Xcel Energy and NextEra Energy Sign MoU to Power Data Center Boom
February 5, 2026
Two major US utility companies have forged a strategic alliance aimed at addressing the surging electricity demand from data centers and other large-scale industrial customers. The non-binding Memorandum of Understanding (MoU) between Minnesota-based Xcel Energy and a subsidiary of NextEra Energy, the world's largest renewable energy generator, signals a proactive industry response to the unprecedented strain that artificial intelligence and cloud computing are placing on power grids. The agreement, announced on February 5, 2026, builds upon an existing relationship between the firms. It outlines a framework for collaboration on the development of new generation assets, energy storage solutions, and associated transmission infrastructure. The partnership is designed to serve both existing and new large-load opportunities across Xcel's eight-state service territory, which includes Colorado, Minnesota, Wisconsin, Michigan, North Dakota, South Dakota, Texas, and New Mexico. The scale of the challenge is immense. Xcel Energy alone is grappling with a pipeline of over 8.9 gigawatts (GW) of interconnection requests from data center developers, prompting the utility to announce a five-year investment plan exceeding $45 billion in new generation and transmission. Similarly, NextEra Energy has reported 20 GW of interest from large-load users, with 9 GW in advanced discussions, predominantly from hyperscale data center operators.
Company executives emphasized the strategic necessity of the partnership. Bob Frenzel, Chairman, President, and CEO of Xcel Energy, stated, "Working with the right partners is critical to deliver on this once-in-a-lifetime opportunity to meet increased energy demand in our communities. This collaboration will align two of the best development teams in the industry to deliver reliable and affordable power for all Xcel Energy customers." He added that the utility would ensure data centers pay their fair share, preventing costs from being passed on to existing residential and business customers. John Ketchum, Chairman and CEO of NextEra Energy, highlighted the accelerating national demand, noting, "This MoU reflects our shared commitment to proactively plan for that growth, using NextEra Energy’s leading digital tools to explore scalable, cost-effective, and quick to deploy energy solutions." The collaboration aims to streamline development timelines and better align future power assets with specific customer demand.
The MoU represents a significant step in the utility sector's adaptation to the digital economy's power needs. For data center operators, such partnerships between established utilities and large-scale power developers could provide a more predictable and accelerated path to securing the vast, often gigawatt-scale, power contracts required for modern AI and cloud campuses. The key commercial terms of the Xcel-NextEra agreement are expected to be finalized in the coming months, with any subsequent projects subject to regulatory approvals.
Source: datacenterdynamics
