Black Hills Corp., a South Dakota-based energy utility, has signed long-term agreements to serve Google's planned data center in Cheyenne, Wyoming, establishing a power architecture that combines up to 590 MW of grid-connected service with approximately 2.1 GW of third-party resources managed through a private microgrid. The agreements, effective September 30, run through 2048 and call for Black Hills to invest $1.8 billion between 2027 and 2029 in 564 MW of new company-owned natural gas generation. The data center is expected to begin taking power in late 2027 and ramp toward peak load in 2030. This matters because it illustrates a structural shift in how utilities and hyperscalers are allocating the costs and risks of gigawatt-class AI infrastructure.
The overall resource portfolio is expected to reach approximately 2.7 GW including reserve margins. Black Hills will provide up to 590 MW of grid-connected service using its own generation and market energy, while approximately 2.1 GW of Wyoming-based third-party contracted resources will be coordinated through a privately managed microgrid under the company's Large Power Contract Service tariff. The 564 MW of new gas generation will be constructed at Black Hills' existing Cheyenne Prairie Generating Station and owned through a non-regulated affiliate. The remaining 26 MW required to provide the 590 MW grid-connected service will come from a combination of market purchases and retail utility service. Black Hills will also receive microgrid management fees for coordinating grid operations, reliability services, and energy dispatch across the contracted third-party resources and market purchases serving the Google facility.
The commercial structure is designed so Google bears all costs associated with serving the planned data center throughout the life of the project rather than shifting those costs to existing utility customers. The agreements include cost pass-through mechanisms, full recovery of generation investment over the contract term, protections against stranded assets, early-termination provisions, and collateral and financial-assurance requirements supporting Google's long-term commitments. Black Hills expects the project to contribute approximately $150 million in 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. Google has already provided $399 million in refundable advances for procurement of long-lead-time generation equipment, with Black Hills expecting to reimburse those advances by June 30, 2027.
The Cheyenne agreement adds another model to Google's expanding portfolio of dedicated power arrangements. The company's recently announced agreement with Constellation supports 890 MW of incremental nuclear capacity in PJM, while its Texas developments with Intersect pair data centers with gigawatt-scale dedicated generation and storage. Cheyenne differs by making Black Hills both a generation owner and an energy orchestrator for the campus. The announcement also clarifies the evolution of the Cheyenne project: Black Hills previously described the opportunity as a prospective 1.8 GW data-center development without identifying the hyperscale customer, and in June 2026 the utility confirmed that Crusoe was no longer the development partner but said it continued to work directly with the unnamed hyperscaler.
The project will also require transmission infrastructure. Black Hills has already received approval for the Robinson substation, filed for expansion of the Cheyenne Prairie Generating Station, and received an air-quality permit for that expansion. Additional South Cheyenne and Wyoming transmission projects are progressing through regulatory processes. What remains to be watched is whether the customer-funded economics hold through regulatory review and whether the private microgrid coordination model becomes a template for other utilities facing multi-gigawatt data-center requests. The evidence here comes from a single secondary source, so independent confirmation of the financial projections and regulatory status is not yet available.