A planned Microsoft data center in Malaga, Washington, has secured power from the public utility provider.

According to local reporting, Chelan PUD approved the contract during a meeting on Monday (16 June).

“Chelan PUD has a long history of managing local hydropower in the best interest of customer-owners,” said general manager Kirk Hudson. “We’re continuing that legacy by preserving what’s most important to our customer-owners - reliability and low rates.”

According to the utility provider, Microsoft signed a large load contract that will see energy supplied from an undisclosed third-party supplier. In addition, it was reported that Microsoft paid around $86.5 million up front to build the Jumpoff Ridge substation and other improvements needed to serve the data center.

The agreement has several provisions to ensure stable rates, said the utility. The terms include a maximum load of 288MW over a 15-year period with an option to extend for a further five-year period until either party opts out.

The power will seemingly be generated from hydropower. Chelan PUC currently operates the Lake Chelan Hydroelectric Project 32 miles north of the city of Wenatchee. The project has a capacity of 59MW and has been in operation since 1927. The Washington grid has a significant amount of hydroelectric power capacity. In 2022, it was revealed that 53.84 percent of the state's power was derived from hydroelectric facilities.

Plans for the data center first surfaced back in April 2022, following the acquisition of more than 100 acres of land in the region. A year later, it was revealed that Microsoft had filed plans to build three data centers on the plot, with construction slated to start in 2025. Following this last year, Microsoft announced it had spent a further $12.5m on five parcels of land for Phase II of the project a few months later.

The exact size and capacity of the data centers have not been disclosed.

Malaga is around 20 miles (32km) from Quincy, where Microsoft has a number of data centers.