Microsoft Signs 20-Year Indiana Power Deal Adding 1,100 MW

NiSource said on 16 October 2026 that it has signed a new long-term energy agreement with Microsoft for Microsoft’s previously announced northwest Indiana campus. Under the agreement, “Microsoft is expected to begin taking electric service under a 20-year term starting in 2028,” the utility said.

The pool of generation owned by its unit NiSource Generation Company, or GenCo, “will be increased by approximately 1,100 MW” to serve Microsoft’s data center and the customers of its Indiana utility NIPSCO, NiSource said, and “Microsoft fully funds all generation and transmission required to serve its load.”

Business Pill · POWER PURCHASE AGREEMENT

A one-minute explainer of power purchase agreements: locking in a steady price for power over many years. It teaches the general idea only and says nothing about any company in this story.

The Money Mechanism

NiSource says GenCo serves new large-load customers “under a structure designed to protect existing Northern Indiana Public Service Company LLC (NIPSCO) electric customers from incremental costs”. In its words, “Large-load customers fully fund the generation and infrastructure required to serve their needs.”

The release says the agreement builds on the $1.4 billion of expected customer savings NiSource had already disclosed over the life of its data center customer contracts, raising total expected savings for NIPSCO electric customers to approximately $1.75 billion, “equating to as much as $140 per customer annually.”

The release gives no dollar value for the Microsoft contract itself. NiSource says “further operational and financial details” on the agreement will be shared on its third quarter earnings call.

The Battery Behind the Deal

“In connection with the Microsoft agreement, GenCo has contracted 600 MW of battery storage, under a long-term tolling agreement,” the release says. An affiliate of AGP Group will develop and build it, and NiSource says it will be added to GenCo’s pool of assets designed to serve multiple large-load customers.

NiSource’s Form 8-K, filed the same day, says GenCo signed the tolling agreement on 15 October 2026 with Atlas Storage 1 LLC, an indirect subsidiary of AGP Capital Holdings, for a 600 MWAC / 2,400 MWh stand-alone battery system connected to the grid run by the Midcontinent Independent System Operator.

“GenCo’s aggregate storage payments over the delivery term are expected to be approximately $2.2 billion,” the filing says. The delivery term is expected to be about twenty and a half years, starting at the commercial operation date of the first phase, which the filing expects by 1 December 2027.

The filing says the agreement is expected to be accounted for as a finance lease obligation, that it is conditioned on AGP Group signing an engineering, procurement and construction contract and an interconnection agreement by 31 January 2027, and that GenCo has an option to buy the project.

What Microsoft and NiSource Said

“Microsoft has always been committed to paying our own way and identifying long-term solutions like this one to ensure that our data centers don’t increase electricity prices for other ratepayers,” said Jeff Riles, Senior Director of Energy Markets at Microsoft, in the release.

“Affordability is not separate from economic development; it is a key pillar of our GenCo model,” said NiSource President and CEO Lloyd Yates.

NiSource says the new assets will upgrade NIPSCO’s electric transmission system “while ensuring current residential and business customers are protected from the costs of serving the data center.”

We have written about a Senate deal that would make data centers pay for grid upgrades, and about a 20-year deal for AEP’s Bloom fuel cells signed by Google. On 16 October we also wrote about Microsoft’s move to sell Copilot without a Microsoft 365 base subscription.

The Structural Read

As we read it, the contract puts the cost of the build on the customer: NiSource says Microsoft fully funds all generation and transmission required to serve its load, and it frames the deal around protecting existing NIPSCO customers from incremental costs.

As we read it, the utility is pooling capacity for more than one buyer: the release says the roughly 1,100 MW is added to a GenCo pool that serves Microsoft’s data center and NIPSCO’s customers, and the 600 MW battery joins assets designed to serve multiple large-load customers.

As we read it, the battery carries a long fixed commitment of its own: the 8-K describes about $2.2 billion of storage payments over roughly twenty and a half years, starting with a first phase that the filing expects by 1 December 2027.

Three Implications

NIPSCO CUSTOMERS NiSource says the structure is designed to protect existing NIPSCO electric customers from incremental costs, and it now expects about $1.75 billion of savings for them, as much as $140 per customer a year.

UTILITIES AND REGULATORS The release says large-load customers fully fund the generation and infrastructure required to serve their needs, and it lists required regulatory approvals among the factors that could change the expected results.

NISOURCE INVESTORS NiSource’s 8-K puts GenCo’s storage payments for the 600 MW battery at about $2.2 billion over roughly twenty and a half years, expected to be accounted for as a finance lease, and the release says more detail comes on the third quarter earnings call.

The Business Engineer Lens

This story maps onto the Business Engineer framework The State of AI Data Centers.

The framework argues: “The structural bottleneck isn’t computing, it’s electrons.”

As we read it, the NiSource agreement writes that bottleneck into a contract: a 20-year term from 2028, roughly 1,100 MW added to a utility pool, and Microsoft funding all generation and transmission for its load. The framework predates the agreement and does not discuss it.

What Is Not Established

The release does not give the contract’s dollar value, how much of the roughly 1,100 MW serves Microsoft rather than other NIPSCO customers, or the size of the Microsoft campus. It lists the receipt, timing and terms of required regulatory approvals among the factors that could change the expected results.

We read NiSource’s 16 October 2026 release and its Form 8-K of the same day in full. MarketWatch’s report could not be read. We did not contact NiSource, AGP Group or Microsoft.

The Bottom Line

On 16 October 2026, NiSource said Microsoft is expected to take electric service for its northwest Indiana campus under a 20-year term from 2028, with GenCo’s generation pool increased by approximately 1,100 MW and Microsoft funding all the generation and transmission needed for its load.

NiSource now expects about $1.75 billion of savings for NIPSCO electric customers, up from $1.4 billion, and its 8-K puts the 600 MW battery contracted alongside the deal at about $2.2 billion of storage payments over roughly twenty and a half years.