Xcel Energy announced a partnership with Alphabet’s Google to supply electricity to the company’s new data center in Pine Island, Minnesota, while simultaneously adding 1,900 megawatts of clean generation and storage to the regional grid.
The utility said the capacity additions will consist of 1,400 MW of wind energy, 200 MW of solar power and 300 MW of long-duration energy storage. Xcel also plans a $50 million investment in its Capacity*Connect program as part of the project. Xcel stated that, consistent with Minnesota’s regulatory and legislative framework for very large loads, Google will bear the full cost of the new service and that the work will not increase rates for current customers.
U.S. electricity demand is projected to climb sharply through this year and the next, driven in part by the rapid expansion of data centers supporting artificial intelligence services and cryptocurrency, along with broader electrification trends in heating and transportation for homes and businesses. Utilities across the country have responded by investing billions of dollars to reinforce and modernize the nation’s electric grid, a step that has raised questions about the potential for higher customer bills.
Alphabet’s move to secure dedicated energy sources for its data center footprint is part of a wider push to lock in long-term supply. Earlier on the same day, AES Corp said it signed a 20-year agreement to supply power to Google’s planned data center in Wilbarger County, Texas. And last week renewable energy firm Ormat Technologies disclosed a long-term geothermal power purchase agreement with NV Energy to support Google’s Nevada operations.
The Xcel announcement ties the immediate operational needs of a large corporate load to a substantial capacity expansion in renewables and storage, with the sponsoring customer responsible for the incremental costs. The arrangement highlights how large industrial and technology customers may finance grid-scale additions to meet steeply rising power requirements without direct rate impacts for existing retail customers, according to Xcel’s statement.
Details on project timelines, procurement methods, or the specific deployment schedule for each resource type were not provided in Xcel’s announcement. The company emphasized the compliance of the cost allocation with Minnesota rules for large loads and the supplemental investment through its Capacity*Connect program.
Summary
Xcel Energy will power Google’s new Pine Island data center and add 1,900 MW of clean resources - 1,400 MW wind, 200 MW solar, 300 MW long-duration storage - with Google financing the service so existing customers are not charged. Related long-term supply deals for Google’s U.S. data center build-out were announced in Texas and Nevada.
Key points
- Project adds 1,900 MW of clean capacity to Xcel’s system: 1,400 MW wind, 200 MW solar and 300 MW storage.
- Google will pay all costs for the new service under Minnesota’s regulatory and legislative framework for large loads, and Xcel says this will not increase costs for existing customers.
- Separate long-term supply agreements for Google’s data center expansion were disclosed in Texas and Nevada, reflecting the company’s push to secure power for rapid data center growth.
Risks and uncertainties
- Investment in grid upgrades nationwide has raised concerns about higher customer bills; while Xcel says this project will not raise costs for current customers, broader utility spending trends remain a market concern - impacts on utilities and retail electricity customers.
- No timeline or detailed procurement schedule was provided for the deployment of the wind, solar and storage capacity, leaving uncertainty about when the added resources will come online - impacts on project developers and equipment supply chains.
- The announcement references compliance with state rules for large loads but does not disclose regulatory approvals or permitting steps required for implementation, which could affect project timing and execution - regulatory and permitting risk for utilities and large customers.