$1.8 Billion of New Gas Generation and a Private Microgrid: Black Hills Will Power Google's 2.7 GW Cheyenne Data Center Through 2048

Black Hills Corp. (NYSE: BKH), the Rapid City, South Dakota-based utility, has signed definitive agreements to serve a planned Google data center in Cheyenne, Wyoming, under terms that run through 2048. The company disclosed the contracts — a Large Power Contract Services Agreement and a Generation Facilities Agreement, effective September 30, 2026 — on October 6, and its shares rose about 5% in after-hours trading.

The project is sized around a total resource mix of 2.7 gigawatts, including reserve margins. Black Hills will provide up to 590 MW of grid-connected energy service and manage roughly 2.1 GW of Wyoming-based, third-party contracted resources through a privately managed microgrid operated under the utility's Large Power Contract Service tariff. To back its share of the load, Black Hills plans to invest $1.8 billion between 2027 and 2029 to build 564 MW (nameplate) of new company-owned natural gas generation at its existing Cheyenne Prairie Generating Station, held through a non-regulated affiliate; the remaining 26 MW comes from market purchases and retail utility service.

Energy service is scheduled to begin in late 2027, with demand ramping to the project's peak load in 2030. Black Hills projects the deal will contribute approximately $150 million of net income in 2030 and generate about $2.4 billion of unlevered free cash flow through 2048, net of the $1.8 billion generation investment — company projections that depend on construction and the demand ramp holding to schedule. Google has already provided $399 million in refundable advances for long-lead-time equipment, which Black Hills plans to repay by June 30, 2027.

The contracts are built around an explicit promise: no cost shifting to other customers. "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," said Linn Evans, Black Hills' president and CEO. The package includes early-termination protections, cost pass-through mechanisms, full recovery of the generation investment to prevent stranded-asset risk, and financial assurance requirements.

Groundwork has been laid for months. Wyoming regulators approved the Certificate of Public Convenience and Necessity for the Robinson substation in May 2026, Black Hills filed the industrial-siting permit for the Cheyenne Prairie expansion in July and cleared its air-quality permit in August, and a CPCN application for the South Cheyenne Transmission Expansion went in during September, with another transmission filing expected in the fourth quarter, according to trade coverage of the company's regulatory calendar.

The agreement lands in the same week as Google's landmark deal with Constellation Energy — a 20-year PPA over 890 MW of new nuclear capacity from reactor uprates plus a separate 15-year, 2,700 MW supply agreement, backed by more than $4.3 billion of investment. Taken together, the two packages put Google's publicly announced US power commitments above 6 gigawatts. It also arrives as Black Hills works through its own structural shift: an all-stock merger with NorthWestern Energy announced in August that would create a combined $15.4 billion utility.

The takeaway: the AI power scramble has moved from buying electricity to financing generation itself. A regional utility is now underwriting a 22-year, multi-billion-dollar buildout for a single customer, and the hyperscaler is effectively acting as project financier, anchor tenant and credit backstop at once. The model keeps household bills insulated on paper — the real test will be whether regulators, gas supply and construction schedules cooperate through 2030.