Xcel Executives Say They Have Data-Center Deals Covering About Half of Their Five-Year Forecast
How quickly is the boom in data centers moving? Consider the case of Xcel Energy Inc.: In early November, leaders of the Minneapolis-based utility said their forecasts included an assumption that they’d sign contracts with data-center customers covering more than 2 gigawatts of energy over the next five years.
Just three months later, Xcel has signed three such deals covering nearly half of the data-center capacity envisioned in that five-year plan. And CFO Brian Van Abel said his team expects to conclude other deals by this fall that will cover the rest of the forecasted needs. If things fall into place, each of Xcel’s operating companies — Northern States Power Minnesota, Northern States Power Wisconsin, Public Service Co. of Colorado and Southwestern Public Service — will be home to a data center owned by a different hyperscaler.
“Speed to market continues to be the one of the most important factors” for owners of data centers, Van Abel said Feb. 6 on a conference call discussing Xcel’s fourth-quarter results. “In terms of, can we deliver the transmission generation capacity on the timeline that they’re looking for?”
Van Abel and other Xcel executives wouldn’t comment on the prospect of lifting their sales growth outlook — which now stands at 3% for 2025 and 5% annually through 2029 — based on the possibility that they’ll sign other data-center contracts. Instead, they said they’ll issue a formal update to the company’s growth forecast in the fall.
But several questions on the Feb. 6 conference call suggested that analysts think a growth upgrade is in the cards. And Xcel Chairman, President and CEO Bob Frenzel and Van Abel in November said there’s a chance the company’s growth rate could reach 8% by 2028 thanks to data centers and demand from oil-and-gas companies in Texas.
In the last three months of 2024, Xcel produced a net profit of $464 million, up from $409 million in the prior-year quarter, on total operating revenues of $3.12 billion. The latter figure was down from more than $3.4 billion in late 2023 in part to mild December weather. Residential sales growth during the quarter was 2.2% while commercial and industrial customers used 3.9% more energy than in the last part of 2023.
Shares of Xcel (Ticker: XEL) fell about 1% to $67.12 after the company’s earnings report. In midday trading Feb. 7, they were changing hands around $66.80. Over the past six months, they have climbed nearly 15%, growing Xcel’s market capitalization to about $38.3 billion.
