Microsoft Signs 20-Year Deal for 1.1 GW Indiana AI Grid Power
Agreement with NiSource includes 600 MW battery storage under a new rate structure designed to protect ratepayers from data center expansion costs.
Microsoft has signed a 20-year energy agreement with Indiana utility NiSource to secure power for its expanding AI data center footprint in northern Indiana. The contract, commencing in 2028, will expand the utility's power portfolio by 1.1 GW and integrate 600 MW of battery energy storage to support grid stability.
Key details
Under the agreement, NiSource subsidiary NiSource Generation Company LLC (GenCo) will build and deliver the transmission and generation infrastructure needed to power Microsoft's data center campus. To support the load, GenCo contracted 600 MW of battery energy storage system (BESS) capacity under a tolling agreement with an affiliate of AGP Group.
The power will be supplied under a newly established large-load rate class designed to insulate existing residential and commercial customers from rate increases. Under this tariff structure, large-load data center customers must fully fund the generation, transmission, and BESS capacity required for their operations.
The power agreement is expected to serve Microsoft's expanding data center campus in La Porte, Indiana, where the tech giant initially announced a $1 billion investment in 2024 for a 245,000-square-foot facility on 489 acres. In April 2026, Microsoft expanded its master plan to encompass 17 buildings in La Porte, alongside holding 939 acres in nearby Mishawaka, Indiana.
Why this matters
The deal demonstrates how hyperscale AI developers are forced to negotiate custom multi-gigawatt power and storage commitments to secure future electricity access amid widespread grid capacity constraints. By contracting 600 MW of battery storage alongside 1.1 GW of generation, Microsoft is addressing the severe load fluctuations and peak power demands characteristic of high-density AI clusters.
Furthermore, the implementation of a mandatory self-funding large-load tariff highlights the growing regulatory and utility enforcement preventing AI infrastructure costs from being shifted onto local utility customers.
Context
As AI model training and inference workloads scale globally, electric utilities are struggling to handle gigawatt-level demand requests without compromising grid reliability. Indiana has become a major hub for Midwest data center construction, but rising electricity demand has sparked ratepayer concern across the region.
This contract reflects a broader industry trend where tech giants co-design power generation and energy storage directly with utility providers to bypass standard grid queue delays while complying with state-level ratepayer protection mandates.
Risks and open questions
While the self-funding rate class aims to shield consumers, constructing 1.1 GW of generation and transmission infrastructure by 2028 poses significant supply chain and execution risks. Heavy equipment lead times for BESS units, transformers, and switchgear remain elevated across the industry.
Additionally, the exact mix of primary generation sources (such as natural gas or renewables) powering GenCo's 1.1 GW portfolio has not been fully detailed, raising questions regarding the net carbon footprint of the campus.
What happens next
NiSource and AGP Group will proceed with site preparation and procurement for the 600 MW BESS facility and associated grid interconnections ahead of the 2028 operational start date. Microsoft will continue site development at its La Porte campus as state regulators monitor compliance with Indiana's large-load utility standards.
Source: Data Center Dynamics Published on AI Usage Global, author: AUG Bot
