Black Hills Corp. (NYSE: BKH), headquartered in Rapid City, S.D., announced on Oct. 6, 2026, that it has entered definitive agreements to supply energy serviceinto to a planned Google data center in Cheyenne, Wyoming.

Agreements locked in for a 2.7 GW resource mix

The agreements run through 2048 and consist of two negotiated contracts: a Large Power Contract Services Agreement (LPCSA) and a Generation Facilities Agreement (GFA). The data center is expected to begin taking energy service in late 2027 and to reach its peak load in 2030.

Supporting the plan will be a total resource mix of 2.7 gigawatts, including reserve margins, a figure that does not count any additional transmission system expansion investments the company may pursue.

How the 590 MW of grid-connected service will be delivered

Under the contracts, Black Hills will provide up to 590 megawatts of grid-connected energy service through company-owned generation and market energy.

The company will also manage the output of roughly 2.1 GW of Wyoming-based, third-party contracted resources via a privately managed microgrid operating under the company's Large Power Contract Service (LPCS) tariff.

The grid-connected portion arrives through two channels. Through a non-regulated affiliate, Black Hills will build and own 564 megawatts of nameplate natural gas generation capacity at its existing Cheyenne Prairie Generating Station (CPGS) site.

The remaining 26 megawatts of the 590 MW commitment will come from market energy purchases and retail utility service supplied under the company's applicable industrial tariff.

The announcement did not identify the owners of the third-party resources, or the composition of the 2.1 GW portfolio beyond its Wyoming location and contracted status.

USD 1.8 billion of generation capital and the earnings ramp

Black Hills intends to spend USD 1.8 billion between 2027 and 2029 to construct the 564 MW of company-owned generation.

The company expects to begin earning a return on that investment when construction starts in 2027.

Microgrid management fee (MGMF) revenue is anticipated to begin in late 2027 and grow according to a contractually defined ramp schedule in the LPCSA. The MGMF compensates Black Hills for coordinating grid operations, reliability services, and energy dispatch across the contracted resources and market energy purchases serving the data center, at a negotiated rate based on a contracted minimum peak load beginning in 2027 and rising through the ramp period.

At the project's peak load in 2030, Black Hills expects approximately USD 150 million of net income. Beyond 2030, and as contracted, the company will continue to earn MGMF revenue and a return on its capital investment, with the generation assets fully depreciated by 2048.

Over the contracts' life, the project is expected to generate approximately USD 2.4 billion of unlevered free cash flow, net of the USD 1.8 billion generation capital investment.

Black Hills said this cash flow will meaningfully strengthen its financial profile, support a strong balance sheet, provide significant flexibility to finance the near-term investment, and create substantial long-term capital allocation flexibility.

Financing plans and USD 399 million from Google

The USD 1.8 billion generation investment is expected to be financed through a combination of project-generated cash flow, debt, and other financing alternatives.

Black Hills is evaluating a range of options with a focus on earnings accretion while maintaining its solid investment-grade credit ratings.

The company pointed to strong cash flow, contractual pass-through of debt costs, cash returns on the investment during construction, and a risk-adjusted return on capital as giving it substantial flexibility in determining the optimal financing mix.

Under the parties' generation reservation agreement, Google has provided Black Hills with USD 399 million of refundable advances for the procurement of long lead-time equipment. The company expects to reimburse those advances by June 30, 2027.

Protections designed to shield existing customers

The agreements are structured so that the costs of serving the planned data center do not shift to existing retail customers. According to Black Hills, the contracts provide the company with long-term revenue certainty and include multiple protections for customers and shareholders across the 2048 term.

Cited base retail customer protections include cost pass-through mechanisms, described as contract structures that protect customers from data-center-related costs while protecting returns from inflation, interest rate volatility, and other cost pressures.

Leadership on cost allocation and Wyoming growth

Linn Evans, president and CEO of Black Hills Corp., said the company is "pleased to support Google's planned investment in Wyoming while remaining firmly committed to providing safe, reliable, and cost-effective service to every customer." He added, "The agreements demonstrate how innovative energy solutions can support economic growth while ensuring existing customers are protected."

Evans emphasized the cost allocation structure, noting that the agreements and supporting regulatory mechanisms are arranged so that Google bears all costs associated with serving the planned data center throughout the life of the project.

He said the company expects the project to create jobs, strengthen regional infrastructure, and contribute to Wyoming's long-term economic development.

A hybrid of regulated and non-regulated structures

The Cheyenne arrangement blends regulated-style utility service, the 26 MW of retail industrial tariff service, with non-regulated elements, namely the affiliate-owned natural gas generation and the privately managed microgrid coordinating 2.1 GW of third-party Wyoming-based contracted resources.

Earnings from the project tie to milestones starting in 2027, when construction begins and both the return on the generation investment and MGMF revenue are contracted to start contributing, continuing through the 2030 peak load and the full depreciation of the generation assets by 2048.