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National Grid bets $1.75 billion on a Texas power plant built specifically to run Microsoft's AI

· by Pondero Newsdesk

The short version

National Grid Ventures will take a 35% stake in Joulent, funding a 2.67 GW co-located gas plant in West Texas that pipes power directly to a Microsoft data center campus, bypassing the public grid entirely.

National Grid bets $1.75 billion on a Texas power plant built specifically to run Microsoft's AI

The UK's National Grid announced on July 1 it will invest $1.75 billion for a 35% stake in Joulent, a Houston startup building a 2.67-gigawatt gas-fired power plant in West Texas whose entire output is already under contract to a Microsoft data center campus nearby. The structure of the deal says more than the headline dollar figure: Joulent's plant will never touch the public electricity grid.

What

National Grid Ventures, the commercial infrastructure arm of National Grid plc, is buying into Joulent's "Across-the-Meter" model, per the company's press release. The model co-locates power generation directly at the data center fence line: electricity flows from turbine to server rack without touching the regional grid. There is no interconnect application, no utility queue, no rate schedule negotiation with a state regulator.

The plant, called Project Kilby, is a 50/50 joint venture between Joulent and Chevron's energy infrastructure arm, Energy Forge. GE Vernova will supply the turbines. Microsoft signed a 20-year power purchase agreement covering the full output. A final investment decision is expected before the end of 2026, with first power delivery targeted for 2028.

The $1.75 billion is incremental to National Grid's existing five-year capital program, per the press release. Returns are expected above what National Grid earns from regulated utility operations.

Why it matters

The specific structure here is the story. Grid interconnect queues in the United States stretched to 5-10 years in many regions as of 2025. A hyperscaler that needs gigawatts of guaranteed baseload power by 2028 cannot wait for a utility queue. Joulent's model routes around that bottleneck entirely by owning the generation and the wire between generation and load.

That dynamic matters for AI tool operators in a concrete way: the same capacity constraints that are driving Microsoft to fund private generation are the reason cloud GPU prices have stayed elevated and availability has been uneven. The proliferation of co-located, privately financed power plants is the infrastructure layer that determines how much frontier compute actually comes online in the next three to five years and at what cost.

The deal also signals that traditional energy infrastructure companies now see AI data center power as their fastest-growing capital deployment opportunity. National Grid is not an AI company. It is writing a $1.75 billion check because contracted returns from AI compute power are higher than from regulated grid assets.

The International Energy Agency projected in 2024 that data centers will consume more than 945 terawatt-hours annually by 2030 per IEA's Electricity 2024 report, more than Japan's entire current electricity consumption. Project Kilby at 2.67 GW is a single campus. Dozens of similar projects are in development or announced across the US Southwest and Southeast.

Context and reactions

Joulent's founder and CEO Chris James said in the company's announcement that "American innovation is moving faster than the power infrastructure built to support it," framing the startup's value proposition as closing that specific gap. That claim is consistent with what grid operators have reported publicly: the North American Electric Reliability Corporation flagged grid reliability risks from surging data center load in its 2025 Long-Term Reliability Assessment.

Data Center Knowledge reported that the deal reflects a broader pattern where grid interconnect delays are accelerating the business case for co-located, off-grid power structures. Joulent is one of at least three US startups pursuing a similar model, alongside others including Applied Digital and specific Chevron/ExxonMobil data center power partnerships announced in 2025.

Reuters reported that National Grid views the Joulent stake as extending its "long-duration, contracted infrastructure" model into US markets, consistent with its broader strategy of diversifying beyond regulated UK grid assets.

What to watch next

The final investment decision before the end of 2026 is the concrete gate. If Joulent clears that milestone and breaks ground in West Texas, it validates the Across-the-Meter financing model and will accelerate similar announcements from other energy infrastructure players. Watch also whether Microsoft expands the power purchase agreement scope beyond the current 20-year term covering Project Kilby's full 2.67 GW output. Any expansion would indicate Microsoft intends to use the Joulent structure as a repeatable template rather than a one-time fix.

Sources