Data center power purchase agreement explained: who pays for the power, and what Google's Cheyenne contracts show

When a company announces a data center, the part that decides whether the power exists is a contract. A power purchase agreement, or PPA, is the usual one: a buyer agrees to purchase electricity from a generator for a fixed term, often at a price set in advance. Google's three overlapping deals near Cheyenne, Wyoming give a rare look at how a data center power purchase agreement can be structured, even though the full contract text is not public.

The scale is why this matters. Google announced a $17 billion campus on November 5, 2026 and said, in its own words, "We will pay for 100% of the power we use." Who pays, and for how long, is the reader's real question.

What a PPA actually fixes

A PPA settles four things: the quantity of power, the price or the formula for it, the length of the term and what happens if either side backs out. For a generator, a long contract with an investment-grade buyer is what lets it raise money to build. For the buyer, it locks supply that the grid may not otherwise deliver in time.

Three structures appear in Cheyenne.

Structure one: the dedicated plant

AEP is building a roughly $4 billion, 702 MW fuel cell plant and selling its output to Google under a 20-year PPA, according to Data Center Frontier's November 4 report. The project company, Cheyenne Fuel Cell LLC, is about 92% owned by AEP, with funds advised by Basalt Infrastructure Partners holding the rest. Construction is expected to start before the end of 2026, with full operation targeted for late 2028. Pricing under the agreement has not been disclosed.

The same report notes that an AEP SEC filing in January 2026 disclosed about $2.65 billion committed by an unregulated subsidiary and a 20-year sales deal with an unnamed investment-grade buyer, later confirmed as Google. For a reader, the lesson is that the buyer's credit quality is part of the financing story, and it surfaced first in a filing, not a press release.

Structure two: the utility service agreement

Black Hills Corp. announced definitive agreements with Google on October 6, 2026, furnished in a Form 8-K with the Securities and Exchange Commission. Data Center Frontier summarizes them: up to 590 MW of grid-connected service, about 2.1 GW of third-party Wyoming resources managed through a private microgrid, and a $1.8 billion plan for 564 MW of new gas generation from 2027 to 2029. The portfolio totals about 2.7 GW including reserve margins.

Here the buyer does more than pay for energy. Google provided $399 million in refundable advances so Black Hills could order long lead-time equipment, which Black Hills expects to repay by June 30, 2027. That advance is risk transfer in the other direction: the buyer funds the first steps, which shortens the wait for turbines and transformers that can take years to deliver.

Structure three: the site developer

Tallgrass is developing a Cheyenne power hub with more than $7 billion of investment and two Mitsubishi Power turbines identified for about 1,150 MW of initial-phase generation, per Data Center Frontier. Google buys power from Tallgrass and Black Hills generators and is studying carbon capture for Tallgrass's turbines, according to Google's post.

What "Google pays for 100%" can and cannot mean

Google's pledge, combined with a refundable advance, points toward protection for other utility customers, who are otherwise the usual backstop when a large customer leaves. The documents we could open do not publish the clauses that would prove it.

But a few things are unknown. The AEP price is undisclosed. The termination terms are not public. The 702 MW and 2.1 GW figures may overlap, as Data Center Frontier cautions. And the Cheyenne grid is not the only constraint: our data center backlash tracker shows that cost allocation is one of several disputes, with water and land use among the others.

How to read a data center power announcement

• Term: a 20-year PPA outlasts most chip generations. Ask what happens if load falls.
• Pricing basis: fixed, indexed to gas, or cost-plus. Undisclosed means unknowable.
• Credit support: advances, guarantees or minimum payments are the real evidence of commitment.
• Capacity versus delivery: megawatts on paper become megawatts on a date. AEP targets late 2028 for its plant; ask for the date on every other megawatt.
• Who else is exposed: regulated utilities can pass costs to ratepayers unless a mechanism says otherwise.

Timing and the site itself

The agreements were announced close together. Data Center Frontier says the Black Hills agreements were announced eight days before AEP's announcement and became effective September 30, 2026. The site they serve, Project Tembo, covers about 716 acres with four planned data center buildings of roughly 3.08 million square feet, and Google took over from Crusoe, which withdrew in 2026.

The wider debate about who bears the cost of data center power is documented in our report on the Senate power and profits report on ratepayers. The Cheyenne contracts are one answer; the open question is whether the same protections appear in deals that are not backed by a buyer with Google's credit.

Our take

Treat the pledge as a claim and the clauses as the evidence. The refundable advance and the long terms suggest Google is serious. The undisclosed prices and unpublished termination terms mean outsiders cannot yet verify the "100%" promise. Regulators and ratepayer advocates should ask for those clauses, and readers should apply the checklist above to the next announcement.