REDMOND, Wash. — Microsoft signed a four-gigawatt geothermal power compact Tuesday with Houston-based developer Fervo Energy to support the company’s AI training compute buildout through the back half of the decade, the company announced in a Tuesday-morning regulatory filing and accompanying press release.

The compact, structured as a fifteen-year offtake agreement with options for two five-year extensions, would deliver geothermal-generated electricity from a series of next-generation enhanced-geothermal-systems sites across central and west Texas to Microsoft data-center campuses currently under development in the same region. The deal’s headline four-gigawatt commitment makes it the largest single geothermal procurement in the corporate-purchasing market by a substantial margin.

A senior Microsoft sustainability executive, in a Tuesday-morning briefing at the company’s Redmond headquarters, said the compact “addresses the question of clean firm power for AI compute on a scale that the existing renewable-procurement market has not been able to deliver.” The executive noted that the deal’s substantive scope had been negotiated over approximately eighteen months and that the company’s principal interest in geothermal procurement had grown as the operational characteristics of large-scale AI training had become better understood.

The deal’s substantive structure includes a first-tranche delivery commitment of one gigawatt by the end of 2028, with the remaining three gigawatts deliverable in roughly six-hundred-megawatt increments through 2032. Fervo Energy will be responsible for the development, construction, and operation of the underlying generating facilities, with Microsoft providing the principal offtake commitment that supports the project’s financing.

Fervo Energy CEO Tim Latimer, in a Tuesday-morning statement, characterized the deal as “the substantive validation of enhanced geothermal as a utility-scale solution for the AI compute build.” Latimer noted that the company’s prior development experience — including a 70-megawatt project in Nevada that achieved commercial operation in 2024 and a 400-megawatt project in Utah currently in advanced development — provided the operational foundation for the Texas expansion.

The compact’s clean-firm character is the principal substantive feature distinguishing it from solar and wind procurement, which have dominated corporate clean-energy purchasing through the past decade. Geothermal power’s twenty-four-hour delivery profile aligns more directly with the operational characteristics of AI training clusters, which require sustained electricity delivery rather than the variable delivery patterns typical of intermittent renewables. The compact addresses the AI sector’s growing emphasis on clean firm power as a structural complement to its renewable-procurement portfolio.

A senior analyst at a major U.S. energy-sector research firm, in a Tuesday-morning client note, said the deal “establishes geothermal as the third substantive pillar of AI sector clean-energy procurement alongside nuclear and large-scale solar.” The analyst noted that the four-gigawatt scale was sufficient to address approximately twenty percent of Microsoft’s projected 2030 AI training compute electricity requirements.

The deal arrives in the context of substantial federal-level regulatory attention to AI infrastructure energy questions. The Treasury Department’s grid-impact disclosure rulemaking published May 14 would impose disclosure obligations on AI training clusters above 200 megawatts, and the California Durazo bill heading to Senate floor consideration this week would impose state-level moratorium provisions on data-center facilities exceeding the same threshold.

A senior Microsoft government-affairs official, contacted Tuesday morning for background, said the compact’s substantive structure had been “thoroughly evaluated” against the emerging federal and state regulatory frameworks and that the company’s overall AI infrastructure buildout was being designed for compliance with the disclosure provisions as they are finalized. The official noted that the company’s broader approach had been to design infrastructure investments for sustained operation under multiple plausible regulatory frameworks rather than for specific currently-final provisions.

The Texas regulatory environment provides relatively favorable conditions for the geothermal buildout. The Texas Railroad Commission, which administers oil-and-gas regulation in the state and has begun extending its substantive authority to enhanced-geothermal operations, has issued operating permits for several geothermal pilot projects on accelerated timelines over the past year. A senior commission official, contacted Tuesday morning for background, said the commission was “supportive of the substantive direction” represented by enhanced geothermal and would continue to develop the regulatory framework as the technology scales.

The compact’s financing structure has been finalized through a combination of project-finance debt, tax-equity investment under the Inflation Reduction Act’s geothermal provisions, and corporate-purchase agreement-backed term-loan financing. A senior Microsoft finance executive, in a Tuesday-afternoon briefing, said the substantive financial structure had been designed to support Fervo Energy’s capital-intensive development program through the multi-year buildout period.

The deal’s substantive implications for the broader corporate-clean-energy market are expected to be substantial. A senior analyst at a major U.S. environmental-policy research organization, in a Tuesday-morning client note, said the substantive scale of the procurement would “establish a substantive precedent” for subsequent AI sector geothermal procurement and would likely catalyze additional development capital toward enhanced-geothermal projects across the western United States.

Other hyperscaler operators have been actively evaluating geothermal procurement options through the past year. Google’s parent Alphabet had announced a 115-megawatt geothermal procurement from Fervo Energy in 2024 covering a Nevada facility, and Meta has signed a smaller geothermal compact covering its Eagle Mountain campus in Utah. Industry observers expect additional announcements of geothermal procurement from major operators over the coming twelve months.

A senior Department of Energy official, in a Tuesday-afternoon background briefing, said the department viewed the Microsoft-Fervo compact as “the substantive operational milestone” the department had been working toward through its geothermal-development initiatives over the past three years. The official noted that the department’s enhanced-geothermal research budget had been increased substantially in the fiscal-year 2026 appropriations process and that additional research funding was expected in the fiscal-year 2027 cycle.

The compact’s first generating facilities are expected to begin commercial operation in early 2028, with Microsoft’s first deliveries from the project scheduled to coincide with the company’s first wave of next-generation AI training facilities currently under construction in the central Texas region.