Innovative tariffs to meet the demands of today's data centers

Energy Solutions for Data Centers

Black Hills Energy 
May 2020 

Large Power Contract Service Tariff

Available in Wyoming

Learn how Black Hills Energy partnered with Microsoft to design an “outside-the-box” energy solution that would save the company money, save the utility’s customers on their electricity bills and deliver the power Microsoft needed at its data center in Cheyenne.


When confronted with Microsoft’s need for more power to serve its data center expansion, Black Hills Energy had to look for a solution that would not only address Microsoft’s mission critical energy requirements, but also consider how this solution might impact the rest of its customers. At stake? System-wide energy availability and capacity, existing and new power generation resources including Microsoft’s desire for more renewable energy, and potential cost impacts to all of Black Hills Energy’s customers should the company need to build a new power plant.

On its face, the problem and solution seemed pretty straight forward. Microsoft needed more energy for their expanding data center. Black Hills Energy could supply that energy with a new power plant but with cost impacts to all its customers.

What if Black Hills Energy and Microsoft took a new approach?

Enter Microsoft’s onsite backup generation (“behind the meter” generation) – a critical component of all data centers to ensure mission critical reliability. Any power disruption, no matter how small, can have devastating impacts to a data center. Backup generation ensures this doesn’t happen. With industry-leading reliability delivered by Black Hills Energy, that backup generation was there if needed, but was typically an unused source of energy that could potentially be tapped for other purposes.

Here’s where it gets interesting…

Rather than build new generation, Black Hills Energy negotiated an agreement with Microsoft that would allow the utility access to the company’s backup generation. Black Hills Energy would tap this backup generation capacity only during periods of high electricity demand. By doing so, Black Hills Energy would ensure its ability to meet its customers’ peak energy demand needs, thereby deferring the need to build a new power plant. In exchange, Black Hills Energy would purchase market power on Microsoft’s behalf (including more renewables), leveraging that same on-site generation in the process, at a firm price to meet Microsoft’s energy needs. That’s how the Large Power Contract Service tariff came about – an “outside-the-box” energy solution developed in partnership with Black Hills Energy and Microsoft.

Large Power Contract Service Tariff - at a glance:

  • As approved by the Wyoming Public Service Commission, the Large Power Contract Service tariff is open to any Black Hills Energy retail customer in Wyoming with a load of over 13 megawatts (MW)
  • The tariff requires customer-owned, behind-the-meter dispatchable generation onsite for reliability and backup
  • The associated negotiated service agreement provides qualifying customers with market-based energy rates and access to renewable energy resources

The tariff:

  • Provides data centers with access to lower cost market energy and renewable energy resources
  • Reduces costs to the customer, the utility and customers
  • Mitigates risk to all customers by deferring the need to build new, utility-scale generation to serve data center load


The development of the Large Power Contract Service tariff was a landmark collaboration that gives Microsoft lower cost market energy while ensuring the reliability they require as a mission critical operation. Black Hills Energy is proud of this innovative solution and looks forward to continued collaboration with Microsoft as their Cheyenne operation continues to grow.

Blockchain Interruptible Service Tariff Available in Wyoming


To support the growing blockchain industry in Wyoming, Black Hills Energy developed an innovative solution to meet the unique energy demands of blockchain operations, the Blockchain Interruptible Service tariff.

Block Chain Interruptible Service Tariff - at a glance:

  • For new loads of 10,000 kilowatts (kW) or greater
  • Under this tariff, a customer’s rate will be developed based on a fixed cost per kilowatt-hour (kWh) with no additional demand charges
  • Rate based on market prices, interruption levels negotiated with the customer, and credit risk
  • Negotiated price remains fixed for a period of two to three years
  • Minimum term of two years and a negotiated number of annual hours of service interruption

The tariff:

  • Allows customers access to market energy in support of large data processing loads
  • Negotiated contract that provides access to low-cost market energy and is not served from utility-owned generation

Renewable Ready Service Tariff Available in South Dakota and Wyoming


In response to customers’ growing interest in renewable energy options, Black Hills Energy developed the Renewable Ready Service tariff (Renewable Ready) for large commercial and industrial customers and government agencies. Renewable Ready provides customers the opportunity to advance their business goals and sustainability objectives by choosing cost-effective, utility-scale renewable energy resources to power their businesses.

Renewable Ready gives customers the option of subscribing to renewable energy resources for up to 100% of their electric energy needs. The program, now fully subscribed, is available to large commercial and industrial customers and government agencies in South Dakota and Wyoming.

To support the Renewable Ready program, Black Hills Energy is building a new, 52.5 MW wind generating facility near Cheyenne, Wyoming – the Corriedale Wind Energy Project. The wind project is currently under construction and expected to be placed into service by the end of 2020.

Renewable Ready subscribers will pay a cost-effective rate for the full cost of generating, integrating and delivering the renewable energy produced at the wind project.

Renewable Ready Service Tariff - at a glance:

  • For large commercial and indFor large commercial and industrial customers and government agencies in ustrial customers and government agencies in South Dakota and Wyoming with annual load of 300,000 kilowattSouth Dakota and Wyoming with annual load of 300,000 kilowatt--hours or hours or greater
  • Subscription
    • Subscription--based program providing customers the option of fulfilling up to based program providing customers the option of fulfilling up to 100% of their electricity needs with low100% of their electricity needs with low--cost, utilitycost, utility scale renewable energy scale renewable energy resources. resources.

The tariff:

  • Allows customers to subscribe to utility-scale renewable energy for up to 100% of their electricity needs
  • Contract periods between 5 and 25 years

Economic Development Rate Available in Colorado


In 2018, the State of Colorado passed legislation empowering the Public Utilities Commission (PUC) to authorize applications by electric utilities to implement economic development rates. The legislation allows the Commission to approve, and electric utilities to implement, lower economic development rates for commercial and industrial users who locate or expand their operations in Colorado.

Economic Development Rate - at a glance:

  • For new loads of at least 3 MW
  • Negotiated service agreement

Talk With a Team Member

Eric Scherr

Special Projects Manager (605) 721-2206 Email Eric