Black Hills Corp. has signed long-term agreements to supply Google’s planned data center in Cheyenne, Wyoming, turning one of the utility’s largest prospective data-center opportunities into a contracted investment expected to materially expand its earnings base by the end of the decade.
The utility plans to invest $1.8 billion from 2027 through 2029 in new natural-gas generation while providing Google with as much as 590 megawatts of grid-connected energy service. Black Hills will also manage roughly 2.1 gigawatts of third-party contracted resources through a private microgrid, creating a total resource mix of approximately 2.7 GW including reserve capacity. Service is expected to begin in late 2027 and ramp toward peak demand in 2030.
Black Hills expects the project to contribute approximately $150 million of net income in 2030, a substantial addition for a company that generated $169.2 million of GAAP net income available to common shareholders during the first six months of 2026. The company also projects roughly $2.4 billion of cumulative unlevered free cash flow through 2048 after accounting for the $1.8 billion generation investment, although those estimates depend on the project reaching its planned scale, regulatory approvals and successful construction.
Shares of Black Hills rose about 4.7% in after-hours trading Tuesday following the announcement, after finishing the regular session at $70.74. The reaction reflects how much the agreement could change the utility’s growth profile if the project develops on schedule: data-center demand that had previously represented potential upside is now tied to contracts running through 2048.
A Large Data-Center Bet Without the Usual Customer Cost Exposure
Black Hills’ planned investment centers on 564 MW of new company-owned natural-gas generation at its existing Cheyenne Prairie Generating Station. The generation will be owned through a nonregulated affiliate, while another 26 MW of the 590 MW grid-connected portion will come from market purchases and utility service. The larger portion of Google’s electricity requirements will come from third-party resources managed by Black Hills rather than generation the company must finance and own itself.
The structure is important because the economics extend beyond earning a return on the new power plants. Black Hills will collect microgrid-management fees for coordinating reliability, dispatch and grid operations across the third-party resource portfolio, with those fees scheduled to begin in late 2027 and rise as the data center’s contracted load ramps. Black Hills also expects to begin earning a return on its generation investment when construction starts in 2027 rather than waiting until the facilities are fully completed.
At the same time, the agreements are designed to keep the project’s costs away from Black Hills’ existing retail customers. Google is responsible for the costs associated with serving the data center, while contractual provisions address inflation, interest-rate changes, stranded generation assets and early termination. Black Hills said the generation agreement provides for recovery of the full capital investment over the contract term, reducing the risk that other customers would ultimately be responsible for facilities built specifically for the large load.
That protection is particularly relevant as utilities across the U.S. confront increasingly large electricity requests from data-center developers. For Black Hills, the Cheyenne project is considerably larger than its existing Wyoming electric system: Wyoming Electric recorded a record customer load of 439 MW in July, up 16% from its June 2025 peak. The Google project therefore represents a step-change in demand rather than an incremental addition to the existing system.
Financing Becomes the Next Major Test
Black Hills still has to finance and construct the $1.8 billion generation program. Management expects to use a combination of project cash flow, debt and other financing alternatives, with the company emphasizing that the financing structure will be designed to preserve its investment-grade credit profile and support earnings accretion.
Google has already provided $399 million of refundable advances to secure long-lead-time generation equipment, up from $285 million at the end of June and $377 million under an amended agreement disclosed in July. Black Hills expects to repay those advances by June 30, 2027, meaning the company will eventually need to replace that temporary customer funding as the larger capital program moves forward.
The scale of the project also changes Black Hills’ previous capital outlook. In February, management outlined a $4.7 billion investment program for 2026 through 2030 and said its financial plan incorporated about 600 MW of data-center growth by 2030, driven primarily by Microsoft expansion and Meta’s planned AI data center. The 1.8-GW Cheyenne opportunity was considered potential upside rather than part of that base plan.
The definitive Google agreements make at least part of that upside much more tangible. They also arrive while Black Hills is pursuing its all-stock combination with NorthWestern Energy, another transaction that could reshape the company’s size and capital requirements. Black Hills said in August that all major merger approvals had been obtained except from the Montana Public Service Commission, with closing targeted by the end of 2026.
Regulatory and Construction Work Still Remains
The data-center project is further advanced than it was earlier this year, but the announced earnings and cash-flow figures remain forecasts rather than secured financial results. Black Hills has received approval for the Robinson substation and an air-quality permit covering expansion of the Cheyenne Prairie site, while an industrial siting permit was filed in July. Additional transmission investments are also expected, including projects that are not included in the announced $1.8 billion generation figure.
Black Hills has filed for a mechanism that would directly recover transmission costs from large customers benefiting from those facilities, and it is pursuing additional transmission approvals in Wyoming. Those investments could create further capital opportunities beyond the generation program, but their eventual size and returns will depend on regulatory outcomes and the broader development of large-load demand in the region.
The project therefore gives Black Hills something utilities rarely receive from a single customer: a long-duration source of load growth paired with substantial new infrastructure investment and contractually defined management revenue. The economic opportunity is large enough that management’s estimated $150 million of 2030 net income would represent a meaningful expansion of the company’s existing earnings base.
Execution now becomes the more important variable. Investors will be watching whether construction begins on schedule in 2027, how Black Hills finances the $1.8 billion investment without putting pressure on its credit profile, whether remaining permits and transmission approvals arrive on time and whether Google’s load ramps toward the contracted levels anticipated for 2030. Those milestones will determine how much of Tuesday’s newly quantified earnings opportunity ultimately becomes recurring cash flow.