Developers plan to build Kentucky’s first ‘hyperscale’ data center in Louisville

This story was originally published by Kentucky Lantern. 

A Virginia developer is planning to build Kentucky’s first “hyperscale” data center in Louisville, an operation that could eventually use as much electricity as one of the state’s power plants produces. 

Virginia-based PowerHouse Data Centers, a subsidiary of American Real Estate Partners, and Poe Companies of Louisville in a Thursday release said they plan to build a data center campus in Louisville that will use about 400 megawatts of electricity with 130 megawatts of electricity expected to be used in 2026 when the center becomes operational.The data center campus will be on Camp Ground Road just west of Shively, reports Louisville TV station WDRB. 

Doug Fleit, the CEO of PowerHouse Data Centers, in a statement said Louisville offered “everything hyperscale users need” including electricity at “attractive” rates, water access and a friendly business environment to “hyperscale growth in the region.” 

“The experience of working with Louisville Gas and Electric, the utility serving the site, has been a model for other utilities in the country to follow as well as a testament to Poe Companies’ relationships in the community and the market,” Fleit said. 

The GOP-dominated Kentucky legislature passed a law last year providing tax breaks for data centers seeking to locate in Jefferson County, something Kentucky Senate President Robert Stivers, R-Manchester, on Thursday hailed as “​​groundbreaking legislation that will spark job creation and expand the tax base.” The Republican said he worked closely with Kentucky Cabinet for Economic Development Secretary Jeff Noel and the private sector on the legislation. 

“This project is a game-changer, driving long-term economic growth in our major metropolitan center and boosting Kentucky as a regional business hub,” Stivers said in a statement. 

Louisville Mayor Craig Greenberg, a Democrat, in a statement said the project would create “thousands of good-paying jobs” in Kentucky’s largest city. 

Data centers are computer hubs that help power a wide range of internet services ranging from “cloud” storage space to the computational power needed to send emails, conduct credit card transactions and meet the boom in demand for artificial intelligence models. Large tech companies such as Google, Meta and others are particularly in need of “hyperscale” data centers, referring to the vast computational capacity needed for large-scale data processing and storage. 

These operations also use a tremendous amount of electricity and often use significant amounts of water as a cooling mechanism for the computers. The eventual electricity demand for the new data center campus is nearly equivalent to the entire capacity of Louisville Gas and Electric and Kentucky Utilities’ (LG&E  and KU) coal-fired unit at its E.W. Brown Generating Station in Mercer County. 

The establishment of new data centers across the country is creating a surge in demand for electricity that has utilities pushing to build new power generation, primarily through natural gas-fired turbines and through renewable energy. LG&E and KU, the electric utility serving the most Kentuckians, has pointed to power demand from data centers as a key driver of future electricity demand in its service area. 

John Crockett, president of LG&E and KU, in a statement said the “groundbreaking project will be historic for Kentucky and a continuation of new economic announcements happening throughout the Commonwealth.”

The release from the developers states “power supply will be supported by a new switch station to be built by LG&E and completed in September 2026, along with a dedicated on-site substation.” 

Environmental advocates have raised concerns over the heat-trapping greenhouse gas emissions from burning fossil fuels brought on by the power demand needed for data centers. Kentucky has little in the way of renewable energy, notwithstanding hydroelectric power, that currently contributes to the state’s electricity generation. Advocates also wonder if ratepayers would have to shoulder the costs for new electricity transmission and infrastructure to service data centers. 

Chris Whelan, a LG&E and KU spokesperson, in an email said all projects needed to serve the electricity load of the data center, including building a substation, would be done “within the guidelines of safety and regulatory protocols.”

She said the utility doesn’t see an “immediate need” for approvals from regulators to extend electrical infrastructure but that “other approvals may be needed in the future as more details come together.”

This story was updated with commentary from an LG&E and KU spokesperson.

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