Black Hills Corp. Executes Definitive Agreements to Serve Google’s Planned Data Center in Cheyenne, Wyoming

The project is expected to contribute approximately $150 million of net income in 2030 as energy demand reaches peak load.

Rhea-AI Summary

Black Hills (NYSE: BKH) signed definitive agreements through 2048 to supply energy for Google’s planned data center in Cheyenne, Wyoming. Effective Sept. 30, 2026, the agreements cover up to 590 MW of grid-connected service and management of approximately 2.1 GW of third-party resources through a private microgrid. Energy service is planned to start in late 2027, reaching peak load in 2030.

Black Hills plans to invest $1.8 billion during 2027–2029 in 564 MW of company-owned natural gas generation. It expects investment returns to begin in 2027 and management fees in late 2027, with approximately $150 million in net income in 2030 and approximately $2.4 billion in unlevered free cash flow, before debt financing effects, through 2048, net of generation investment. Contract protections include cost pass-through, full generation investment recovery, early termination safeguards and collateral requirements.

13 points · 0 major

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1 major · 6 points

Hollow bars mark forward-looking points. How the balance works

Positive

• Moderate pointGoogle agreements, effective Sept. 30, 2026, secure contracted service terms through 2048.
• Moderate pointEnergy service covers up to 590 MW, plus management of approximately 2.1 GW of third-party resources.
• Moderate point. Forward-looking: it has not happened yet and may not happen.Project net income is expected to reach approximately $150 million in 2030.
• Moderate point. Forward-looking: it has not happened yet and may not happen.Unlevered free cash flow is expected at approximately $2.4 billion through 2048, net of generation investment.
• Moderate point. Forward-looking: it has not happened yet and may not happen.Generation expansion plans add 564 MW nameplate capacity at the existing Cheyenne Prairie Generating Station.

8 minor points

• Minor point. Forward-looking: it has not happened yet and may not happen.Generation investment returns are expected to begin when construction starts in 2027.
• Minor point. Forward-looking: it has not happened yet and may not happen.Microgrid management fees are anticipated from late 2027, increasing on a contracted minimum-peak-load schedule.
• Minor pointCost pass-through provisions protect existing customers and investment returns from inflation and interest-rate volatility.
• Minor pointGeneration agreement provides full capital investment recovery over the contract term, protecting against stranded assets.
• Minor pointEarly termination provisions provide customer and shareholder safeguards if the project ends before the agreements expire.
• Minor pointCredit protections include collateral and financial assurance requirements backing the data center’s commitments.
• Minor pointRobinson substation certificate and expansion air quality permit were approved in May and August 2026, respectively.
• Minor point. Forward-looking: it has not happened yet and may not happen.Additional transmission investment is anticipated for this project and other regional large-load opportunities.

Negative

• Major point. Forward-looking: it has not happened yet and may not happen.Generation construction requires planned investment of $1.8 billion during 2027–2029.
• Moderate point. Forward-looking: it has not happened yet and may not happen.Refundable Google equipment advances of $399 million are expected to be reimbursed by June 30, 2027. 7.4% of market cap
• Moderate point. Forward-looking: it has not happened yet and may not happen.Generation financing is expected to include debt; the company is still evaluating its financing mix.
• Minor pointIndustrial siting permit for the generation expansion was filed in July 2026, rather than reported approved.
• Minor pointTransmission cost mechanism and South Cheyenne expansion certificate were filed in June and September 2026, respectively.
• Minor point. Forward-looking: it has not happened yet and may not happen.Wyoming transmission expansion certificate application is planned for the fourth quarter of 2026.

News Explained

Google’s $399 million equipment advance is refundable, and Black Hills expects to reimburse it by June 30, 2027.

For the signed project, Black Hills expects to finance its planned generation investment with project cash flow, debt and other alternatives, and says it is evaluating financing options, so the funding mix remains unsettled.

Google has provided $399 million in refundable advances for long-lead equipment, which Black Hills expects to reimburse by June 30, 2027.

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Market Reaction – BKH

$70.59 – $75.00 Day Range

$5.68B Market Cap

On Oct 6, the day this news came out, the latest delayed price for BKH is 5.23% above the previous close. Our momentum scanner has recorded 3 alerts for this stock so far that day. The latest delayed price is $74.44.

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Key Figures

Generation investment: $1.8 billion Grid-connected service: Up to 590 MW Managed contracted resources: 2.1 GW +5 more

Generation investment

$1.8 billion

Planned investment between 2027 and 2029

Grid-connected service

Up to 590 MW

Service to the planned data center

Managed contracted resources

2.1 GW

Third-party resources managed through a private microgrid

Company-owned generation capacity

564 MW

Nameplate capacity planned for construction

Refundable advances

$399 million

Google advances for long lead-time equipment

Advance reimbursement deadline

June 30, 2027

Black Hills expects to reimburse the refundable advances

Expected net income

$150 million

Project expectation for 2030

Unlevered free cash flow

$2.4 billion

Expected through 2048, net of generation capital investment

Historical Context

1 past event · Latest: Aug 05

1 event

1. Aug 05

   Data center update

   24h Move

   +1.4%

   Reported a prospective 1.8 GW Wyoming data-center project with $377 million in refundable advances.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Key Terms

microgrid, unlevered free cash flow, nameplate capacity, cpcn

4 terms

microgrid technical

"through a privately managed microgrid under the company’s Large Power Contract Service"

A microgrid is a small, local electricity system that combines power sources (like solar panels, small generators) and storage (batteries) with controls so it can run either connected to the main utility grid or on its own during outages. For investors, microgrids matter because they reduce outage risk, can lower energy costs, enable new revenue streams (selling excess power or grid services), and reflect growing demand for resilient, decentralized energy infrastructure.

unlevered free cash flow financial

"The project is expected to deliver approximately $2.4 billion of unlevered free cash flow"

Unlevered free cash flow is the cash a company generates from its core business after paying operating costs and reinvesting in the business, but before any interest or debt repayments. It shows how much cash would be available to all providers of capital—owners and lenders alike—and helps investors compare underlying business performance and value companies without the distortion of different debt levels, like judging a car’s fuel efficiency before adding cargo weight.

nameplate capacity technical

"construct 564 MW (nameplate capacity) of company-owned generation"

Nameplate capacity is the maximum output a power plant, factory, or piece of equipment can produce under ideal conditions, as specified by the manufacturer. Investors care because it sets the upper limit on potential revenue and growth—actual earnings depend on how often and efficiently that capacity is used, similar to a car’s top speed versus how fast you actually drive in daily traffic.

cpcn regulatory

"Robinson substation Certificate of Public Convenience and Necessity (CPCN) approved"

A Certificate of Public Convenience and Necessity (CPCN) is an official permit from a government regulator that authorizes a company to build or operate major public infrastructure or utility services, such as power lines, pipelines, or transit projects. For investors, a CPCN matters because it clears a major legal and planning hurdle — like a building permit for a large project — and affects whether the project can proceed, how long it will take, and the likelihood of earning the expected returns.

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• Investing $1.8 billion in new company-owned natural gas generation
• Providing up to 590 megawatts (MW) of grid-connected energy service and managing 2.1 gigawatts (GW) of third-party contracted resources through a private microgrid
• Strong customer protections including no cost shifting to other customers
• Return on generation investment and microgrid management fees are contracted to begin contributing to earnings in 2027, and expected to provide approximately $150 million of net income in 2030
• Expected to generate approximately $2.4 billion of unlevered free cash flow through 2048, net of $1.8 billion of capital expenditures
  
  

RAPID CITY, S.D., Oct. 06, 2026 (GLOBE NEWSWIRE) -- Black Hills Corp. (NYSE: BKH) today announced it has signed definitive agreements effective Sept. 30, 2026, with terms through 2048, to serve a planned Google data center to be constructed in Cheyenne, Wyoming. The negotiated agreements include a Large Power Contract Services Agreement (LPCSA) and a Generation Facilities Agreement (GFA).

The project, exclusive of additional transmission system expansion investments, is anticipated to be served by a total resource mix of 2.7 GW, including reserve margins, and is planned to begin taking energy service in late 2027 and ramp to the project’s peak load in 2030. Black Hills will provide up to 590 MW of grid-connected energy service through company-owned generation and market energy. In addition, Black Hills will manage the output of approximately 2.1 GW of Wyoming-based, third-party contracted resources through a privately managed microgrid under the company’s Large Power Contract Service (LPCS) tariff.

To support the project, Black Hills plans to invest $1.8 billion between 2027 and 2029 to construct 564 MW (nameplate capacity) of company-owned generation. The company expects to begin earning a return on its generation investment when construction begins in 2027. Revenue from microgrid management fees (MGMF) is anticipated to begin in late 2027 and increase based upon a contractually defined ramp schedule included in the LPCSA.

The project is expected to provide approximately $150 million of net income in 2030. Beyond 2030 and as contracted, the company will continue to earn MGMF and a return on its capital investment to be fully depreciated by 2048. The project is expected to deliver approximately $2.4 billion of unlevered free cash flow, net of $1.8 billion of generation capital investment. This cash flow will meaningfully strengthen the company’s financial profile, supporting a strong balance sheet, providing significant flexibility to finance the near-term investment, and creating substantial long-term flexibility for capital allocation.

“We are pleased to support Google’s planned investment in Wyoming while remaining firmly committed to providing safe, reliable, and cost-effective service to every customer,” said Linn Evans, president and CEO of Black Hills Corp. “The agreements demonstrate how innovative energy solutions can support economic growth while ensuring existing customers are protected. Importantly, these agreements and supporting regulatory mechanisms are structured so that Google bears all costs associated with serving the planned data center throughout the life of the project. We are excited that this project will create jobs, strengthen regional infrastructure, and contribute to Wyoming's long-term economic development."
        
Earning on generation investments and management of third-party resources through flexible Wyoming service model

To provide 590 MW of grid-connected service, Black Hills will construct and own through a non-regulated affiliate 564 MW (nameplate capacity) of new natural gas generation located at the company's existing Cheyenne Prairie Generating Station (CPGS) location. The remaining 26 MW will be supplied through a combination of market energy purchases and retail utility service provided under the company’s applicable industrial tariff.

In addition to recovering and earning a return on its generation investment, Black Hills will receive MGMF revenue for coordinating grid operations, reliability services, and energy dispatch across the portfolio of contracted resources and market energy purchases to serve the planned data center. The MGMF is a negotiated rate based upon a contracted minimum peak load expected to begin in 2027 and increase throughout the project's ramp period.

The company expects to finance the $1.8 billion generation investment through a combination of project-generated cash flow, debt, and other financing alternatives, and is evaluating a range of financing options, with a focus on earnings accretion while maintaining our solid investment-grade credit ratings. Strong cash flow, contractual pass-through of debt costs, cash return on the investment during construction, and a risk-adjusted return on the capital investment provide substantial flexibility in determining the optimal financing mix. Google has provided Black Hills with $399 million of refundable advances for the procurement of long lead-time equipment under the parties' generation reservation agreement. Black Hills expects to reimburse those advances by June 30, 2027.

Agreements provide benefits and protections for customers and shareholders

The project is structured to ensure that costs associated with serving the planned data center do not shift to existing retail customers. The agreements provide Black Hills with long-term revenue certainty and include multiple protections for customers and shareholders throughout the 2048 contract term.

Importantly, the announced agreements include the following base retail customer protections, among others:

• Cost pass-through mechanisms – contract structures protect customers from costs associated with the planned data center while protecting returns from inflation, interest rate volatility, and other cost pressures;
• Stranded asset risk protection – the GFA provides for full recovery of all generation capital investment over the contract term, protecting customers against risk of stranded assets;
• Early termination protection – contract provisions safeguard customers and shareholders should the project terminate prior to the end of the agreements’ term; and
• Credit protections – strong collateral and financial assurance requirements back the data center’s long-term commitments.

To further support this project, the company has completed or commenced regulatory matters, including the:

• Robinson substation Certificate of Public Convenience and Necessity (CPCN) approved in May 2026;
• Industrial siting permit for CPGS expansion filed in July 2026; and
• Air quality permit for CPGS expansion approved in August 2026.
  
  

Additionally, the company is anticipating additional transmission investment to serve this project and other regional large-load opportunities that provide upside to its current capital plan. The company is advancing its transmission plans through the following regulatory filings:

• Large Customer Transmission Cost Adjustment Mechanism (LCTCAM) filed in June 2026;
• South Cheyenne Transmission Expansion CPCN filed in September 2026; and
• Wyoming transmission expansion CPCN to be filed in the fourth quarter of 2026.
  
  

About Black Hills Corporation
Black Hills Corp. (NYSE: BKH) is a customer-focused, growth-oriented utility company with a tradition of improving life with energy and a vision to be the energy partner of choice. Based in Rapid City, South Dakota, the company serves 1.37 million natural gas and electric utility customers in eight states: Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. More information is available at www.blackhillscorp.com.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this press release that address activities, events, or developments that we expect, believe, or anticipate will or may occur in the future are forward-looking statements. This includes, without limitations, the expected timing, scope and benefits of the Cheyenne data center project, the timing and availability of equipment and milestone payments related thereto and the timing of regulatory or licensing approvals. These forward-looking statements are based on assumptions which we believe are reasonable based on current expectations and projections about future events and industry conditions and trends affecting our business. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties that, among other things, could cause actual results to differ materially from those contained in the forward-looking statements, including without limitation, risks of securing the required regulatory or licensing approvals; contract risks, including conditions precedent, termination rights, and performance of our obligations; the risks that counterparties, including suppliers, contractors and other parties to our agreements, fail to perform their obligations; project development, financing, and operational risks that may impact our ability to realize the financial benefits expected; and other risk factors described in Item 1A of Part I of our 2025 Annual Report on Form 10-K and other reports that we file with the SEC from time to time.

New factors that could cause actual results to differ materially from those described in forward-looking statements emerge from time-to-time, and it is not possible for us to predict all such factors, or the extent to which any such factor or combination of factors may cause actual results to differ from those contained in any forward-looking statement. We assume no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise.

Investor Relations
Sal Diaz
investorrelations@blackhillscorp.com

24-Hour Media Relations Line

888-242-3969

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/103549c1-06f2-4c38-b22a-da48cca745fb

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

When will Black Hills begin serving Google’s planned Cheyenne data center?

Energy service is planned to begin in late 2027, with the project reaching peak load in 2030. The agreements took effect Sept. 30, 2026, and have terms through 2048.

How much income and cash flow does Black Hills expect from the Google data center project?

Black Hills expects approximately $150 million of net income in 2030 and approximately $2.4 billion of unlevered free cash flow through 2048. The cash-flow figure is net of $1.8 billion of generation capital investment and excludes debt financing effects.

How does Black Hills plan to finance generation for Google’s Cheyenne data center?

Black Hills expects to finance the $1.8 billion generation investment using project-generated cash flow, debt and other financing alternatives. It is evaluating options with a focus on earnings accretion while maintaining investment-grade credit ratings. Google has provided $399 million in refundable equipment advances, which Black Hills expects to reimburse by June 30, 2027.

What regulatory approvals and filings support Black Hills’ Google data center project?

The Robinson substation certificate was approved in May 2026, and the generation expansion air quality permit was approved in August 2026. The industrial siting permit was filed in July. Transmission filings include a cost adjustment mechanism filed in June and the South Cheyenne expansion certificate filed in September; a Wyoming expansion certificate application is planned for the fourth quarter of 2026.

Who will own the generation serving Google’s planned Cheyenne data center?

Black Hills will own the planned 564 MW nameplate-capacity natural gas generation through a non-regulated affiliate at its existing Cheyenne Prairie Generating Station location. The remaining 26 MW of grid-connected service will come from market energy purchases and retail utility service under the applicable industrial tariff.