LG&E announces first major data center electric customer

Rhea-AI Summary

Louisville Gas and Electric Company (LG&E), a PPL subsidiary, has announced its first hyperscale data center electric customer through a joint venture between PowerHouse Data Centers and Poe Companies. The project will develop Kentucky's first 400-megawatt data center campus in Louisville, with the initial 130 megawatts becoming available in October 2026.

The development secured an initial power capacity of 335 megawatts, expandable to 402 megawatts, supported by a new LG&E switch station to be completed in September 2026. The project benefits from a 50-year tax exemption program approved by the Kentucky Legislature in 2024 for data centers in Louisville and Jefferson County. Construction will begin in 2025, with the first building operational by Q4 2026.

The campus will utilize Louisville Water Company's infrastructure and the Ohio River's water supply, averaging 75 billion gallons daily, for cooling and operational efficiency.

Positive

• Secured major new customer for 400MW data center campus development
• Initial power capacity of 335MW with expansion potential to 402MW
• Project benefits from 50-year tax exemption program
• Strategic location between Mid-Atlantic markets and Midwest

Negative

• First building won't be operational until Q4 2026
• Significant infrastructure investment required (new switch station and substation)

Insights

Data Center Infrastructure Expert

This hyperscale data center project represents a major infrastructure development with significant revenue potential for PPL through its LG&E subsidiary. The 400-megawatt campus will be one of the largest data center developments in the region, with the first phase delivering 130 megawatts by October 2026. The secured power capacity of 335 megawatts with expansion potential to 402 megawatts indicates substantial long-term electricity consumption and revenue generation.

The strategic location at the crossroads of Mid-Atlantic and Midwest markets, combined with the 50-year tax exemption program, positions this project favorably against competing markets. The site's access to abundant water resources from the Ohio River (75 billion gallons daily) provides important cooling capacity for high-density computing operations, addressing a critical infrastructure requirement that often constrains data center developments.

Utility Financial Analyst

The hyperscale data center partnership presents a significant revenue opportunity for PPL Data centers are among the most energy-intensive customers for utilities, with consistent base load demand and high reliability requirements. Based on industry standards, a 400-megawatt data center campus typically generates annual revenue between $350-450 million for utility providers at average industrial electricity rates.

The dedicated switch station and on-site substation investment signals LG&E's commitment to supporting large-scale industrial customers, while potentially creating opportunities for grid modernization and infrastructure upgrades. The 50-year tax exemption program enhances the project's long-term viability and could attract additional data center developments to the service territory, further expanding PPL's industrial customer base.

Market Research Analyst

This development positions PPL strategically in the rapidly growing data center market. The timing aligns with increased demand for data center capacity driven by AI computing requirements and digital transformation initiatives. The project's scale and location could establish Louisville as a new tier-2 data center market, potentially attracting additional technology investments to PPL's service territory.

The partnership with established developers like PowerHouse and Poe Companies reduces execution risk. PowerHouse's track record in major markets and Poe's local expertise create a strong foundation for project success. The secured power capacity and existing zoning approvals significantly de-risk the development timeline, with operations scheduled to begin in Q4 2026. This positions PPL to capture growth in the data center sector while diversifying its industrial customer base.

LG&E's new utility partnership with Poe Companies and PowerHouse Data Centers sets stage for Kentucky's first hyperscale data center campus

LOUISVILLE, Ky., Jan. 16, 2025 /PRNewswire/ -- Louisville Gas and Electric Company, a subsidiary of PPL Corporation, announced today its first hyperscale data center electric customer.

A joint venture between PowerHouse Data Centers, a leading real estate developer for next-generation hyperscale data centers and division of American Real Estate Partners (AREP), and Poe Companies, a Louisville-based real estate developer with properties in Kentucky and across the U.S., was announced earlier today. The joint venture is developing Kentucky's cutting-edge 400-megawatt data center campus which will be located in Louisville. The first 130 megawatts will be available in October 2026.

"We are proud to serve Kentucky's first hyperscale data center campus," said John R. Crockett, president of LG&E and KU and chief business development officer for PPL Corporation. "This groundbreaking project will be historic for Kentucky and a continuation of new economic development announcements that are happening throughout the Commonwealth. We're thankful for the Poe Companies and PowerHouse Data Centers teams for their vision and commitment to making this happen in Louisville and applaud the legislature and Governor Beshear for passing the enabling legislation that puts Kentucky on the data center map."

The joint venture between Poe and PowerHouse combines both companies' shared expertise, values, and vision for the campus and future development in the region. Poe is a distinguished real estate developer with a deep and proven record in delivering premium properties. Similarly, PowerHouse brings a successful track record of delivering real estate strategy and development across major markets nationwide.

 In 2024, the Kentucky Legislature approved a 50-year tax exemption program for data center projects located within Louisville and Jefferson County. Kentucky and the surrounding area have emerged as a key location for data centers seeking low-latency peering, and due to its location at the crossroads between the Mid-Atlantic markets and the Midwest.

"Louisville offers everything hyperscale users need in the market – immediate and reliable power at very attractive rates, water, connectivity and a business environment that encourages more hyperscale growth in the region," said Doug Fleit, co-founder and CEO of PowerHouse. "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." 

"Poe Companies is honored to partner with PowerHouse Data Centers, a truly world class data center developer, on this transformative project," said Steve Poe, CEO of Poe Companies. "Our combined expertise and shared vision for innovation continues to position Louisville as a key hub for cutting-edge digital infrastructure."

Displaying one of its core strengths as a developer, PowerHouse and Poe have secured access to an initial power capacity of 335 megawatts for this campus with near-term expansion up to 402 megawatts. The power supply will be supported by a new LG&E switch station, to be completed in September 2026, and a dedicated on-site substation. The campus will also benefit from access to the Louisville Water Company's strong infrastructure system and excess capacity with its water treatment system as well as the Ohio River, with an average of 75 billion gallons flowing by Louisville daily, ensuring effective cooling and operational efficiency for high-density computing needs. With all essential zoning in place, the site will begin construction in 2025 with the first building scheduled to be operational by the fourth quarter 2026.

Louisville Gas and Electric Company and Kentucky Utilities Company, part of the PPL Corporation (NYSE: PPL) family of companies, are regulated utilities that serve more than 1.3 million customers and have consistently ranked among the best companies for customer service in the United States. LG&E serves 335,000 natural gas and 436,000 electric customers in Louisville and 16 surrounding counties. KU serves 545,000 customers in 77 Kentucky counties and 28,000 in five counties in Virginia. More information is available at www.lge-ku.com and www.pplweb.com.

For more information:
Contact the LG&E and KU 24/7 media hotline at (502) 627-4999.

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SOURCE Louisville Gas and Electric and Kentucky Utilities

FAQ

What is the capacity of LG&E's new hyperscale data center project in Louisville?

The data center campus will have a total capacity of 400 megawatts, with initial power capacity of 335 megawatts, expandable to 402 megawatts. The first 130 megawatts will be available in October 2026.

When will PPL's Louisville data center campus begin construction and operations?

Construction will begin in 2025, with the first building scheduled to be operational by the fourth quarter of 2026.

What tax benefits does the Louisville data center project receive?

The project benefits from a 50-year tax exemption program approved by the Kentucky Legislature in 2024 for data centers located within Louisville and Jefferson County.

How will the PPL data center campus in Louisville handle cooling requirements?

The campus will utilize Louisville Water Company's infrastructure system and the Ohio River's water supply, which averages 75 billion gallons flowing daily, for cooling and operational efficiency.

What infrastructure improvements are planned for PPL's Louisville data center project?

The project includes a new LG&E switch station to be completed in September 2026 and a dedicated on-site substation to support the power supply.