U.S. utility company Black Hills announced on Tuesday, October 6, that it had signed agreements to supply electricity to a proposed Google data center in Cheyenne, Wyoming. The company will spend $1.8 billion between 2027 and 2029 on new power generation, as tech companies race to secure electricity for energy-hungry AI data centers.
What’s in the agreement?
564 megawatts: The new generation capacity the company will build for the Cheyenne project.
2.7 gigawatts: The size of the project’s resource mix, including reserve margins.
Timeline: Electricity deliveries are set to begin in late 2027, with the load expected to peak in 2030.
From the grid: The company will supply up to 590 megawatts, most of it from a new gas plant at the Cheyenne Prairie station.
Private network: It will manage about 2.1 gigawatts of third-party resources in Wyoming through a privately operated microgrid.
Expected returns: The South Dakota-based company expects the project to add about $150 million to its net income by 2030.
The key question: Who pays?
The agreement requires Google to pay the full cost of electricity for the data center, so those expenses won’t be passed on to the utility’s other customers. That’s exactly what people worry about when massive data centers are built: rising electricity demand could show up on ordinary households’ bills.
Google isn’t stopping there
Google also signed a separate 3.59-gigawatt energy deal with Constellation Energy, which will invest more than $4.3 billion in its fleet. This shows that major tech companies are increasingly signing long-term contracts directly with power companies rather than waiting for the grid to catch up.
Company background
Last August, Black Hills agreed to merge with NorthWestern Energy in an all-stock deal, creating a regulated electric and gas utility valued at $15.4 billion.
What does it mean?
The news points to a shift in the relationship between tech companies and power companies. For utilities, this is a major source of growth. For consumers, the question is: Do agreements like this really protect them from added costs? There’s also the question of where the energy comes from, since some of the supply will come from a new gas plant.
One thing to keep in mind: The data center is still only proposed, and the figures will hold if the project actually goes ahead.
The bottom line
The AI race is no longer just about chips and models—it’s about electricity. The companies that secure power on terms that shield them from added costs will win the next round. What do you think: Is making the tech company cover the full cost enough, or are there other risks?
(This article is for informational purposes and is not investment advice.)