Data Centers in Kentucky: Opportunities and Considerations

The advent of artificial intelligence has rapidly become an integral part of everyday life. AI applications, such as ChatGPT, have become valuable tools to assist performance at work and answer everyday questions at home. As a result, demand for data centers is growing across the United States, including Kentucky. 

As this sector evolves, state and local officials are evaluating how data centers fit within long-term development strategies, including land use needs, workforce impacts, and energy capacity planning. 

Data Centers: Where and What are they? 

More than 4,200 data centers operate or are under development across the country. Approximately one-third of those are in Virginia (667), Texas (417), and California (326). According to Data Center Map, Kentucky has 37 data centers across nine different markets, 24 of which are located within Jefferson County.1  

What constitutes a data center can be broad, but the most common are hyperscale data centers: large-scale operations for advanced functions such as cloud computing, crypto mining, and AI generation. They can also be enterprise data centers, which serve as private/business data storage, or co-location data centers/service providers, which operate as rental facilities for small businesses. On average, a data center houses around 2,000 to 5,000 servers. However, the growth of hyperscale facilities has resulted in various states competing to attract data centers to their communities. This raises the question: How do cities address the need for this increased space and the ability to generate large amounts of power?  

Opportunities for Communities 

Data centers can generate substantial economic activity. Construction phases support high-wage jobs and contracting opportunities, while ongoing operations contribute to local employment and can help attract related technology businesses. Some regions have documented measurable increases in local tax receipts and improved infrastructure reliability after multiple data centers located in a region. 

According to a study by PricewaterhouseCoopers (PwC), data center-related jobs increased by 20% nationwide between 2017 and 2021. They also found that the expansion of data centers has helped create, on average, 7.4 additional jobs that supported local economies throughout the U.S. A study by the Northern Virginia Technology Council estimated that Virginia generated about $31 billion in supported economic output from data center construction and operations in 2023.  

Because of this economic boom, private electric companies are also providing infrastructural support while electric grids are being expanded. In Ohio, American Electric Power (AEP) has initiated a broad transmission build-out and special-rate structures for data centers. 

Planning and Capacity Considerations 

Alongside these economic opportunities, data center development presents planning challenges that policymakers are monitoring closely.  

Energy demand is among the most widely cited concerns. The U.S. International Energy Agency (IEA) estimates that in 2024, data centers utilized more than 4% of the country’s total electricity consumption. Further, they estimate that electricity consumption is expected to more than double (133%) by 2030.  

In 2023, the Electric Power Research Institute estimates that data centers consumed high levels of electric supply in Virginia (26%), North Dakota (15%), Nebraska (12%), Iowa (11%), and Oregon (11%). As a result, several states, including California, Illinois, Minnesota, New Jersey, and Virginia, have explored legislation that would require or incentivize data centers to draw some of their power from renewable energy sources and to report their electricity and water usage.  

A study by Carnegie Mellon University estimates that data centers negatively impact user utility bills. The study also projects that crypto mining may result in an 8% increase in electricity bills by 2030 – this percentage may be much greater in higher-demand markets. A May 2025 report from the Institute for Energy Economics and Financial Analysis (IEEFA) highlighted the impact on The Pennsylvania-New Jersey-Maryland Interconnection (PJM) electricity market. The PJM, which is the world’s largest wholesale electricity market, stretching from Illinois to North Carolina, will experience an increase of $16 a month in the average residential bills in Ohio due to the increase in capacity because of data centers. 

Large hyperscale developments also require extensive land and infrastructure. Local leaders may evaluate impacts related to zoning, stormwater systems, transportation, noise, and emergency services. 

Local Governments Deserve a Seat at the Table 

Even though data centers have been around for decades, the growing demand for advanced cloud computing and AI has resulted in some states quickly trying to court these economic developments. Cities are at the forefront of land-use and zoning decisions, utility and infrastructure planning, stormwater and environmental oversight, and police, fire, and emergency response readiness. Because of these responsibilities, local governments are essential partners in conversations about site selection, service delivery, and ensuring infrastructure capacity keeps pace with development. 

Early collaboration between state leaders, utilities, developers, and local officials can help align data center growth with the needs of the broader community, which will ensure residents and businesses share the benefits of technology-driven investment.