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Chevron signs 20-year power agreement with Microsoft for West Texas data center

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Re: Chevron signs 20-year power agreement with Microsoft for West Texas data center

#71

Post by iririririr »

stonogo wrote: post #39
epistasis wrote: post #33

Earlier quoted context omitted.

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 tha…

The cost of gas is completely irrelevant. In order to bring a new large load onto the grid, you have to coordinate with ERCOT, and they just made that process more tedious. Once you get your grid connection approved and built out, you have to source your own power anyway, and frankly there just isn't enough power on the market to realize the stated datacenter buildout goals in this country. In short, you're going to…

hopefully when the Ai bubble burst, all those new renewable plantals will be feeding the grid. and power will be the Aeron chairs of 2030.

Re: Chevron signs 20-year power agreement with Microsoft for West Texas data center

#72

Post by HDThoreaun »

epistasis wrote: post #16
softwaredoug wrote: post #13

Earlier quoted context omitted.

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 o…

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…

Solar makes sense for utility generation because demand goes down at night. For datacenter usage demand is effectively constant, so theyd need a fuckload of batteries which is where all the cost goes. It doesnt make sense to power 2.6 GW overnight fully on batteries. Much simpler, a.k.a faster, to just buy a plot next to an area with excess gas and build the whole thing there.

Re: Chevron signs 20-year power agreement with Microsoft for West Texas data center

#73

Post by Matticus_Rex »

jeffbee wrote: post #56
alex43578 wrote: post #52

Earlier quoted context omitted.

Because I expect the economics of enough batteries to carry a data center’s worth of demand through the night and morning is too expensive compared to essentially free natural gas. Data centers would ideally run at ~100% utilization, so any drop in solar output needs to be fully met by batteries.

> Data centers would ideally run at ~100% utilization I don't think this is broadly accepted among major data center operators.

IIRC ERCOT estimated from their experience it was something like 85% on average?

Re: Chevron signs 20-year power agreement with Microsoft for West Texas data center

#74

Post by Doches »

ElevenLathe wrote: post #20
epistasis wrote: post #18

Earlier quoted context omitted.

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: 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…

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…

I know this is nitpicking, but as a Texan I have to correct you on a point of grammar. The “west” in “West Texas” (and similarly for the other regions) isn’t an adjective; it’s part of the proper noun and should be capitalized. So it’s “West Texas,” not “west Texas.”

Yes, this is weird and no, I have no idea why we do it, but it’s really weird to read “export it to east Texas” — to the extent that I had to re-parse the sentence to figure out what you meant.

Re: Chevron signs 20-year power agreement with Microsoft for West Texas data center

#75

Post by outside1234 »

epistasis wrote: post #33
auspiv wrote: post #21

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 oi…

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 tha…

There is also probably a balance of payments aspect of this. Chevron uses a ton of Azure. They probably asked for Microsoft to use some amount of Chevron in exchange. This is probably that deal.

Re: Chevron signs 20-year power agreement with Microsoft for West Texas data center

#76

Post by phil21 »

epistasis wrote: post #16
softwaredoug wrote: post #13

Earlier quoted context omitted.

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 o…

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…

> What this tells me is that like most hyperscalers, Microsoft is not price sensitive on the electricity side,

What this should likely tell you, is that you are missing information and have an incomplete picture of the situation.

Or it could be MSFT just likes to spend extra money for no reason because they are simply stupid. I'm gonna go with the former though.

I'd be interested in all these behind the meter setups for large 24x7 loads that are being built using solar+battery though. I haven't heard of one personally, but I must be lacking information on the subject since you seem so certain these are common?

Re: Chevron signs 20-year power agreement with Microsoft for West Texas data center

#77

Post by dopa42365 »

epistasis wrote: post #45
stonogo wrote: post #39

Earlier quoted context omitted.

The cost of gas is completely irrelevant. In order to bring a new large load onto the grid, you have to coordinate with ERCOT, and they just made that process more tedious. Once you get your grid connection approved and built out, you have to source your own power anyway, and frankly there just isn't enough power on the market to realize the stated datacenter buildout goals in this country. In short, you're going to…

> Gas is the cheapest, fastest zero-to-production choice for onsite power generation, and has been for a long time. Is it, though? There's a ton of projects out there waiting to get their solar on the grid in west Texas, partnering with one of them and launching the project early while waiting on the interconnection queue, and adding enough batteries, gives a more robust solution right now without the SPOF nature of…

>Add to that the long backorder list for gas turbines right now

If demand > supply then the price goes up. Doesn't mean you can't buy something though.

Re: Chevron signs 20-year power agreement with Microsoft for West Texas data center

#78

Post by caminante »

epistasis wrote: post #45
stonogo wrote: post #39

Earlier quoted context omitted.

The cost of gas is completely irrelevant. In order to bring a new large load onto the grid, you have to coordinate with ERCOT, and they just made that process more tedious. Once you get your grid connection approved and built out, you have to source your own power anyway, and frankly there just isn't enough power on the market to realize the stated datacenter buildout goals in this country. In short, you're going to…

> Gas is the cheapest, fastest zero-to-production choice for onsite power generation, and has been for a long time. Is it, though? There's a ton of projects out there waiting to get their solar on the grid in west Texas, partnering with one of them and launching the project early while waiting on the interconnection queue, and adding enough batteries, gives a more robust solution right now without the SPOF nature of…

Good luck. The renewables overbuild required to firm baseload demand for a datacenter is insane. You need something like 4x solar and 1.5x storage in a 10hr battery.

Respectfully, the laws of NPV and IRR hurdles don't matter in Chinese infrastructure.

Whatever you choose in the US, it's not cheap, and developers crawl over each other to sign up hyperscalers. Race to the bottom.

Re: Chevron signs 20-year power agreement with Microsoft for West Texas data center

#80

Post by sidewndr46 »

bob1029 wrote: post #15
epistasis wrote: post #6

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 surp…

West Texas is like Costco for natural gas. 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.

Replace "extremely cheap" with "zero cost" and you've got it correct. Texas at night is an endless sea of flare stacks. We burn off an unbelievable amount of natural gas just to get rid of it.
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