Powering the next wave of AI: Expanding capacity with our new datacenter in Pecos

Today, Microsoft is announcing one of the largest single capacity additions in our history. In Pecos, Texas, we will build a new datacenter campus, expanding our global datacenter capacity by approximately 2 gigawatts (GW) to meet strong and sustained customer demand for AI and cloud services across industries and regions. Beyond the technology, this is a major investment in West Texas. We expect to support over 6,000 construction jobs at peak build-out and to create hundreds of permanent operational jobs that will add a new industry that supports the local economy when the new datacenter campus is operational.

This multibillion-dollar datacenter campus investment over the next five to seven years reflects both the immediate needs we are seeing today and the future trajectory of AI and advanced compute, where reliable infrastructure at scale is essential to unlocking the next generation of innovation. This expansion is grounded in a simple principle: we build where our customers need us, and we build for the long term. We have a track record of doing exactly that in Texas. In the San Antonio region, where we have operated datacenters for nearly a decade, our investment has generated billions of dollars in local economic activity and supported thousands of local jobs. We are committed to delivering the same lasting value in Pecos.

Meeting customer demand with reliable infrastructure

Customer demand for AI and cloud services continues to grow rapidly, from startups building new applications to governments, healthcare providers and educational institutions modernizing critical systems. Meeting this demand requires not only more datacenter capacity, but capacity that is predictable, resilient and able to scale quickly.

The datacenter campus in Pecos enables us to deliver on that need. By pairing new datacenter infrastructure with dedicated energy supply located onsite, we can bring capacity online at the pace our customers require while maintaining operational reliability. Critically, the energy infrastructure required to power this datacenter is being funded by Microsoft. We are paying for the new generation and supporting infrastructure needed to serve our own operations. The capacity we bring online in Pecos is built to meet our demand, ensuring that our growth strengthens, rather than strains, the energy resources the community relies on.

Putting Community First in West Texas

While meeting customer demand is critical, how we grow is equally important. At Microsoft, our Community First approach guides us where we build, own and operate our datacenters, including our new datacenter campus in Pecos.

This work begins with a simple commitment: we show up as a lasting partner, not just a builder of infrastructure.

As shared in our letter to the community in Pecos and Reeves County, we are approaching this project as a new neighbor, with a focus on partnership, transparency and listening. We recognize that earning trust takes time, and we are committed to ongoing engagement with local residents, leaders and organizations as this project moves forward. The region’s elected leadership has welcomed the investment. Reeves County Judge Leo Hung, the county’s top elected official, said:

“We are excited to welcome Microsoft to Pecos. This investment reflects the strength of our region and its ability to support innovation at a global scale. It will create new opportunities for local businesses, support workforce development and reinforce Pecos as a place where forward-looking companies can grow and thrive.”

Our Community First approach in this region focuses on three priorities:

1. Listening and engaging early
We engage early and often through community meetings, local partnerships and ongoing communication across the life of the project, which gives residents multiple ways to ask questions and share feedback, just as we have in other Texas communities.

2. Creating local economic opportunity
This project is built to drive lasting regional growth. As well as supporting thousands of construction jobs, the hundreds of permanent operational roles will add a new industry to the local economy. We will also invest in workforce development and small-business support. We are focused on ensuring that local residents are prepared to take advantage of the opportunities created by the AI economy. This is part of a sustained commitment to the region, building on more than a decade of experience in Texas, including our operations in San Antonio:

Near San Antonio, where we have operated for nearly a decade, our Datacenter Academy partners with local colleges to prepare students for datacenter careers, including a $545,000 investment that has already reached more than 450 students. Statewide, workforce programs like TechSpark have helped create more than 1,100 jobs and engaged 20,000 Texans in digital skilling. We will bring the same model of local hiring, training and small-business support to West Texas.

3. Partnering for lasting community impact
Our investment reaches well beyond the datacenter, into education, digital inclusion and nonprofit partnerships. In fiscal year 2024, Microsoft and its employees contributed $11 million in cash and $103.3 million in donated software and cloud technology to more than 10,000 Texas nonprofits, alongside 42,000+ employee volunteer hours. In Pecos, we will direct that same commitment toward the priorities that matter most to West Texas residents.

Advancing sustainability through innovation

As we expand our datacenter footprint, we remain equally committed to building and operating our infrastructure in ways that reduce environmental impact.

Energy and emissions
This includes improving energy efficiency across our infrastructure, from compute to hardware, and building on the 4.7 GW of renewable electricity we have already contracted for our electricity use in Texas, advancing carbon-free electricity through renewable generation and other technologies. This investment is intentionally designed with flexibility in mind, allowing Microsoft to adjust capacity over time as demand evolves.

At launch, the datacenter campus will operate with a co-located natural gas power facility, an arrangement known as “behind the meter.” This serves the campus directly and independently of the public grid, so this demand does not take from the current grid. The plant’s design will integrate state-of-the-art air emissions controls, such as Selective Catalytic Reduction systems to lower nitrogen oxide emissions. Over time, we anticipate connecting the power facility and the datacenter to the broader grid and becoming part of the regional energy system, working in close coordination with utilities and local authorities. We will continue to drive additional improvements in environmental performance in line with our corporate commitments. This evolution reflects our long-term mindset in the region: as we grow, we intend to contribute to a more resilient and reliable grid that delivers value not only to our operations, but to the wider West Texas community.

Water stewardship
We plan to deploy closed loop cooling systems, which significantly reduce water requirements. This approach is expected to limit water usage by requiring only an initial charge of the cooling system at the start of operations, with no additional water consumption during steady-state operation. As a result, the total lifecycle water use of this datacenter is only a fraction of that consumed annually by a typical fast-food restaurant.

We are also designing our operations to minimize reliance on freshwater sources by utilizing nonpotable water where possible, helping to reduce pressure on shared community resources.

This builds on the way we approach water stewardship across Texas. Near San Antonio, Microsoft has helped fund the permanent protection of more than 1,500 acres in the Edwards Aquifer recharge zone — safeguarding a critical water source for over two million Texans — as part of our broader commitment to be water positive by 2030. In Pecos, we will continue to prioritize responsible water use, efficient design and close coordination with local authorities as our operations grow, and we will share our progress with the community over time.

Building for the future, responsibly

The datacenter in Pecos represents an important step forward in how we build infrastructure for the AI era by combining capacity at scale, energy and a commitment to responsible growth.

But just as importantly, it reflects how we do this work: in partnership with communities, with an enduring mindset and with a focus on creating shared value.

As we move forward, we will continue to engage closely with the community in West Texas, provide updates on our progress and ensure that this investment delivers lasting benefits for both our customers and our neighbors. Community members can learn more at Open letter to Pecos and Reeves County – Microsoft Local.

We look forward to building that future together.

Noelle Walsh leads the organization that powers the global Microsoft Cloud. She oversees the company’s physical cloud infrastructure and operations, with a charter focused on safety, security, availability, sustainability and competitive infrastructure growth — bringing decades of global operational leadership.

Tags: datacenters