheet capacity. It will not change the company's current five-year, £70 billion spending plan, according to Morningstar. Free cash flow from the Joulent stake is not expected to turn positive until the early 2030s. The final investment decision on Project Kilby is expected later in 2026.
Chevron and Microsoft Lock In a 20-Year Gas Power Deal
Chevron is a 50/50 partner with Joulent on Project Kilby through its subsidiary Energy Forge One. Jeff Gustavson, President of Chevron New Energies, said the company is "uniquely positioned to deliver power to customers with certainty" by tapping Permian Basin natural gas and Chevron's own drilling and engineering capabilities. TD Securities analyst Jason Gabelman estimates the total project cost at $7 billion to $9 billion, with developers targeting a roughly 15% internal rate of return, according to Global Data Center Hub.
Microsoft is the sole buyer of all power from the plant. Noelle Walsh, Microsoft's President of Cloud Operations, welcomed National Grid Ventures' involvement, saying AI and cloud computing "require closer coordination between energy and infrastructure." Analysts estimate Microsoft may be paying around $150 per megawatt-hour — a premium price that reflects the speed and reliability guarantees that the dedicated plant can offer versus a public grid connection.
Shares Dip as Analysts Flag Liquidity and Environmental Risks
National Grid's London-listed shares fell about 1.3% on the day of the announcement. Analysts at GuruFocus flagged the company's current ratio — a measure of short-term financial health — at just 0.76. A ratio below 1.0 means a company's short-term debts exceed its liquid assets. Some investors questioned whether a $1.75 billion bet on an energy startup is the best use of capital when the UK transmission grid still needs major upgrades.
Environmental questions also linger. The project locks in 20 years of natural gas generation at a time when Microsoft has a net-zero carbon goal. Project Kilby will use non-potable brackish groundwater for cooling to protect scarce West Texas freshwater supplies. It will also install emissions-reduction systems to cut nitrogen oxide output, Inspenet reported. On the economic side, the project is expected to create 6,000 construction jobs and generate $10 billion in state and local tax revenue over its lifetime.
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