NiSource Signs 20-Year Microsoft Deal That Adds 1,100 MW in Indiana and Contracts a 600 MW Battery
- AI Energy Demand Data Centers News
Marin Holt
- 0
- 8 minutes read
- Contract term: 20 years, service starting 2028
- Generation added to GenCo pool: approximately 1,100 MW
- Battery storage under tolling agreement: 600 MW
- Projected NIPSCO customer savings: $1.75 billion
NiSource has signed a 20-year energy agreement with Microsoft to serve a planned data center campus in northwest Indiana. The Indiana utility holding company announced the deal on Oct. 16, 2026. NiSource expects Microsoft to start taking electricity service in 2028. NiSource Generation Company LLC (GenCo), a NiSource subsidiary, will grow its pool of generation resources by approximately 1,100 MW. In the same announcement, GenCo said it has contracted 600 MW of battery storage under a long-term tolling agreement.
How the Deal Is Built
Microsoft will fully fund the generation and transmission infrastructure that its demand requires. NiSource says this structure keeps the cost off existing Northern Indiana Public Service Company (NIPSCO) electric customers. DatacenterDynamics (DCD) reports that the campus will take service under a new large-load rate structure. Under that rate class, large-load users must fund the generation and infrastructure that power their facilities.
An affiliate of AGP Group will develop and build the battery facility. The battery joins the GenCo resource pool, which serves multiple large-load customers. Microsoft is one customer of that pool, not its only one.
Why It Matters
The deal puts the cost of new supply on the data center customer. NiSource uses a separate generation company and a rate class that bills the large customer for the build. The company now projects about $1.75 billion in savings for NIPSCO electric customers. That figure covers the life of its data center contracts. Its earlier estimate was $1.4 billion. NiSource says the savings could reach as much as $140 per customer each year.
The 600 MW battery contract also matters for storage developers. A utility generation company is buying storage capacity through a tolling agreement, in the same announcement as a hyperscale load. Jeff Riles, a senior director at Microsoft, said the company is “committed to paying our own way.” He said the goal is that its data centers do not raise prices for other ratepayers.
What NiSource Has Not Said
NiSource has not given the capital cost. It also has not given the mix of generation behind the 1,100 MW. It says more detail will come with its third-quarter results. Stocktwits reports that NiSource will report third-quarter earnings on Oct. 28. The announcement does not give a duration in MWh or a site for the battery.
The campus site is also not confirmed. DCD writes that the deal likely serves the Microsoft data center under construction in La Porte, Indiana. Microsoft announced that project in 2024 as part of a $1bn investment in Northwest Indiana. In April 2026 Microsoft said it now plans 17 buildings on an expanded plot in La Porte. DCD says it is unclear how many of those will be data centers. The $1.75 billion savings figure is a NiSource projection.
Critical Perspective
NiSource puts customer savings at about $1.75 billion. It has not published the capital cost or the generation mix behind the 1,100 MW. Without those numbers, nobody outside the company can test the savings figure. The same gap applies to the claim that existing NIPSCO customers pay nothing. Indiana has a recent test case in the AES Indiana plan for the 390 MW Google campus at Monrovia. The commission found that the Google contract met the 80% cost test in state law. Even so, $73.8 million of network upgrades went into the AES transmission rate base. Federal regulators accepted a similar floor for Duke, where a large load pays for at least 75% of its planned load for 15 years. Microsoft also signed a 20-year deal with Chevron for a 2.67 GW off-grid gas plant in Texas. First power there is also targeted for 2028. The 600 MW battery serves a shared pool, and NiSource gave no MWh figure. If Microsoft builds fewer data centers in La Porte than planned, who pays for the capacity that GenCo adds?
Sources
- NiSource (Business Wire): NiSource Announces Long-Term Agreement with Microsoft Expected to Increase Customer Savings and Support Indiana’s Economic Growth (2026-10-16)
- DatacenterDynamics: Microsoft signs 20-year power deal with Indiana utility NiSource for planned data center in the state (2026-10-19)
- Finviz: NiSource Signs 20-Year Microsoft Power Agreement for 1,100 MW Indiana Data Centre Campus (2026-10-16)
- Stocktwits: NiSource Expands Microsoft Power Deal, Projects $1.75B In Customer Savings (2026-10-16)
