Black Hills Corp will invest $1.8 billion to power a new Google data center in Wyoming, aiming to add $150 million to its annual net income by 2030. This major project highlights how utility companies are increasingly positioning themselves to meet the massive power demands of AI and technology infrastructure.
Black Hills Corp has announced a significant long-term agreement to supply power to a new Google data center located in Cheyenne, Wyoming. The utility company plans to invest $1.8 billion between 2027 and 2029 to build 564 megawatts of new natural gas generation capacity at its Cheyenne Prairie Generating Station. This project marks a major shift in how utility firms are partnering with big technology companies to handle the surge in electricity usage driven by artificial intelligence.
The agreement is structured to limit the impact on the utility’s existing customer base. Under the terms, Google will cover the full financial costs of the electricity supply, which is designed to protect other ratepayers from price hikes. For Black Hills, the investment is expected to be a major financial driver, with projections showing it could boost the company's annual net income by $150 million by 2030 and generate $2.4 billion in unlevered free cash flow through 2048.
Beyond building new power plants, the company will manage a 2.1-gigawatt private microgrid to ensure the data center has consistent and reliable energy. While the project offers a long-term revenue stream, it also presents challenges for the company's balance sheet. Investors may need to track how Black Hills plans to fund this $1.8 billion capital expenditure. Major projects of this size often require new debt or equity financing, which can affect the company's financial flexibility. Additionally, the project carries typical utility construction risks, such as potential delays or regulatory hurdles regarding the returns the company is allowed to earn on its investments.
This expansion comes at a busy time for the utility provider, which is also working toward a pending all-stock merger with NorthWestern Energy. The successful integration of this merger, alongside the complex build-out for the Google data center, will be key areas for the market to watch. The company’s ability to execute these large-scale infrastructure projects while managing its debt levels and historical cash flow patterns will be essential to realizing the projected financial gains.