Black Hills Corp. (NYSE: BKH) announced on 6 October 2026 that it has signed definitive agreements to serve a planned Google data center in Cheyenne, Wyoming. The agreements took effect on 30 September 2026 and run through 2048.
The utility says it will invest $1.8 billion between 2027 and 2029 to build 564 MW (nameplate capacity) of company-owned natural gas generation. It says the project will be served by a total resource mix of 2.7 GW, including reserve margins, with energy service beginning in late 2027 and a ramp to peak load in 2030.
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The key insight: Most of the power behind this deal is not Black Hills’ to own. The utility says it will build and own 564 MW of gas, and manage about 2.1 GW of third-party resources through a private microgrid for a fee. As we read the release, Black Hills earns in two ways: a return on the plant it builds, and management fees on capacity it does not own.
The release names two agreements: a Large Power Contract Services Agreement (LPCSA) and a Generation Facilities Agreement (GFA).
Black Hills says it will provide up to 590 MW of grid-connected energy service. Of that, it says, 564 MW comes from new gas generation it will build and own through a non-regulated affiliate at its existing Cheyenne Prairie Generating Station. The remaining 26 MW, it says, will come from market energy purchases and retail utility service under its industrial tariff.
The larger block is not Black Hills’ own. The company says it will manage the output of approximately 2.1 GW of Wyoming-based, third-party contracted resources through a privately managed microgrid, under its Large Power Contract Service (LPCS) tariff.
A graphic attached to the release labels that block “Turbine Power Plant and Fuel Cells” and describes it as “Owned by third-party partners and located in Cheyenne, Wyoming.”
How the resource mix for Google’s planned Cheyenne data center splits, from Black Hills’ release of 6 October 2026: 564 MW of company-owned gas (nameplate), 26 MW of market energy and retail service, and about 2.1 GW of third-party contracted resources run through a private microgrid. The three parts sum to about 2.69 GW (our arithmetic); the release puts the total mix at 2.7 GW including reserve margins.
Who Pays
Linn Evans, president and CEO of Black Hills, said in the release: “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.”
The release lists four protections for existing retail customers: cost pass-through mechanisms, stranded asset risk protection, early termination protection and credit protections. On stranded assets, it says the GFA provides for full recovery of all generation capital investment over the contract term.
Google has provided $399 million of refundable advances for long lead-time equipment under the parties’ generation reservation agreement, the release says. Black Hills says it expects to reimburse those advances by 30 June 2027.
What Black Hills Says It Will Earn
Black Hills says it expects to begin earning a return on its generation investment when construction begins in 2027. It says revenue from microgrid management fees (MGMF) is anticipated to begin in late 2027 and to increase on a ramp schedule set out in the LPCSA.
The company says the project is expected to provide approximately $150 million of net income in 2030. It says the project is expected to deliver approximately $2.4 billion of unlevered free cash flow through 2048, net of the $1.8 billion of generation capital investment, and that the generation is to be fully depreciated by 2048.
Black Hills says it expects to finance the $1.8 billion through a combination of project-generated cash flow, debt and other financing alternatives. It says it is evaluating a range of financing options, with a focus on earnings accretion while maintaining its investment-grade credit ratings.
The Permits and the Wires
Among the regulatory matters the release lists in support of the project are a certificate of public convenience and necessity (CPCN) for the Robinson substation, approved in May 2026, an industrial siting permit for the Cheyenne Prairie expansion, filed in July 2026, and an air quality permit for that expansion, approved in August 2026.
The $1.8 billion excludes additional transmission investment, which Black Hills says is anticipated for this project and other regional large-load opportunities. The release lists a Large Customer Transmission Cost Adjustment Mechanism filed in June 2026, a South Cheyenne Transmission Expansion CPCN filed in September 2026, and a Wyoming transmission expansion CPCN to be filed in the fourth quarter of 2026.
The Campus Behind It
DCD reported on 14 July 2026, citing Cowboy State Daily, that Google was the company behind the Project Jade 2.7GW campus near Cheyenne, renamed Project Tembo. It reported a 716-acre parcel in the Switchgrass Industrial Park, four planned data halls and completion slated for 2031.
DCD said the site was previously developed by Crusoe, and that Tallgrass Energy had said it was still building out a bring-your-own power generation hub for the data center client. It reported that Google’s application says it will also use energy resources from Black Hills Energy. We have not checked whether the Tallgrass hub is the 2.1 GW that Black Hills says it will manage.
The Structural Read
The release puts the cost on the customer. Black Hills’ CEO says the agreements are structured so that Google bears all costs of serving the site, and the release lists cost pass-through, full recovery of generation capital over the contract term, early termination protection and collateral requirements.
The release says Google has advanced money for equipment before construction starts. It says Google has advanced $399 million, refundable, for long lead-time equipment, and that Black Hills expects to reimburse it by 30 June 2027. That is a customer financing the equipment queue, as we read it.
The $1.8 billion does not cover the wires. Black Hills says the $1.8 billion excludes additional transmission investment, and it lists three transmission filings, one of them still to be made in the fourth quarter of 2026.
Linn Evans, president and CEO, Black Hills Corp., in the release
“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.”
Three Implications
A UTILITY AS MICROGRID MANAGER Black Hills says it will manage about 2.1 GW of Wyoming-based third-party resources through a privately managed microgrid, earning management fees that ramp on a schedule set in the contract.
THE CUSTOMER CARRIES THE COST, BY CONTRACT The release lists cost pass-through, stranded asset recovery, early termination and credit protections, and its CEO says Google bears all costs of serving the site.
THE TRANSMISSION BILL IS STILL OPEN The $1.8 billion excludes additional transmission investment, the release says, and a Wyoming transmission expansion CPCN is still to be filed in the fourth quarter of 2026.
The framework’s starting point: “The structural bottleneck isn’t computing, it’s electrons.”
As we read it, Black Hills’ agreements put that idea into contract form: the release describes a planned Google data center served by new gas generation and a private microgrid, with terms through 2048, and the agreements are signed, effective 30 September 2026, before energy service is planned to begin in late 2027.
What Is Not Established
We read the Black Hills release, the Form 8-K that furnishes it, and the attached graphic. The 8-K furnishes the release, with its graphic, as Exhibit 99.1; the agreements are not among the filing documents we listed, and we did not read the LPCSA, the GFA or the generation reservation agreement themselves.
In the release we read, the third-party owners of the 2.1 GW are not named, and the microgrid management fee rate is not given. We did not read the Wyoming Public Service Commission dockets, the county application DCD describes, or a statement from Google, and we did not contact Black Hills or Google.
The net income, cash flow and timing figures are Black Hills’ expectations, given in a release that carries a forward-looking statements caution.
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Black Hills says it will spend $1.8 billion in 2027–2029 on 564 MW of gas generation it will own at Cheyenne Prairie, and manage about 2.1 GW of third-party resources through a private microgrid, to serve Google’s planned Cheyenne data center. According to the release, the total mix is 2.7 GW including reserves, service starts in late 2027, and the contracts run through 2048. Its CEO says Google bears all costs of serving the site.
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A note on sourcing. We read Black Hills Corp.’s release of 6 October 2026 in full, the Form 8-K that furnishes it, and the project graphic attached to both. For the background on the campus we read DCD’s report of 14 July 2026. We did not read the agreements themselves, the Wyoming Public Service Commission dockets or a statement from Google, and we did not contact Black Hills or Google.
The earnings and cash-flow figures are the company’s expectations. Nothing here is a forecast, and nothing here is financial or investment advice.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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