Idle industrial sites draw interest from data centers

Kentucky is emerging as a focal point for hyperscale data center development, with many developers targeting former industrial sites such as the Paducah Gaseous Diffusion Plant in McCracken County. Paducah Mayor George Bray highlights these locations as ideal due to their substantial existing power and water infrastructure, remnants of past energy-intensive operations. The U.S. Department of Energy is planning to transform a portion of the Paducah site into a data center to support the AI industry, as part of a broader federal strategy to repurpose Cold War-era sites.

Several specific projects illustrate this trend: TeraWulf acquired the former Century Aluminum smelter site in Hancock County to build a 482-megawatt data center, which will be leased to artificial intelligence company Anthropic. Other areas, including Boyd and Greenup counties, are being eyed by a Spanish developer for a 2-gigawatt campus, and the City of Pikeville is negotiating a smaller data center project. In Bell County, a temporary ban on data center construction was enacted after a developer considered a site there. Mason County's planning and zoning committee approved the rezoning of 2,000 acres for an undisclosed hyperscale data center, despite ongoing local opposition.

While local economic development directors view these projects as opportunities for new life and significant tax revenue at languishing industrial sites, environmental attorney Byron Gary of the Kentucky Resources Council raises concerns about potential long-term costs for Kentucky ratepayers. He warns that extensive transmission upgrades required for the massive electricity demand of these data centers, particularly from regional energy grids like MISO and PJM, could be socialized across all ratepayers. Residents in Hancock County have voiced strong concerns to the Kentucky Public Service Commission (PSC) regarding water usage, electricity bill impacts, and backup generators for the TeraWulf project; the PSC is currently considering approval of a special power contract between TeraWulf and Big Rivers Electric Corporation.

Colby Kirk, CEO of One East Kentucky, notes the persistent but speculative nature of data center inquiries in coalfield counties, citing challenges in finding sites with the required acreage and water capacity. He acknowledges the potential for tax revenue but remains uncertain about the long-term landscape for data centers in Kentucky, given past waves of interest from other industries like solar and cryptocurrency mining, and the possibility of an "AI bubble."