Microsoft to fund 1,100 MW for Indiana data center campus in 20-year NiSource deal

Microsoft has agreed to fund the generation and transmission needed to power its northwest Indiana data center campus under a 20-year contract with NiSource. The deal adds about 1,100 megawatts to a power pool the utility runs for its largest customers. Service is expected to begin in 2028, according to NiSource's October 16 announcement.

NiSource opened the announcement with a promise of "creating jobs, expanding the tax base, and building a skilled workforce." It attached no job count to that promise. The figures it did give are about who pays for the power. NiSource now expects existing customers of its Indiana electric utility, Northern Indiana Public Service Company (NIPSCO), to save about $1.75 billion over the life of its data center contracts. Before the Microsoft deal, the projection was $1.4 billion. The company says the savings equal as much as $140 per customer a year, spread across a utility serving roughly 500,000 electric customers.

The savings come from the way the power is supplied. Large customers are served through a subsidiary, NiSource Generation Company (GenCo). Under that structure, a customer like Microsoft fully funds the generation and infrastructure built for it, and existing NIPSCO customers are meant to be shielded from the added cost. The company also says the structure returns value to those customers when large users rely on the existing grid.

"Affordability is not separate from economic development; it is a key pillar of our GenCo model," said Lloyd Yates, NiSource's president and chief executive. Jeff Riles, Microsoft's senior director of energy markets, said the company "has always been committed to paying our own way."

That framing is aimed at a live local argument. WSBT, the South Bend station, has run reporting on who pays for Indiana's data centers, including a story on faith leaders asking the facilities to "pay their fair share."

The physical buildout is where the work sits. Alongside the Microsoft contract, GenCo has signed a long-term tolling agreement for 600 megawatts of battery storage. An affiliate of AGP Group will develop and build that facility, which will join the pool serving several large customers rather than Microsoft alone. NIPSCO and GenCo will also provide transmission and generation infrastructure. NiSource says the transmission work will upgrade NIPSCO's system for all Indiana customers.

WSBT identified the campus as Microsoft's site in La Porte, where the company broke ground in June. DataCenterDynamics, the trade publication, said the agreement seems likely to serve La Porte, while noting that this had not been explicitly confirmed. The project has grown since it was first announced. In 2024, Microsoft described a $1 billion investment that included a 245,000-square-foot data center on 489 acres at Radius Industrial Park. Its first phase was to include six data centers and a substation. In April 2026, Microsoft disclosed plans for 17 buildings on an expanded site, DataCenterDynamics reported. Microsoft also owns 939 acres in Mishawaka, which DataCenterDynamics said is thought to be set aside for another data center.

NiSource's risk language is more cautious than its jobs-and-savings pitch. The company lists regulatory approvals and their terms as a risk. It also lists Microsoft's ability to carry out its construction plans, and public intervention or litigation. Further risks include raising "the significant additional financing required" for the new assets and finishing them on time and on budget. Another is the possibility that a data center customer cuts its committed capacity or ends its contract. Among the workforce risks, the company names its "ability to attract, retain or re-skill a qualified workforce and maintain good labor relations," along with construction and supply risks and the performance of third-party suppliers and service providers. NiSource has about 7,700 employees across six states.

Investors responded modestly. NiSource shares rose 1.31 percent in premarket trading on the day of the announcement, to $41.78, RTTNews reported. The company said it would give more operational and financial detail on the agreement, and on its broader data center strategy, during its third-quarter earnings call on October 28.