XEL's Unit to Supply 200 MW Electric to Fermi's Project Matador Campus

Xcel Energy Inc.’s XEL subsidiary, Southwestern Public Service Company (“SPS”), has entered into an Electric Service Agreement (“ESA”) with Fermi America. As per the contract, SPS will provide up to 200 megawatts (MW) of electricity to Fermi's Project Matador Campus in Amarillo.

In accordance with the ESA and its applicable tariffs, 86 megawatts of power will be supplied from January 2026, and the supply capacity will gradually expand up to 200 MW.

Xcel Energy’s Benefit From the Deal

The ESA with Fermi America will create a guaranteed revenue stream for the company, which will increase the cash inflow.

The supply of electricity from SPS' high-voltage 115-kilovolt transmission system will ensure service reliability and create an opportunity for the company to supply electricity to other AI-based data centers.

XEL’s Plans to Meet Future Demand

To efficiently meet the rising energy demand from data centers and an expanding customer base, Xcel Energy plans to invest $60 billion during the 2026-2030 period. Of this total, nearly $29.4 billion is allocated to enhancing electric distribution and transmission operations, while $23.4 billion will be directed toward electric generation. The plan also includes $3.6 billion for natural gas operations and another $3.6 billion for other necessary initiatives.

The long-term investments aim to bolster situational awareness, upgrade powerline safety settings, and provide real-time data resiliency rebates, collectively helping to improve overall customer reliability.

Price Movement of XEL

In the past six months, XEL’s shares have risen 9.8%, but lagged the industry’s growth of 10.4%.

Rising Demand for Clean Energy

The electric power industry is currently going through a transition as most of the companies operating in the industry are trying to reduce emissions from their electricity generation process. This transition is also helping the utilities meet the rising demand for clean energy in their service territories.

Courtesy of the huge development of AI-based data centers, usage of higher number of electric vehicles, reshoring of some industries and rise in electric usage from the residential sector are creating huge demand for electricity.

Ameren Corporation AEE offers electric (generation, transmission and distribution) and natural gas services to residential, commercial, industrial and wholesale end markets in Missouri and Illinois. The company plans to invest up to $26.3 billion during 2025-2029 to strengthen its existing operations. Ameren plans to invest heavily in clean energy infrastructure while putting strong emphasis on nuclear energy for future generation portfolio.

Dominion Energy, Inc. D signs joint planning agreement to advance several regional electric transmission projects across multiple states. These initiatives include high-capacity transmission lines, which aim to meet the growing demand for clean energy. The company plans to invest nearly $50 billion during 2025-2029 to strengthen its operations, grid upgradations and infrastructure modernization.

Zacks Rank & Key Pick

Xcel Energy currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same industry is Entergy Corporation ETR, carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ETR has a long-term (three to five years) earnings growth rate of 10.21%. The Zacks Consensus Estimate for 2025 earnings has increased 0.26% to $3.90 per share in the past 60 days.

 

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This article originally published on Zacks Investment Research (zacks.com).

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