GE Vernova: Project Kilby Proves Off-Grid AI Power Model

GE Vernova lands turbine contracts for Project Kilby, a 2.67 GW Chevron-Microsoft off-grid Texas plant validating behind-the-meter energy delivery for AI data centers.

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What Happened

Project Kilby will be built near Pecos in the Permian Basin, where Chevron already operates as a major natural gas producer. The plant is expected to require roughly $7 billion in capital expenditure and will run on seven large GE Vernova heavy-duty gas turbines, supplemented by equipment from Solar Turbines, a Caterpillar subsidiary. Power delivery is targeted for 2028, subject to a final investment decision Chevron expects to reach by year-end 2026.

The arrangement is structured so the power plant is physically co-located with Microsoft's data center, supplying electricity behind the meter — meaning Microsoft receives dedicated, dispatchable generation without drawing on the ERCOT transmission grid that serves Texas consumers. That configuration sidesteps interconnection queues currently stretching multi-year for large industrial loads, a structural bottleneck that has constrained AI infrastructure deployment across the country.

Strategic Context

For GE Vernova, Project Kilby arrives as the company accelerates an already-steep demand curve. In the first quarter of 2026, the company signed 21 gigawatts of new gas turbine agreements, pushing total gigawatts under contract to 100. Its equipment backlog grew by more than $13 billion quarter-over-quarter, and CEO Scott Strazik pulled the company's $200 billion backlog milestone forward to 2027, a full year ahead of prior guidance.

Roughly 20% of GE Vernova's contracted generation capacity is now explicitly tied to data center developers, up from a negligible share two years ago. In Q1 2026 alone, the company's Electrification segment booked $2.4 billion in equipment orders for data centers — surpassing the full-year 2025 total. The company also expects to reach at least 110 gigawatts of combined gas turbine backlog and slot reservation agreements by the end of 2026.

Gas turbine slots are tightening through 2030. That scarcity reinforces GE Vernova's pricing power and order visibility, particularly in the heavy-duty segment that Project Kilby requires.

Market Reaction

GEV shares traded at approximately $1,127 on June 22, the day the Chevron-Microsoft deal was announced. By June 24, GEV had pulled back to around $1,050, reflecting broader market softness rather than project-specific concern. The stock retains a 72.5% year-to-date gain and remains within range of its 52-week high of $1,181.95, against a 52-week low of $482.20. Next earnings are scheduled for July 22, 2026.

AI and Technology Angle

Project Kilby represents the clearest operational validation yet for a model that technology companies and energy developers have been assembling since late 2024. Where earlier off-grid AI power announcements remained conceptual or pre-final investment decision, Project Kilby carries a signed 20-year PPA, a named technology supplier, a specific location, and a defined construction timeline.

The project's modular, phased design allows capacity to be added incrementally — a feature that aligns with how hyperscalers typically expand data center footprints. GE Vernova's aeroderivative and heavy-duty turbine families, offered to data center clients across a range of sizes, deliver between 35 MW and several hundred megawatts per unit, with five-minute fast-start capability available on the aeroderivative side.

The structural trade-off is emissions duration. A 2.67-gigawatt gas plant operating under a 20-year PPA locks in fossil-fuel generation through the mid-2040s, creating tension with the net-zero commitments both Microsoft and GE Vernova have publicly adopted. That tension is expected to become a focal point for regulators and institutional investors as similar projects proliferate.

What Comes Next

Dozens of comparable behind-the-meter projects are at various stages of development across the United States. Project Kilby, as one of the most structurally complete deals executed to date, establishes a commercial template — 20-year PPA, energy developer as intermediary, hyperscaler as off-taker, dedicated heavy-duty turbine fleet — that competitors and counterparts are positioned to replicate.

GE Vernova's second-quarter earnings on July 22 will draw scrutiny on whether data center bookings continue to outpace earlier forecasts and whether turbine slot commitments are extending further into the decade. Supply chain capacity at GE Vernova's manufacturing facilities, including an announced $200 million expansion in Hai Phong, Vietnam, will determine how quickly the company can convert record backlog into recognized revenue.

Outlook

Project Kilby elevates GE Vernova's position at the center of the AI energy buildout, providing a concrete reference transaction for the behind-the-meter model. With 100 gigawatts under contract, a backlog expanding faster than forecast, and turbine supply constrained through 2030, near-term revenue visibility for GEV is unusually strong. The critical variables ahead are execution speed, the trajectory of U.S. emissions policy toward industrial gas generation, and whether the Permian Basin gas supply chain can scale to match the ambitions of what may become one of the largest clusters of off-grid industrial power in modern U.S. history.