Google(GOOGL.US) and AES(AES.US) sign a 20-year "co-located power generation" agreement to secure power supply for Texas data centers

American energy company AES (AES.US) and tech giant Google (GOOGL.US) have officially signed a 20-year power supply agreement to provide long-term, stable energy support for Google’s new large-scale data center in Wilbarger County, Texas.

According to the details announced by both parties, the project will adopt an innovative “on-site power generation” model. AES plans to directly build and operate dedicated power generation facilities near the Google data center. This approach can significantly reduce reliance on and pressure on the local public grid, while improving energy transmission efficiency.

In addition to the 20-year power purchase agreement, AES will also take on comprehensive energy management responsibilities for the campus, including land acquisition, grid interconnection agreements, and shared power infrastructure construction. The two sides also signed a long-term energy management agreement, under which AES will provide retail services, cost optimization, and related operational support for the campus. “Our expanded partnership with Google demonstrates how AES accelerates data center development by delivering large-scale electrified land and energy,” said Andres Gluski, President and CEO of AES. He noted that the company has signed nearly 12 gigawatts of energy agreements with data center clients, of which 9 gigawatts are direct power purchase agreements with large-scale cloud service providers.

This collaboration comes amid a surge in demand for computing power driven by artificial intelligence technology. Google is ensuring its energy security in the emerging AI park in Texas through this project. Google stated that the new data center in Wilbarger County will form a powerful computing matrix together with its existing Midlothian and Red Oak campuses, supporting the expansion of global cloud services and AI operations.

Furthermore, both parties emphasized that by increasing new clean energy capacity, this partnership will not only meet the energy needs of the tech giant but also help protect local energy affordability, minimizing potential negative impacts on Texas residents’ electricity bills.

Market response to this news was positive, with AES stock rising over 2% in pre-market trading on the day the agreement was announced.