Amazon backs 7.65 GW Texas gas plant, most polluting in US

Amazon's first off-grid AI data center in West Texas will be powered by a 7.65 GW gas plant permitted to emit 33 million tons of CO2 annually — more than any single source in the US.

"Amazon believes in paying the full costs of powering our operations," a company spokesperson said. "Our new planned data center campus in Pecos County does just that: it's powered by new on-site generation that won't raise electricity costs for Texas families."

The plant, developed by Pacifico Energy, will use 35 turbines to generate 7.65 GW entirely disconnected from the Texas grid, at least initially. The state issued an air permit in January allowing 33 million tons of CO2 emissions — more than the country's largest coal plant. Pacifico plans up to 750 MW of on-site solar and 1.8 GW of battery storage at the site. Amazon said it has enabled 10 GW of carbon-free energy across 40 projects in Texas for its existing operations.

The project marks Amazon's first major bet on off-grid power, joining Microsoft, Google, and Meta in a wave of behind-the-meter gas plants. Data center developers have announced nearly 60 such projects totaling 90 GW since early 2025, as AI compute demand outpaces grid interconnection timelines.

AWS grew at its fastest rate in 18 quarters in the second quarter, CEO Andy Jassy told investors on July 30, adding that the company has more demand for compute than it can supply — a mismatch expected to persist well into next year. That capacity crunch is driving hyperscalers to bypass the grid entirely.

Microsoft partnered with Chevron in June to build a 2 GW off-grid gas-powered data center campus near Pecos, located 30 miles west of GW Ranch. Meta has also invested significantly in natural gas power this year. Constellation Energy, the largest US nuclear operator, signed 20-year power purchase agreements with Microsoft and Meta for nuclear supply, while Vistra entered a 20-year deal with Meta for 2,600 MW from three nuclear plants.

Amazon's GW Ranch project uses non-potable, brackish groundwater — a source not suitable for irrigation or drinking water. The company said it remains committed to net-zero carbon emissions by 2040 under The Climate Pledge, though the gas plant would put those goals further out of reach as its emissions are already rising quickly.

90 GW of Behind-the-Meter Projects Reshape Power Markets

The off-grid trend extends beyond Texas. Amazon confirmed it is in talks with developers of a 4.5 GW gas power plant in Homer City, Pennsylvania. When that project was first announced, it was billed as the largest gas power plant in America — now it's just one of many giga-scale proposals across the country.

Constellation, Vistra, NextEra Stand to Gain

Amazon's pivot to on-site gas generation reflects the scale of AI-driven power demand. Modern AI hardware with high-density GPU clusters requires 20 kW to 100 kW per server rack, compared with 5-10 kW for traditional cloud workloads. Grid operators in key regions face multiyear interconnection backlogs.

For investors, the trend favors merchant power producers with large gas and nuclear fleets. Constellation Energy, trading at roughly 20 times forward earnings after a 35 percent decline from its 52-week high, and Vistra, with 44,000 MW of capacity, are positioned to capture demand from hyperscaler PPAs. NextEra Energy, with a 35.1 GW renewable and storage pipeline, is building 2 GW of gas generation for a $100 billion AI data center campus in western Kentucky.

Amazon shares face a tension: the gas plant could attract regulatory scrutiny and ESG backlash, but it also reflects the company's aggressive infrastructure expansion in the AI arms race. The company's stock has been supported by AWS growth, with analysts pricing in continued acceleration as capacity constraints ease.

This article is for informational purposes only and does not constitute investment advice.