Black Hills Bets $1.8 Billion on the Power Behind Google’s Next Big Data Center

The race to build larger AI and cloud data centers is increasingly becoming a race for electricity, and Black Hills Corporation has just put a very large number behind that trend. The utility company said it has signed definitive agreements to serve a planned Google data center in Cheyenne, Wyoming, and plans to invest approximately $1.8 billion between 2027 and 2029 to expand generation capacity for the project.

The agreement is significant because the technology industry's data-center expansion is creating an infrastructure problem that cannot be solved simply by adding more servers. Artificial intelligence workloads require enormous amounts of computing power, and that computing power ultimately translates into enormous electricity demand. Black Hills' latest deal shows how technology companies and traditional utilities are increasingly becoming partners in building the physical infrastructure needed for the AI era.

Google’s Data Center Will Need an Unusual Amount of Power

Under the agreements announced by Black Hills, the utility will provide up to 590 megawatts of grid-connected energy service while also managing approximately 2.1 gigawatts of third-party contracted resources through a private microgrid. Taken together with reserve requirements, Black Hills says the project is expected to be served by a resource mix totaling about 2.7 GW.

That is an extraordinary amount of electricity for a single technology project. To put the scale into perspective, the 2.7-GW figure is not simply the amount of power Black Hills will generate itself. It represents the broader resource mix planned to support the data-center development, including contracted resources and reserves. The arrangement is designed to give Google the dependable power supply required as the campus grows toward its eventual peak demand.

Black Hills expects energy service to begin in late 2027, with the project ramping toward peak load in 2030. The agreements run through 2048, giving the utility a long-term relationship with one of the world's largest technology companies.

$1.8 Billion Will Go Into New Natural-Gas Generation

The centerpiece of Black Hills' investment plan is new company-owned natural-gas generation. The utility says it will spend about $1.8 billion on the generation expansion during 2027–2029, adding approximately 564 MW of nameplate capacity at the existing Cheyenne Prairie Generating Station.

This is an important detail because the project illustrates the complicated energy choices facing the data-center industry. AI companies are seeking more electricity at precisely the moment when utilities are under pressure to expand generation while keeping the grid reliable and electricity costs manageable.

For Black Hills, natural gas provides dispatchable generation that can be brought online to meet large and relatively predictable industrial demand. For Google, the arrangement provides another layer of certainty around the electricity needed to operate a large computing facility. The two needs fit together commercially, even as the broader technology industry continues looking for ways to increase the share of lower-carbon power used by data centers.

The Deal Was Years in the Making

The announcement did not come out of nowhere. Black Hills had been developing plans around a 1.8-GW data-center project in Cheyenne for months before identifying Google as the customer in its latest agreements.

In June, Black Hills said it was working directly with the hyperscale customer after Crusoe was no longer serving as the development partner. At that time, the company said the project was still moving forward and was targeting service in early 2028. The prospective customer had already provided more than $200 million in refundable construction contributions to help secure long-lead generation equipment.

By August, Black Hills said it was progressing toward definitive agreements for the 1.8-GW project. The company also disclosed that refundable advances associated with generation equipment had increased to $377 million.

The October agreement therefore represents the point where months of planning turned into a formal long-term power arrangement.

Google’s Wyoming Expansion Is Bigger Than One Power Contract

The Cheyenne project is part of a much larger data-center development story in Wyoming. Industry reporting has identified Google as the customer behind a large campus near Cheyenne that was previously associated with the name Project Jade and later referred to as Project Tembo.

The broader campus has been reported at around 2.7 GW, with plans involving multiple data halls and supporting buildings. The development is located south of Cheyenne, and Google has emerged as the hyperscale customer behind the project.

That larger scale helps explain why Black Hills is not simply adding a modest amount of generation to its existing system. A data center of this size requires an energy strategy capable of growing alongside the computing infrastructure.

AI Is Changing the Economics of the Power Grid

For years, data centers were already important electricity customers. The rapid expansion of generative AI has changed the equation.

Modern AI systems rely on huge clusters of accelerators and specialized processors. Training large models can require enormous computing resources, while inference—the process of actually running those models for users—creates a continuing electricity requirement. As companies deploy more AI services, they need more computing capacity, and that means more data centers and more power.

Google has openly acknowledged that energy has become a major constraint on technological growth. The company said in March that electricity demand is being driven by technologies such as AI, along with manufacturing and electrification, and has been working with utilities on approaches that make data-center electricity consumption more flexible.

The Black Hills agreement is a more direct example of the same trend: instead of waiting for existing grid capacity to become available, the utility and customer are coordinating generation and infrastructure specifically around the data center.

Black Hills Says Other Customers Won’t Carry the Cost

One of the notable features of the agreement is the company's emphasis on customer protections. Black Hills says the project is structured so that there will be no cost shifting to other customers.

That point matters because enormous data-center developments can create difficult questions for utilities. New generation, substations, transmission upgrades and other infrastructure require capital. Regulators and communities increasingly want to know who ultimately pays for those investments and whether ordinary electricity customers could see higher costs as a result.

Black Hills says Google's project will be supported through the negotiated service structure rather than shifting those costs onto the utility's existing customer base.

A Major Business Opportunity for Black Hills

The agreement is also a major financial opportunity for Black Hills. The company expects the project to generate approximately $150 million in net income in 2030 and around $2.4 billion in unlevered free cash flow through 2048, after accounting for the $1.8 billion generation investment and before the effects of debt financing.

Google has also agreed to provide approximately $399 million in refundable advances for long-lead equipment, according to the project disclosures. The arrangement gives Black Hills greater certainty around the enormous capital commitment required to build the new generation resources.

The economics show why utilities are increasingly interested in large technology customers. A hyperscale data center can represent a long-term, high-volume electricity contract that justifies major infrastructure investment.

Wyoming Is Becoming a Major AI Infrastructure Hub

Cheyenne is already home to several major technology infrastructure projects. Microsoft has an established data-center presence in the area, while Meta is also developing a large AI-focused facility. Other data-center projects have further increased the region's importance to the industry.

Wyoming offers a combination of available land, relatively favorable conditions for large infrastructure projects and an established utility network. But the growing concentration of data centers also means the region must continually expand its ability to generate and deliver electricity.

That makes Black Hills' investment important beyond Google's individual campus. The generation and grid infrastructure being developed today could become part of the foundation supporting Wyoming's wider technology economy for years to come.

The Bigger Story Is No Longer Just About Data Centers

The most interesting part of this announcement is what it says about the future of AI infrastructure. The next phase of the AI boom will not be determined only by who has the best chips or the largest models. Companies also need land, cooling systems, fiber connections, substations and, above all, dependable electricity.

Google's Wyoming project demonstrates how closely those worlds are now connected. A technology company building an AI data center can effectively trigger billions of dollars in utility investment, while a utility company becomes an important part of the infrastructure behind cloud computing and artificial intelligence.

Black Hills' $1.8 billion investment is therefore more than a utility expansion. It is another sign that the AI boom is reshaping America's physical infrastructure—and that the biggest technology projects of the coming decade may be built as much around power generation as around processors.

Sources

• Reuters — Black Hills plans $1.8 billion investment to power Google's data center.
• Black Hills Corporation — Definitive agreements to serve Google's planned Cheyenne data center.
• Black Hills Corporation Investor Relations — June 2026 update on the 1.8-GW Cheyenne project.
• Black Hills Corporation Investor Relations — Q2 2026 results and data-center project update.
• Google — Supporting the White House Ratepayer Protection Pledge and responsible energy growth.
• Data Center Dynamics — Google identified as customer behind the Cheyenne-area data-center campus.