Capital chasing AI infrastructure does not stop when it hits resistance. It redirects. That is the clearest way to read what happened last week: while the UK government rejected a bid to power a 1.2 GW data center using the Drax biomass plant in Selby, local reports said the proposal failed to meet criteria including “credible plans for energy delivery, environmental considerations, and local economic benefit”, two very large commitments landed in Indiana instead.
Digital Realty plans to develop a gigawatt-scale data center campus on 476 acres in Kokomo, Indiana, comprising three single-story buildings. Located on greenfield land in Kokomo’s Industrial Park North, the campus could total around 1 GW of IT capacity across roughly three million square feet, and city officials have said it could be fully built out by 2033. No tax abatements. The city projects the site will generate between $1.3 billion and $1.7 billion in taxable assessed property value, potentially yielding $44 million to $55 million in annual property tax revenue at completion.
The more immediately investable story, though, is NiSource.
Microsoft has signed a long-term energy agreement with Indiana-headquartered regulated utility NiSource to power its planned data center campus in northwest Indiana, with the 20-year contract beginning in 2028. As part of the agreement, NiSource’s GenCo resource pool will be increased by around 1,100 MW, with NIPSCO and GenCo expected to provide the transmission and generation infrastructure to power the data center. NiSource says large-load customers fully fund the generation and infrastructure required to serve their needs, with the stated aim of protecting existing NIPSCO electric customers from incremental costs.
That structure matters. NiSource is not absorbing risk on behalf of a tech tenant. It is collecting long-duration contracted revenue while Microsoft writes the infrastructure check. NiSource has also said it increased projected customer savings associated with its data center strategy to approximately $1.75 billion over the life of the contracts, up from a previously discussed $1.4 billion figure. In connection with the Microsoft deal, GenCo entered into a 600 MW battery storage system tolling agreement.
Critically, Microsoft is not NiSource’s first hyperscaler. The Microsoft deal follows other data center agreements. NiSource previously signed a long-term energy supply agreement with a subsidiary of Alphabet for a northern Indiana data center and has expanded its Amazon Data Services agreement to accelerate and increase power delivery. The utility has quietly assembled a roster that now includes Amazon, Alphabet, and Microsoft.
What to Check Before You Buy a Utility for This Reason
The NiSource thesis is real, but it requires discipline before acting on it. Four questions matter most.
Regulatory approval risk. Every large-load contract passes through the Indiana Utility Regulatory Commission. Approvals on the Amazon agreements came through in June 2026, but each new deal restarts that process. A denial or extended delay would push revenue recognition well past the stated start dates.
Capital intensity. NiSource is executing a $28.6 billion capital investment plan covering 2026 through 2030. That scale requires consistent access to debt markets. Interest coverage and free cash flow coverage of the dividend can matter a lot when capital spending is this high, especially if costs or timelines slip.
EPS growth durability. Management has lifted its long-term consolidated adjusted EPS growth outlook to 9% to 10% from 2026 through 2033, linking these agreements to future earnings, not just headline megawatts. That is a meaningful commitment, but it assumes each contracted load comes online on schedule.
Land and power premiums context. U.S. purchases of land for future data centers reached about $6 billion in the first half of 2026, up 79% from a year earlier, according to Avison Young as reported by major media outlets. In Northern Virginia, one widely cited benchmark has entitled land without power at around $4 million per acre, while powered land can fetch $6 million per acre or more. Indiana is priced far below those levels now. That gap is both an opportunity and a signal of how much execution risk the market still prices in.
The Wealth Takeaway
A regulated utility with 20-year contracts from Microsoft, Alphabet, and Amazon is not the same business it was three years ago. NiSource has structurally repositioned itself as the power backbone for AI infrastructure in the Midwest, without taking on merchant risk or asking existing ratepayers to subsidize Big Tech. That is a durable model. The due diligence is not whether the trend is real. The due diligence is whether the balance sheet can carry the build, and whether Indiana regulators keep saying yes.