Minnesota-based electrical utility Xcel Energy has signed a non-binding Memorandum of Understanding (MoU) with a subsidiary of US utility NextEra Energy to support the delivery of new generation assets to serve large-load customers, in particular data centers.

The MoU builds on a long-standing relationship between the two companies, with the latest deal expected to support existing and new large load opportunities across Xcel’s service territories.

Xcel serves eight states across the US, including Colorado, Minnesota, Wisconsin, Michigan, North Dakota, South Dakota, Texas, and New Mexico.

Under the terms of the MoU, the companies will collaborate on generation, storage, and associated transmission investments, which they claim will enable both to “better anticipate system needs, rapidly assess where large customer demand intersects with available grid and power assets, streamline development timelines, and advance innovative grid technologies for the benefit of all Xcel Energy customers.”

Xcel has said that it expects the deal to allow it to increase the data center demand that it can serve through the 2030s. The company noted that, despite its focus on powering large loads, it will ensure costs don’t fall on existing customers, with data centers paying their fair share.

“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,” said Bob Frenzel, chairman, president, and CEO of Xcel.

The key commercial terms concerning the MoU are expected to be executed in the coming months, with any future projects subject to negotiation, agreement on definitive terms, and applicable regulatory approvals.

“Across the country, energy demand from data centers, advanced manufacturing, and other large load customers is accelerating rapidly,” said John Ketchum, chairman and CEO of NextEra Energy. “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 that will also help ensure customers have access to cost-effective energy today and in the future.”

Xcel has seen its data center pipeline swell over recent years, with more than 8.9GW of interconnection requests from data center firms. In response, the company announced plans to invest more than $45 billion in new generation, transmission, and other projects over the next five years.

NextEra has also signed numerous deals with data center companies over the past 12 months. In its latest earnings call, the company revealed that it had 20GW of interest from large load users, predominantly from hyperscale data center customers, with 9GW in advanced discussions.

At the end of last year, NextEra expanded a partnership with Google Cloud to develop several gigawatt-scale data center campuses and the associated generation and capacity needed to power them. The deal builds on an established partnership between the two companies, with more than 3.5GW of power in operation or under contract. In October, the two companies signed a 25-year Power Purchase Agreement to support the restart of the 615MW Duane Arnold Energy Center in Palo, Iowa.

Last year, the company also signed 2.5GW of clean energy contracts with Meta across the US, covering 11 Power Purchase Agreements and two Energy Storage Agreements.