Kodiak Gas Services Expands Data Center Power Portfolio with 76 MW West Texas Agreement
Kodiak Gas Services, Inc. has announced a new long-term agreement to provide 76 megawatts of behind-the-meter, baseload power capacity to a data center in West Texas, strengthening the company’s position in the rapidly developing market for dedicated power solutions supporting large-scale computing infrastructure.
Under the six-year agreement, Kodiak will supply the data center with approximately 40 reciprocating natural gas-fueled generation units, together with the associated balance-of-plant infrastructure required to support power generation and delivery. The project is designed to provide reliable, dedicated electricity directly to the data center, allowing the facility to operate with an on-site baseload power supply.
Deployment of Kodiak’s power generation assets is expected to begin during the fourth quarter of 2026 and continue through the first quarter of 2027. Revenue recognition for the project is anticipated to begin in the first quarter of 2027 as the generation capacity is brought into service.
The agreement represents another step in Kodiak’s strategy to expand its power generation business alongside its established natural gas compression operations. The company is increasingly targeting opportunities where natural gas-fired generation can provide dependable electricity for energy-intensive facilities, including data centers supporting advanced computing and artificial intelligence applications.
The West Texas project involves a data center operator that is contracted with an investment-grade-rated hyperscaler. The data center lease also has a GPU designer serving as guarantor, providing additional commercial support for the project.
For Kodiak, the agreement is significant because it combines a substantial power requirement with a location that is already within the company’s established operating footprint. The company said the project’s size also aligns with the power generation fleet it currently has available for deployment.
“Today’s announcement represents an ideal situation for us; the size fits our available power fleet, the location is within our established operational footprint in West Texas, and the customer has strong commercial and financial support,” said Mickey McKee, Kodiak’s President and Chief Executive Officer.
McKee added that the agreement marks Kodiak’s second long-term contract to supply primary power to a data center. With the latest contract, approximately half of Kodiak’s current power portfolio is now covered by long-term power agreements.
The development comes as demand for electricity from data centers continues to increase. Facilities supporting cloud computing, artificial intelligence, high-performance computing and other digital services require large and dependable quantities of electricity. As power demand grows, data center developers and operators are exploring a range of supply arrangements, including on-site and behind-the-meter generation.
Behind-the-meter generation can allow a facility to produce electricity close to where it is consumed rather than relying entirely on power supplied through the broader electricity grid. For large data centers, this approach can provide an additional source of capacity and support operations in locations where grid availability or transmission capacity may be constrained.
Natural gas-fired reciprocating engines can be deployed in modular configurations, allowing generation capacity to be scaled according to customer requirements. In the West Texas project, Kodiak plans to deploy approximately 40 generation units to provide the contracted 76 MW of baseload capacity.
The agreement also supports Kodiak’s broader expansion plans for its power generation business. The company has established a target of reaching two gigawatts of power generation capacity by 2030, reflecting its expectation that demand for dedicated power solutions will create additional commercial opportunities.
Kodiak said it currently has a robust pipeline of potential power projects. The company expects its existing operating experience, available generation fleet and track record in supplying behind-the-meter power to data centers to support further contracting activity.
“We have a robust commercial pipeline of power projects, which, combined with our demonstrated track record of operational performance in supplying behind-the-meter power to data centers, provides a clear path toward contracting additional power capacity,” McKee said.
The company is also positioning its power business to benefit from the intersection of natural gas infrastructure and growing electricity requirements from digital infrastructure. Data centers can require continuous electricity supplies, making reliability and availability important considerations when developers evaluate power solutions.
Kodiak’s existing operations in West Texas provide an additional operational advantage for the newly announced project. By deploying generation assets within an area where it already maintains an established presence, the company can build on its existing operational capabilities and regional experience.
The six-year term provides Kodiak with a long-duration contractual arrangement while giving the data center operator access to dedicated baseload generation capacity. The structure also adds another contracted project to Kodiak’s expanding power portfolio.
The project’s planned deployment schedule begins in the fourth quarter of 2026, with activity expected to scale into the first quarter of 2027. Kodiak anticipates beginning revenue recognition in the first quarter of 2027 as the project progresses into operation.
The agreement follows Kodiak’s first long-term data center power contract and increases the portion of its power portfolio supported by long-term arrangements. According to the company, approximately half of its current power portfolio is now under such contracts.
As demand for data center capacity expands, Kodiak is seeking to establish additional long-term power relationships while advancing toward its 2030 generation-capacity target. The company expects its commercial pipeline and operational experience to provide opportunities to add further generation capacity in markets where reliable electricity is increasingly important to digital infrastructure.
With the West Texas agreement, Kodiak is combining natural gas-fired generation, behind-the-meter power delivery and its existing regional operating footprint to serve a major data center customer. The six-year contract represents another expansion of the company’s power business and contributes to its longer-term strategy of building a larger portfolio of dedicated generation capacity for data centers and other customers.
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