Black Hills Shares Jump 5% on $1.8 Billion Google Data Center Deal

Black Hills Corporation saw its shares rise 5% in after-hours trading on Tuesday after announcing a major deal to serve a planned data center in Cheyenne, Wyoming. The utility company will invest $1.8 billion in new natural gas generation between 2027 and 2029 to support the project, providing up to 590 megawatts of grid-connected energy service and managing 2.1 gigawatts of third-party contracted resources through a private microgrid.

The project is expected to generate significant financial benefits, including approximately $150 million in net income by 2030 and $2.4 billion in unlevered free cash flow through 2048, after accounting for the $1.8 billion capital expenditure. Black Hills plans to begin earning a return on its generation investment when construction starts in 2027, with revenue from microgrid management fees anticipated to start in late 2027.

Black Hills will construct 564 MW of company-owned natural gas generation at its existing Cheyenne Prairie Generating Station, with the remaining 26 MW supplied through market energy purchases and retail utility service. The agreements ensure no cost shifting to existing retail customers, with Google bearing all costs associated with serving the data center. Google has provided Black Hills with $399 million in refundable advances for long-lead-time equipment, expected to be reimbursed by June 30, 2027.

The company plans to finance the investment through a combination of project-generated cash flow, debt, and other financing alternatives while maintaining investment-grade credit ratings. Energy service is planned to begin in late 2027 and ramp to peak load in 2030.