Location, Location, Location
Morning Energy (Originally published June 23, 2026)
We have a house on the market right now, so I have heard the realtor’s first rule on repeat. Location, location, location. In power that rule splits into three different words: location, fuel, and delivery. Each carries its own premium now, and owning the resource alone keeps getting marked down. Cheap Reasoning made a version of this case in May, that value accrues to whatever is scarce, deliverable and contractable. The Chevron deal this week put a price on it.
Start with location. Chevron (CVX) signed a 20-year deal to power a Microsoft data center in West Texas, building roughly 2.5 GW of dedicated gas generation on 2,000 acres in Reeves County, behind the meter and off the public ERCOT grid. On June 18 FERC pointed the rules the same way, issuing show-cause orders to all six grid operators and tilting toward colocated projects. The good address now sits next door to generation, and EIR puts AEP, Oncor and NEE in the best zip codes to capture it.
Then fuel. The Chevron plant burns gas from the company’s own Permian fields, a short hop from wellhead to turbine to server. Fervo (FRVO) is the other side of that coin, introducing geothermal as alternative fuel. We see it priced to perfection at $35.09 against an EIR fair value of $18.10 even after granting the technology works. Its rock is plenty hot. Converting that heat to steady megawatts is the hard part. The plan calls for about 25 power units a year, four times what the entire global ORC industry ships in a typical year, near 300 MW, or five to six units.
Then delivery, which is where the tenants separate. Chevron has already lined up the hardware, a majority of the generation from GE Vernova (GEV) turbines with the balance from Caterpillar’s (CAT) Solar Turbines, the exact equipment everyone else is waiting in line for. Crusoe is the counterexample. Black Hills confirmed it walked from Project Jade, a 1.8 GW campus in Cheyenne, leaving Black Hills to build directly with a customer that had already sunk more than $200 million into milestones. EIR’s ERCOT Batch Zero work scores all 197 large-load projects in the queue on exactly this, real tenant or tourist.
The grid has turned into a property market. Location, fuel, delivery. You get paid for the address, the megawatts and the ability to show up. The resource and the announcement are table stakes now. The deal closes for the one who shows up with the turbines.
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