Black Hills Stock Rises on Google Data Center Energy Deal

Black Hills Corporation (BKH) saw its stock rise 4.6% in after-hours trading on Tuesday following the announcement of a significant long-term agreement with Google (GOOG, GOOGL). The deal involves serving Google’s planned data center in Cheyenne, Wyoming, through 2048, including up to 590 MW of grid-connected energy services and managing 2.1 GW of third-party resources via a private microgrid.

To support the project, Black Hills plans to invest $1.8 billion between 2027 and 2029 to build 564 MW of natural gas generation capacity. Revenue from microgrid management fees is expected to begin in late 2027, with earnings projected to grow according to a predefined schedule in the large power contract services agreement.

The company anticipates the project will generate approximately $150 million in net income by 2030, along with ongoing microgrid management fees and a return on its capital investment, which will be fully depreciated by 2048. The project is expected to produce around $2.4 billion in unlevered free cash flow, net of the $1.8 billion generation capital investment.

Black Hills emphasized that the agreements provide long-term revenue certainty and include protections for both customers and shareholders throughout the contract term. The project is structured to ensure that costs associated with serving the data center will not be passed on to existing retail customers.