| Deal value | $1.8B |
|---|---|
| Share of market cap | 33.4% |
| Share of annual revenue | 77.9% |
Key highlights
- Project involves a total resource mix of 2.7 GW, including 590 MW of grid-connected service
- Company to invest $1.8 billion between 2027 and 2029 in 564 MW of nameplate natural gas generation
- Projected to generate $150 million in annual net income by the 2030 peak load period
- Estimated $2.4 billion in unlevered free cash flow through 2048 after capital expenditures
- Contract includes 2.1 GW of third-party resource management via a private microgrid
What Is the Contract?
Black Hills Corporation has executed definitive agreements, including a Large Power Contract Services Agreement and a Generation Facilities Agreement, to provide comprehensive energy solutions for Google’s planned data center in Cheyenne, Wyoming. The partnership, which runs through 2048, tasks Black Hills with supplying up to 590 MW of grid-connected energy and managing 2.1 GW of third-party contracted resources. To fulfill these requirements, the company will construct 564 MW of new natural gas generation at its Cheyenne Prairie Generating Station. Energy services are scheduled to commence in late 2027, with a phased ramp-up reaching peak project load by 2030.
Business Impact
- Anticipated contribution of $150 million to net income by fiscal year 2030
- Expected generation of $2.4 billion in unlevered free cash flow through the contract term
- Structured cost-protection mechanisms ensure zero cost shifting to existing rate-paying customers
- Revenue streams include return on generation investment and ongoing microgrid management fees
- Propels the company's non-regulated affiliate activities via large-scale infrastructure ownership
CEO Perspective
“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.”
Business Overview
Headquartered in Rapid City, South Dakota, Black Hills Corporation operates as a customer-focused utility company serving 1.3 million natural gas and electric utility customers across eight states. The company maintains a diversified portfolio of regulated and non-regulated energy businesses, including electric and natural gas utilities, power generation, and coal mining. This Google contract expands upon a growing pipeline of large-load data center projects, which previously exceeded 3.0 GW in identified potential. Furthermore, the company is navigating a strategic expansion through a pending all-stock merger with NorthWestern Energy, which is expected to close by the end of 2026.
Financial Context & Industry Landscape
The utility sector is currently experiencing a significant tailwind driven by hyperscale data center expansion and the high energy requirements of artificial intelligence infrastructure. Black Hills Corp enters this project with a market capitalization of $5.39 billion and annual revenue of $2.31 billion. With a P/E ratio of 17.8x and an RSI of 47.3, the stock's technical indicators reside in a neutral range. The $1.8 billion capital investment represents a substantial scale-up compared to previous utility-scale projects, such as the 99 MW Lange II gas plant. This contract leverages Wyoming's favorable regulatory environment for large-power service agreements to capture high-density industrial demand.
Up 9.2% since our story on 6 Oct: $70.74 when we broke it → $77.24 at the close on 13 Oct. Daily closing prices. Source: Yahoo Finance.
Show the prices
| 14 Sep | $70.62 |
|---|---|
| 15 Sep | $69.96 |
| 16 Sep | $70.50 |
| 17 Sep | $71.32 |
| 18 Sep | $70.45 |
| 21 Sep | $71.96 |
| 22 Sep | $71.77 |
| 23 Sep | $70.51 |
| 24 Sep | $69.93 |
| 25 Sep | $70.46 |
| 28 Sep | $69.73 |
| 29 Sep | $70.27 |
| 30 Sep | $70.08 |
| 1 Oct | $70.14 |
| 2 Oct | $70.96 |
| 5 Oct | $70.48 |
| 6 Oct | $70.74 |
| 7 Oct | $75.84 |
| 8 Oct | $76.52 |
| 9 Oct | $76.08 |
| 12 Oct | $76.32 |
| 13 Oct | $77.24 |
Management commentary
“The agreements demonstrate how innovative energy solutions can support economic growth while ensuring existing customers are protected.”
| Share price | $70.74 |
|---|---|
| Market cap | $5.4B |
| Revenue (annual) | $2.3B |
| P/E (TTM) | 17.8× |
| 1-month price change | -3.49% |
| Sector | UtilitiesUtilities - Regulated Gas |
Reference market data from a third-party provider, as of the story. Not a valuation or a recommendation.
SEC filing by Black Hills Corporation announcing definitive energy service agreements with Google.
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