Black Hills to Build $1.8 Billion in Gas Power for Planned Google Data Center in Wyoming

Black Hills Corp. has signed agreements to supply electricity for a planned Google data center in Cheyenne, Wyoming, committing to build $1.8 billion in natural gas generation under a deal running through 2048. The company said the center could begin receiving service in late 2027 and reach full planned demand in 2030. Construction of the data center remains ahead.

Black Hills is a Rapid City, South Dakota-based electric and natural gas utility serving 1.37 million customers across eight states. A company affiliate plans to build and own new generating units at the existing Cheyenne Prairie Generating Station, while Black Hills coordinates electricity from other suppliers for Google through a privately managed local power system, often called a microgrid.

“Importantly, these agreements and supporting regulatory mechanisms are structured so that Google bears all costs associated with serving the planned data center throughout the life of the project,” Black Hills President and CEO Linn Evans said in an Oct. 6 announcement filed with the SEC. Black Hills says the contracts will recover the cost of serving Google without passing it to existing customers. The filing summarizes the agreements’ payment and early-exit protections.

Black Hills describes 2.7 gigawatts of power resources for the project, including reserves. Black Hills would supply up to 590 megawatts of service connected to the wider grid, including 564 megawatts of new gas generation measured as nameplate capacity. Purchased power and utility service would supply the remaining 26 megawatts. The company would also manage about 2.1 gigawatts from turbine plants and fuel cells owned by unnamed third parties in Cheyenne. Those resources would operate through the privately managed microgrid described in the filing.

Michigan regulators on Oct. 1 approved DTE Electric’s contracts to serve another planned Google campus, in Van Buren Township, with about 1 gigawatt of maximum demand. DTE says Google will pay for new power supply and grid equipment. Attorney General Dana Nessel challenged the minimum payment and exit terms during the review. The approved contracts require Google to pay for at least 80 percent of its contracted demand and, if it leaves early, at least 15 years of minimum charges. Black Hills says its Cheyenne deal likewise shields existing customers, but uses company-built gas generation alongside power managed for Google.

Kentucky Power and TeraWulf have proposed a power contract for a data center in Grayson, Kentucky, that promises $100 million in residential bill credits over 10 years. TeraWulf would also cover some financing costs for new generation. Kentucky Power said it plans to file the amended contract with state regulators later this year. The first 500-megawatt phase is scheduled to begin ramping up in 2028. Moving the second phase up to 2029 from 2030 is subject to regulatory approval and Kentucky Power’s construction schedule.

Black Hills expects to earn a return on its $1.8 billion plant investment starting when construction begins in 2027. It also expects fees for coordinating the outside power supplies, grid operations and reliability services. The fees rise with a contracted minimum peak load as the project ramps up. The agreements took effect Sept. 30, 2026, and run through 2048.

Black Hills projects about $150 million in net income from the project in 2030 and about $2.4 billion in cash flow through 2048 after the $1.8 billion plant investment, excluding financing costs. Those forecasts depend on regulatory approvals, construction, financing and performance under the contracts. The company expects to finance the plants with project cash flow, debt and potentially other funding. The plant investment is scheduled for 2027 through 2029. Google advanced $399 million to order equipment with long lead times; Black Hills expects to repay the refundable advances by June 30, 2027.

The agreements let Black Hills pass through certain cost increases and recover its generation investment over the contract term, the company says. They also include collateral and financial assurance requirements and early-termination provisions. A plant built for one customer could leave unpaid costs if that customer scales back or leaves.

Black Hills says an air permit for the plant expansion was approved in August and a certificate for the Robinson substation in May. It filed for an industrial siting permit in July and for a South Cheyenne transmission expansion in September. The company also filed in June for a mechanism to assign transmission costs tied to large customers. A further Wyoming transmission filing is planned for the fourth quarter. That work would add spending beyond the $1.8 billion generation plan.