US Company Black Hills Plans $1.8 Billion Gas Power Plant to Supply Google

en.Wedoany.com Reported - On October 6, U.S. energy company Black Hills announced a long-term power supply agreement signed with Google, planning to invest $1.8 billion between 2027 and 2029 to build a 564-megawatt natural gas power generation facility in Cheyenne, Wyoming, to provide electricity for Google's planned data center. The agreement between the two parties took effect on September 30 and runs through 2048, covering large-scale power services and power generation facility construction arrangements. The data center is expected to begin receiving power in late 2027 and reach peak load in 2030, with an overall power supply resource portfolio of approximately 2.7 gigawatts, including backup capacity.

Under the agreement, Black Hills will provide up to 590 megawatts of grid-connected power supply services through its own generation assets and market purchases, while using a privately managed microgrid to coordinate approximately 2.1 gigawatts of third-party contracted power resources. The new gas generation facility is located at the existing Cheyenne Prairie Generating Station site and will be built and owned by a non-regulated affiliate of Black Hills. In addition to the nameplate capacity of the new units, the remaining 26 megawatts will be supplemented through market power purchases and retail electric service under applicable industrial rates. Microgrid management scope includes power dispatch, grid operation coordination, and reliability services.

On the funding side, Black Hills plans to raise construction funds through project operating cash flow, debt, and other financing channels. Google has provided Black Hills with a $399 million refundable prepayment under the previously signed generation capacity reservation agreement between the two parties, for the procurement of long-lead-time equipment. Black Hills expects to repay the prepayment by June 30, 2027. The contract between the two parties also includes cost pass-through, asset recovery, early termination, and credit support provisions, requiring Google to bear all related costs arising from power supply to the data center, avoiding shifting project costs to other retail electric customers.

Multiple progress milestones have been achieved in project permitting. The Certificate of Public Convenience and Necessity for the Robinson substation was approved in May 2026; the Cheyenne Prairie Generating Station expansion project submitted an industrial siting permit application in July and obtained an air quality permit in August. On the transmission side, Black Hills submitted a large customer transmission cost adjustment mechanism application in June and submitted a Certificate of Public Convenience and Necessity application for the South Cheyenne transmission expansion project in September. The company plans to continue submitting Wyoming transmission expansion permit applications in the fourth quarter of 2026, with related transmission investments not included in the current gas generation construction budget.

Under the contractual arrangements, Black Hills expects to begin earning returns on its generation asset construction investment starting in 2027, with microgrid management fee revenue planned to commence by the end of that year and gradually increase according to the agreed load growth schedule. The company expects the project to contribute approximately $150 million in net income in 2030 and, after deducting gas generation capital expenditures, to generate approximately $2.4 billion in cumulative unlevered free cash flow through 2048. Generation asset investments will be depreciated over the contract term, and the capital recovery provisions set forth in the contract cover generation facility investments and related financial risks.