Utilities report as many as 30 data centers under discussion in Kentucky
Kentucky is seeing significant interest from hyperscale data center developers, with utilities reporting dozens of potential projects and massive projected electricity demands. This has led to concerns from local communities regarding electricity costs, water usage, noise, and land transformation, resulting in a moratorium in Cave City and regulatory discussions in Mercer County. State lawmakers have incentivized data centers but a bill to cover infrastructure costs failed.
Kentucky communities are facing a surge in interest from hyperscale data center developers, with state utilities projecting significant electricity demand from dozens of potential projects. Louisville Gas and Electric (LG&E) and Kentucky Utilities (KU) informed the Kentucky Public Service Commission in March that they have 29 potential data center projects in their pipeline, with 11 having at least a 50% chance of development, requiring almost 3.5 gigawatts of power. Their parent company's CEO estimated total prospective demand could reach 12 gigawatts. This comes as LG&E and KU plan to spend billions on two gas-fired power plants and keep a coal-fired unit open to meet future demand.
The influx of data center proposals has sparked strong concerns among residents in various communities, including potential increases in electricity bills, extensive water usage for cooling, declining property values, noise pollution, and the transformation of rural land. In response, the Cave City council in Barren County enacted a one-year moratorium on data center applications. Separately, the Mercer County planning and zoning commission is considering an ordinance to regulate data centers after local residents, organized as "We Are Mercer County," voiced distress over the impact on rural farmland. State lawmakers have historically offered sales tax breaks to attract data centers, but a recent GOP-backed bill to mandate data centers cover their own electricity and water infrastructure costs failed.
Specific projects are already being announced. TeraWulf, a company that has expanded from Bitcoin mining into data center development, revealed plans for a data center utilizing over 1 gigawatt of electricity at the EastPark industrial park in Greenup County. This follows an earlier announcement by TeraWulf for another large data center at an idled Century Aluminum Mill site in Hancock County. Boyd County Judge-Executive Eric Chaney praised the TeraWulf announcement, though he faced criticism on social media for a perceived lack of transparency.
While utilities like LG&E and KU defend their economic development processes, environmental groups like the Kentucky Resources Council, represented by attorney Byron Gary, question the methodology used by utilities to assess the likelihood of these projects and whether the revenue will offset the costs borne by other ratepayers. Kentucky Power, which is servicing TeraWulf's Eastern Kentucky project, also indicated active engagement in economic development for various industries, including data centers.