Louisville Gas and Electric Company and Kentucky Utilities Company are forecasting in their Integrated Resource Plan (IRP) filed with the Kentucky Public Service Commission (KPSC) the need for additional generation due to the expected influx of data centers and economic development across the utilities’ service territories.
The utilities say Kentucky is seeing “unprecedented” economic growth from data centers and other opportunities that don’t seem to be slowing down. Despite the amount of energy efficiency, customer-installed solar, and other energy-saving activities that are forecasted to reduce load by over 3.5% by 2032, LG&E and KU expect economic development to increase system load by 30% to 45% by 2032 compared to 2024.
“There are always uncertainties when you are planning 15 years out. The idea behind the IRP is to pick a point in time and forecast the best path forward based on the current information that can be modelled,” said David Sinclair, vice president–Energy Supply and Analysis. “We know there likely will be market and regulatory changes that could impact our actual plans, but we are confident that, given what we know today, the IRP modelling and our recommendation provide us with a solid direction forward.”
In the base case, the utilities recommend that the least-cost path forward to support existing customers, new load and compliance with environmental regulations, would be to build two new natural gas combined-cycle generation units (one in 2030 and another in 2031); install 400 MW of battery storage in 2028, another 500 MW of battery storage and 500 MW of solar in 2035; and add selective catalytic reduction to the Ghent Generating Station Unit 2 in 2028 and environmental compliance technology at Ghent and Trimble County Generating Station by 2030. Mill Creek Generating Station Units 3 and 4 and E. W. Brown Generating Station Unit 3 would retire in 2035 near the end of the IRP planning period.
In addition, since the growth of data centers load is driven by customers with “aggressive” carbon goals, the IRP presents an enhanced solar plan, if requested by customers or if solar prices become more economically competitive with other generation. In that scenario the first 200 MW are forecasted to be installed in 2028, followed by 200 megawatts in 2030 and 600 megawatts in 2032.
According to a study published by EPRI in May, data centers could consume up to 9% of U.S. electricity generation by 2030 — more than double the amount currently used. Demand for computing power from data centers, fueled by artificial intelligence and other new technologies, requires enormous amounts of power.In the U.S., data center demand is expected to reach 35 GW by 2030, up from 17 GW in 2022, McKinsey & Company projects. Grid operators and utilities are projecting significant load growth driven by electrification, new manufacturing, and data center development.
Utilities across the U.S. are grappling with how to equitably address growing data center demand through tariff structures.
In late August, the Federal Energy Regulatory Commission (FERC) rejected a proposal from Basin Electric Power Cooperative that requested to create new wholesale power sales rate schedules for cryptocurrency centers and other large loads.
Basin made the proposal in March, which requested three crypto blockchain rate schedules and a new large load schedule for other non-crypto loads greater than 75 MW, according to law firm Troutman Pepper. In the proposal, Basin said it had already had 200 MW of crypto load in its territory last year, and expected at least another 1,000 MW over the next several years.
Some utilities are attempting to collaborate with technology providers, however. Amazon, Google, and Microsoft supported an effort by Duke to develop new tariffs designed to support the long-term sustainability goals of data center owners.
