By Liam Niemeyer,
Kentucky Lantern
May 29, 2026
Kentucky communities are grappling with the prospect of hyperscale data center projects — massive, sprawling warehouses of power-intensive computer clusters — potentially moving in. A lot more of them could be on the way.
This issue became central to Cave City recently when the council there voted for a one-year moratorium on data center applications.
Louisville Gas and Electric and Kentucky Utilities, the state’s largest utility, told the Kentucky Public Service Commission in March that 11 data centers, with a combined electricity demand of almost 3.5 gigawatts of power, have at least a 50% chance or greater of setting up shop in the state. That amount of electricity demand could power more than 2 million homes.
In total, LG&E and KU said it had 29 potential data center projects in its pipeline in total, and the CEO of LG&E and KU’s parent company told investors in May that the total prospective electricity demand from potential data centers could be around 12 gigawatts of electricity. Federal data showed Kentucky utilities generated a maximum of 18.4 gigawatts of electricity in the summer of 2024.
Other electric utilities in the state are also trying to usher in power-intensive data centers into the state, with one company seeking to launch two enormous data center operations, one at the site of a former Western Kentucky aluminum mill and one at an Eastern Kentucky industrial park. The number of sprawling data centers that could move into Kentucky would still be dwarfed by data center hotspots such as Virginia.
But Kentuckians in communities near where these data centers want to locate have strong concerns: about the potential enormous electricity usage and whether it could exacerbate electricity bills; the source of water and the amount needed to cool data centers; whether property values will go down for homeowners living near a data center; the potential for noise pollution and in some cases the prospect of rural land being transformed for a data center site. What about water use?
State lawmakers in previous years have passed laws offering sales tax breaks to incentivize data centers to come to the state, but but nothing to regulate them in terms of fiscal and environmental costs to the state. A GOP-backed bill that would have required data centers to cover their own electricity and water infrastructure costs failed on the final day of this year’s legislative session. Some Kentucky utilities argue their own rules and rates already protect other ratepayers from the impact of data centers.
Kentucky and other states have been home to a number of smaller data centers that power various online services including digital cloud storage. But with the advent of services powered by artificial intelligence, much more massive data centers coined as “hyperscale” that can use the electricity equivalent of entire power plants have been expanding across the country.
Data centers in the pipeline
But how many of these data centers ultimately will ultimately arrive and set up shop still remains to be seen. Electric utilities in Kentucky told the Lantern they’re fielding numerous requests to locate to the state. But one attorney for an environmental legal group told the Lantern, at least in LG&E and KU’s case, it’s not entirely clear the methodology the utility is using to vet how likely it is a data center will happen. determine the likelihood of a power-intensive data center coming to the state.
LG&E and KU in March told the Public Service Commission that four of the data center projects were considered to be “imminent” with an 80% chance of happening, pointing to a planned data center site in West Louisville among them.
“They just appear to be based on their business judgments, which doesn’t really have any objective grounding and truth so far as we can tell,” said Byron Gary, an attorney for Kentucky Resources Council.
This is as LG&E and KU is planning to spend billions of dollars to build two gas-fired power plants, in part, to meet projected power demand from data centers. The utility is also billing ratepayers for the cost of keeping a coal-fired power plant unit open that was slated for retirement because of future electricity demand.
Liz Pratt, a spokesperson for LG&E and KU, did not provide an updated number of data center projects in the utility’s economic development pipeline. In an emailed statement, she said “not all projects under consideration will ultimately come to fruition” but “the overall scale of interest remains significant”.
“Our approach is grounded in established economic development practices and reflects decades of experience managing customer growth opportunities within Kentucky and the Louisville region,” Pratt said.
Pratt said LG&E and KU respectfully disagreed with criticism that their economic development process lacked clarity or that data center prospects were speculative.
She said each category of their economic development pipeline is tied to “specific, observable actions and commitments”, saying that a project is considered “imminent” when the utility has already conducted infrastructure and siting evaluations.
Gary said it’s hard to know whether the revenue brought in by data centers for utilities will offset the costs to serve them — and whether other ratepayers will benefit from the revenue.
“At this point we haven’t seen any firm, marginal cost studies that show even if X-number of data centers come online, they will produce more revenue than costs,” Gary said. “We’re really still banking on that speculative pipeline from ‘prospect’ to ‘imminent’ and the judgments that LG&E and KU have assigned to give those each probabilities.”
Pratt said LG&E and KU respectfully disagreed with criticism that their economic development process lacked clarity or that data center prospects were speculative.
She said each category of their economic development pipeline is tied to “specific, observable actions and commitments”, saying that a project is considered “imminent” when the utility has already conducted infrastructure and siting evaluations with a customer having the information needed “to make a sitting decision.”
An industrial park and an idled mill
One company building data centers in particular is making waves in Kentucky, announcing its plans to take over an industrial park earlier this month.
TeraWulf, a company originally started to mine Bitcoin that’s expanded into building data centers, announced Tuesday it’s planning on putting a data center that would use more than 1 gigawatt of electricity in a Greenup County industrial park. The EastPark industrial park is the same site where state and local officials tried and failed to get a proposed aluminum mill to locate, having to eventually claw back a $15 million investment made by the state into the project.
This is after TeraWulf had already announced putting another large data center on the site of an idled Century Aluminum Mill in Hancock County.
Paul Prager, chairman and CEO of TeraWulf, said in a statement he expected the planned Eastern Kentucky data center to be a “transformational economic development initiative for the region.” The company’s press release stated Kentucky was emerging as “an attractive market” for AI development “due to its robust energy infrastructure, supportive business environment, and strong engagement from state and local stakeholders.”
Other communities in including in Mercer and Mason counties are also grappling with potential interest from data center developers. In Mercer County, locals are distressed over the potential impacts to rural farmland that a local land developer is advertising as a potential use for a data center. The local planning and zoning commission is considering an ordinance to regulate data centers. In Barren County, the Cave City city council advanced this month a temporary ban on data center developments after locals had been approached by developers.
Diane Floyd, one of the organizers with the group We Are Mercer County, previously told the Lantern earlier this month that she doesn’t believe her local government has the resources to go up against “giant tech companies” backing data centers.
“It’s all going to have a long term impact, and it’s going to change the way our small rural life looks,” Floyd previously told the Lantern.
A spokesperson for investor-owned electric utility Kentucky Power, which is servicing TeraWulf’s data center project in Eastern Kentucky, didn’t say how many other data center projects Kentucky Power was fielding.
Kentucky Power spokesperson Sarah Lynch said the utility “actively engaged in economic development for a variety of industries, given this is the best vehicle for eventually balancing or lowering electric rates.”
Republican Boyd County Judge-Executive Eric Chaney in a Facebook post hailed the TeraWulf data center announcement, arguing that “data centers often get a bad rap and face skepticism” but “we’ve been able to watch other projects throughout the country and learn from their mistakes.”
A number of people on social media have criticized Chaney over a lack of transparency with the unveiling of the project, some organizing to attend the next Boyd County Fiscal Court meeting in early June to express concerns.
“This project is a huge step for us,” Chaney said. “We were able to bring a large industrial project to a space that was created for industry and has sat vacant for 28 years. We have been able to work a deal that will benefit our entire community, region, and state.”
Kentucky Lantern is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Kentucky Lantern maintains editorial independence. Contact Editor Linda Blackford for questions: info@kentuckylantern.com.
