Kentucky to make data centers prove they won't raise power bills or damage wetlands

Kentucky is tightening its rules for data center growth, with Gov. Andy Beshear issuing an executive order aiming to protect citizens and the environment from the side effects of these massive facilities. 

Before a project can advance under the new executive order, developers must show it will not increase household electricity costs or harm wetlands and other natural resources in the state.

What's happening?

Local governments will continue to decide where data centers can be built through zoning, even after Gov. Beshear's Aug. 6 executive order increased state oversight of the industry in Kentucky, according to WDRB.

For a project to move forward, applicants must now submit detailed energy plans showing that their operations would not raise residents' power costs, demonstrate they can comply with environmental rules, and pay their share of state, local, and school taxes, per the Kentucky League of Cities.

The order also requires companies to clearly share proposed locations, project details, and job opportunities with communities, while directing the Kentucky Public Service Commission to block utility rate increases connected to data center operations, as reported by WDRB.

If a development would damage air quality, water resources, wetlands, or other natural resources, the Kentucky Energy and Environment Cabinet is required to deny the permit, according to the Kentucky League of Cities.

Why does it matter?

Data centers have become essential to cloud computing and the growth of artificial intelligence, but the benefits they bring come with high local costs.

Because these facilities use enormous amounts of electricity, they may add stress to the power grid and increase pressure for utility rate hikes if those expenses are passed along to customers.

Their environmental footprint can also be substantial, with effects on water supplies, wetlands, and air quality depending on how and where they are built. Noise and sound pollution are additional environmental concerns that impact both wildlife and residents.

In addition to this executive order, more than 30 communities in the state have already enacted moratoriums or ordinances that limit data center construction, according to WDRB.

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