LOUISVILLE, Ky. (LEX 18) — Every internet search, photo upload, and ChatGPT query relies on a physical home: a data center.
As AI and cloud services grow, companies are constructing more data centers to meet the demand.
Last year, Kentucky joined the competition to recruit such centers by offering tax incentives to companies looking for locations to build.
Now, it appears companies are taking note.
First hyperscale data center in Kentucky
Troy Morrison has lived in southwestern Louisville for over three decades.
At the end of his street lies a massive plot of land on Camp Ground Road that he said was once an old pig farm.
"My neighbor called me and said, did you hear what they're building in that empty field?" he said.
Last month, Morrison was surprised to learn that this site will be developed to become Kentucky's first "hyperscale" data center.
It will be one of many in development across the country by PowerHouse Data Centers, based in Virginia.
"The data center is at the heart of our digital lives, anything that we're doing—you're watching a Netflix movie or you're sending an email or doing a Zoom call," explained Matt Monaco, senior vice president of asset management & development at PowerHouse.
He explained there are four factors that PowerHouse looks for when scouting locations to build: large amounts of power, water availability, fiber access and the local business environment.
Economic benefits
The Louisville project is expected to bring "thousands" of jobs, according to Louisville Mayor Craig Greenberg.
The substantial economic benefits of data centers can be seen most clearly in Virginia, which is currently the world's data center capital.
Virginia's Joint Legislative Audit and Review Commission (JLARC) released a report in 2024, detailing some of the benefits.
The report states the data center industry is expected to contribute over $9 billion in GDP to the state's economy every year, and can generate "substantial" tax revenue for the areas housing them.
The hidden costs of data centers
The economic benefits come with concerns over the energy required to power them.
John Bevington, Senior Director of Business & Economic Development at PPL Corp., the parent company of LG&E and KU, anticipates a substantial increase in the number of data centers nationwide and hopes Kentucky will attract more.
These new facilities, however, require significant energy.
The Louisville data center alone will use about 400 megawatts (MW), equivalent to the consumption of anywhere from 160,000 to 360,000 houses, per electricity usage estimates shared by the Nuclear Regulatory Commission.
"Data centers use a tremendous amount of electricity, and there's some estimates they're showing it could use up to 12% of all US electricity by 2028," said Lane Boldman, executive director of the Kentucky Conservation Committee.
Her concerns center on the potential environmental impacts, such as the great amount of water usage to cool data centers and potential strain on the power grid.
The Kentucky Conservation Committee is calling for the state to implement regulations to ensure energy efficiency and a focus on renewable energy.
Is Kentucky ready?
LEX 18 asked both PowerHouse and PPL Corp. if Kentucky is prepared to meet such power demands, especially if more data centers are constructed in the future.
"Oh, absolutely," said Monaco. "I mean, we wouldn't have been able to kind of do all the things that we're doing there, and I think LG&E is also thinking about the future. Thinking about this one, but also thinking about the second one and the third."
LG&E and KU assured residents that Kentucky is prepared for a data center boom and that residents won't bear the financial burden. In a statement, the utility company wrote:
"Customer classes (residential customers, commercial customers, etc.) pay for their share of the system operations, so data centers will be responsible for much of the network resources that may be needed to serve their needs. Conversely, it is an individual customer’s responsibility to pay for any specific investments we must make for their direct service. Site development work, such as adding new services at their property and additional transmission capacity to serve a single source, would be the responsibility of that customer."
Despite assurances from Monaco and LG&E and KU that Kentucky's infrastructure can support this demand, concerns persist.
On his quiet street in Louisville, Morrison weighs the potential risks and benefits of the new data center.
"It's gonna give some jobs to people, but most likely, nobody around here," Morrison said of his neighborhood.
While some see it as a sign of progress, he and others remain cautious about the future. Activists and residents alike hope that Kentucky can benefit from the economic boost from data centers, while moving forward responsibly.
