Data Center Site Selection in Kentucky

Kentucky is a regulated, vertically integrated utility state, so the utility that holds the service territory has an obligation to serve and may have to build generation, substations or transmission for a large new load.³ That makes the first screening question simple to ask and decisive to answer: which utility, and which wholesale system behind it, serves this parcel?

• LG&E and KU (Louisville Gas and Electric and Kentucky Utilities) plan and build their own generation as regulated utilities, with new plants approved by the PSC.³¹⁰
• East Kentucky Power Cooperative supplies 16 owner-member distribution co-ops and has been fully integrated into PJM since 2013, when PJM took over operation of its transmission system.⁴¹¹
• Kentucky Power, in the northeast, relies on PJM for supply beyond its own plants.⁶
• In western Kentucky, Big Rivers Electric and its member co-op Kenergy deliver power sourced from MISO.¹²
• TVA-served local power companies cover pockets of the south and west; their large-load terms follow TVA’s rules, described in our Tennessee guide.

The practical effect is that two parcels a few miles apart can face different tariffs, capacity markets and study processes. A site in EKPC or Kentucky Power territory inherits PJM’s capacity and transmission dynamics, covered in our PJM guide; one served through Big Rivers sits in MISO. LG&E-KU sites depend on the utility’s own resource plan and Public Service Commission (PSC) approvals.¹⁰

House Bill 8, enacted in 2024, created a sales and use tax exemption for qualifying data center equipment. As originally written, the owner, operator or colocation tenant had to invest at least $450 million within five years (or $150 million for a project organizer), and the project had to sit in a consolidated local government with a population of at least 500,000, which in practice meant Louisville.¹ Projects need preliminary approval from the Kentucky Economic Development Finance Authority, cannot replace an existing Kentucky data center and cannot stack certain other incentives.¹

House Bill 775, passed in 2025, removed the Louisville-only effect by scaling the investment floor to county population.² That matters for land: rural and coal-region counties, previously shut out, can now compete for incentive-backed projects at a much lower capital threshold.

The exemption is not the whole tax picture. Real property taxes, local abatements and any PILOT arrangement are negotiated separately, and the exemption term and covered equipment should be confirmed in the statute and the authority’s approval. Compare Kentucky with peer states in our sales tax exemptions by state guide.

In an order dated October 30, 2025, the PSC approved EKPC’s Data Center Power tariff for data centers served by its member co-ops.⁴ It applies to loads of 15 MW or more, and above 250 MW one or more dedicated generation resources must be part of the supply plan.³ The PSC also required commission approval of each special contract, removed the cap on application fees and raised collateral requirements.⁴ Because hyperscale and AI campus requests commonly exceed 250 MW, most serious projects should plan for the dedicated-resource path.

LG&E-KU took a different route. In a 2025 settlement in its power plant case, the utilities proposed that any new data center expecting to use at least 100 MW take service under an “extremely high load factor” (EHLF) tariff, paying for at least 80% of its contracted monthly energy for 15 years even if it uses less.⁵ The tariff itself was assigned to separate rate proceedings rather than the plant case.⁵ In October 2025 the PSC approved new generation for future data center load but denied a cost-recovery mechanism the utilities sought for a new Louisville gas plant.¹⁰ The companies asked for rehearing of their rate case in March 2026, so confirm the final EHLF terms on the PSC docket before underwriting.¹³

Both designs push risk onto the customer through minimum bills, long terms and collateral. Our guide to large-load tariffs and electric service agreements explains how to model them.

Kentucky’s Energy Planning and Inventory Commission (EPIC) published its first statewide analysis of data center development in June 2026.³ It counts 37 existing data centers, 24 of them in Jefferson County, and cites about 12 GW of prospective demand discussed in LG&E-KU territory and 11 active EKPC projects seeking more than 10 GW.³ Reporting on the analysis noted that 11 LG&E-KU projects totaling about 3.5 GW were rated at 50% or higher likelihood of proceeding, and that Kentucky utilities’ maximum generation in summer 2024 was 18.4 GW.⁸

EPIC framed the core problem as timing: a data center can be operating in 18 to 24 months, while a new power plant takes five to seven years.³ The state response is moving. On August 6, 2026, Gov. Andy Beshear signed an executive order requiring data center developers to submit an energy plan to the Energy and Environment Cabinet and directing the PSC to keep utilities from raising rates to recover data center costs.⁹ Expect energy-plan content (load, ramp, backup and water) to become part of early diligence, and see our overview of state data center legislation trends.

Coal remains Kentucky’s primary energy source for electricity, and the state generated about 67 million MWh in 2024 at an average retail price of about 10.07 cents per kWh.¹⁴ That generation base, plus large tracts of disturbed land, is why eastern Kentucky is now pitched for data centers. Commentators note that much of the region’s land is still owned by out-of-state companies, that strip mining left some of it level, and that many mining companies walked away without remediation after bankruptcy.¹⁵

Three proposals show the range. TeraWulf plans a campus of more than 1 GW by 2030 on an abandoned strip mine on the Greenup-Boyd county line near Ashland, served by Kentucky Power, which plans a new gas unit at its former Big Sandy coal plant in Louisa; in August 2026 the company said the campus could grow to as much as 2 GW.⁷ That project is less advanced than TeraWulf’s western Kentucky campus in Hancock County, where the PSC approved a service agreement for up to 482 MW in August 2026.⁶¹² Near Russell, a developer has proposed a hyperscale campus of eight two-story buildings on the 425-acre former AK Steel brownfield, an $8–12 billion plan that a local moratorium on data center applications could affect.¹⁶

Reclaimed mine land brings specific diligence items: compacted or uncompacted spoil and old underground workings for the geotechnical investigation, severed mineral rights, reclamation bond status and water supply in narrow valleys. Our guides to repurposing industrial and power plant sites and brownfield liability protections cover the common issues.

1. 01Identify the serving utility and its wholesale system (LG&E-KU, an EKPC co-op, Kentucky Power, Big Rivers or a TVA distributor).
2. 02Pull the applicable large-load tariff and model minimum bills, term and collateral at the full ramp.
3. 03Check the county population tier for the HB 775 investment floor and confirm eligibility with counsel.
4. 04Prepare the energy plan content the 2026 executive order calls for.
5. 05Screen local ordinances and moratoriums early; Russell’s June moratorium on data center applications shows how quickly local rules can change.¹⁶
6. 06On mine or industrial land, scope geotechnical, mineral and environmental work before signing a long option.

Location strategy usually splits two ways. Louisville, home to most of the state’s existing data centers, offers fiber and an experienced utility but faces the highest HB 775 investment floor.³² Rural counties offer cheaper land and a $25 million floor, but often need new transmission, water and fiber, so the utility study and the energy plan carry more weight there.²

Our site due diligence checklist expands each step. If you hold land in Kentucky and want an independent read on power and buildability, get a site reviewed.