Chevron Corp., investor Engine No. 1, and GE Vernova Inc. have announced a partnership to develop natural gas-fired power plants adjacent to data centers. The initiative aims to support the growing energy needs of artificial intelligence, which is driving a surge in U.S. electricity demand.
First Plant Set for Completion by 2027
The companies plan to have their first multi-gigawatt plant operational by the end of President Donald Trump’s term. The power plants will be built next to data centers in the U.S. Southeast, West, and Midwest, ensuring a direct energy supply that bypasses traditional transmission grids.
According to the announcement, the plants will use GE Vernova’s gas turbines and will be capable of generating up to four gigawatts of power—enough to supply electricity to approximately 3.5 million U.S. homes.
AI’s Impact on Electricity Demand
U.S. electricity demand is projected to rise by nearly 16% over the next five years—more than three times the estimate from a year ago. This spike is being fueled by the expansion of data centers, factory development, and overall electrification of the economy.
However, Chinese AI company DeepSeek has introduced uncertainty into these forecasts. DeepSeek’s AI model reportedly operates with greater energy efficiency than its U.S. competitors, raising concerns that power demand from AI may not be as high as previously expected. These concerns triggered a selloff in power stocks on Monday.
Why Gas Power is Gaining Favor
While companies like Microsoft and Amazon are investing in nuclear and renewable energy to power their data centers, natural gas remains the most viable short-term solution due to its cost-effectiveness and ability to generate power 24/7.
Unlike wind and solar, which are intermittent energy sources, gas plants can provide a steady power supply. Additionally, gas plants are faster and cheaper to build than nuclear reactors, making them an attractive option for AI-driven power demand.
Chevron’s Commitment to Energy and AI
Chevron CEO Mike Wirth expressed confidence in the project:
“President Trump’s pro-American energy policies and commitment to energy and AI dominance give us the confidence to invest in projects that will create American jobs and strengthen our national security.”
GE Vernova and Engine No. 1’s Role
GE Vernova, which spun off from General Electric in April, manufactures equipment for gas power plants and wind farms. Until DeepSeek’s AI breakthrough disrupted energy market expectations, the company had been one of the leading beneficiaries of the AI-driven power demand boom.
Engine No. 1, a San Francisco-based investment firm, gained prominence in 2021 after waging a successful proxy fight against Exxon Mobil, forcing the oil giant to replace a quarter of its board. Now, the firm is investing in AI-driven energy solutions.
Market Reaction
Following the announcement:
- Chevron’s stock remained relatively unchanged in early trading.
- GE Vernova shares edged higher after a significant drop on Monday.
Competition from Exxon
Chevron’s latest move follows a similar announcement from Exxon Mobil last month. Exxon is working on an emission-free electricity solution for data centers by equipping a large gas-fired power plant with carbon capture technology.
Conclusion
Chevron’s partnership with GE Vernova and Engine No. 1 signals a major investment in AI-driven energy demand. While gas-fired plants remain the most competitive solution, the rise of energy-efficient AI models like DeepSeek could reshape market expectations. As competition among energy providers heats up, the industry will closely watch how demand for power-intensive AI applications evolves.