Microsoft announced the construction of a new data center campus in Pecos, Texas, in one of the largest single capacity additions in the company’s history. The project is expected to expand Microsoft’s global data center capacity by approximately 2 gigawatts, with the aim of meeting continued customer demand for artificial intelligence and cloud computing services across various sectors and regions.
The project represents a multibillion-dollar investment over the next five to seven years. The company also expects it to support more than 6,000 construction jobs at the peak of construction, in addition to hundreds of permanent operational positions once the campus begins operations. Microsoft believes the investment will add a new industry to the economy of West Texas, building on its previous experience in the region, particularly its operations around San Antonio, where it has operated data centers for nearly a decade.
Expanding Capacity to Meet Demand for Artificial Intelligence
Microsoft said demand for artificial intelligence and cloud services is growing rapidly, from startups developing new applications to governments and healthcare and education institutions modernizing their critical systems. Meeting this demand requires not only increased capacity, but also infrastructure that is reliable, rapidly scalable, and capable of providing stable operating capacity.
The Pecos project will include new data center infrastructure alongside a dedicated on-site power source. The company says Microsoft will fund the power generation facilities and infrastructure needed to serve its operations, and that the capacity coming online in Pecos has been designed to meet its needs without increasing pressure on the energy resources relied upon by the local community.
Commitment to Collaboration with the Local Community
Microsoft says its “community first” approach will guide how the campus is built, owned, and operated. This includes early and ongoing engagement through community meetings, local partnerships, and open communication channels throughout the project, allowing residents to ask questions and provide feedback.
The company also plans to invest in workforce development and support small businesses, with the goal of helping local residents benefit from opportunities associated with the artificial intelligence economy. In the San Antonio area, Microsoft’s Datacenter Academy has partnered with local colleges to prepare students for work in data centers through a $545,000 investment that reached more than 450 students. Across the state, skills development programs such as TechSpark have helped create more than 1,100 jobs and engaged 20,000 Texans in digital skills training.
The company notes that its community support extends to education, digital inclusion, and partnerships with nonprofit organizations. In fiscal year 2024, Microsoft and its employees provided $11 million in cash and $103.3 million in software and cloud technologies to more than 10,000 nonprofit organizations in Texas, in addition to more than 42,000 employee volunteer hours.
Leo Hung, Reeves County Judge and its highest-ranking elected official, welcomed the investment, saying it would create opportunities for local businesses, support workforce development, and strengthen Pecos’s position as a destination for companies seeking to grow and innovate.
Power and Water with a Different Design
Upon beginning operations, the campus will rely on an on-site natural gas power generation facility under an arrangement known as “behind the meter.” The facility will serve the campus directly and independently of the public power grid, incorporating advanced air emissions control systems, such as selective catalytic reduction systems to reduce nitrogen oxide emissions.
Microsoft later expects to connect the power facility and data center to the broader grid, making them part of the regional power system in coordination with utilities and local authorities. The company is also building on the 4.7 gigawatts of renewable electricity it has already contracted for use in Texas, noting that the project’s design allows capacity to be adjusted over time as demand changes.
Microsoft plans to use closed-loop cooling systems, which it says will significantly reduce water needs. According to the company, the system will require only an initial water charge when operations begin, with no additional consumption during steady-state operations, making total water use over the data center’s life cycle a small fraction of the annual consumption of a typical fast-food restaurant. The company will also use non-potable water wherever possible to reduce reliance on freshwater sources.
Microsoft links these plans to its commitment to becoming water positive by 2030, pointing to its contribution near San Antonio to protecting more than 1,500 acres in the Edwards Aquifer recharge zone, a vital water source for more than two million people in Texas.