What are data centers? And other things to know about these KY projects
Tucked into industrial parks and planned along major corridors across Kentucky with its cheap land and central locale, data centers are causing controversy.
As more companies look to invest in the Bluegrass State amid the artificial intelligence boom, residents are hoping they’ll be shielded from unwanted environmental impacts and higher electric bills once data centers become their neighbors.
A number of questions about data center proposals have gone unanswered as deals get made behind closed doors and developers move fast. Here are some answers to common questions about Kentucky’s data center projects.
What is a data center?
A data center is a physical space that in most cases operates 24/7, with a collection of servers to run applications, store data and process computer functions.
Devices are constantly interacting with data centers as people go about their daily routines interacting with the internet or the cloud, said Brian Davis, a leader in the Kentucky Chapter of the American Planning Association, the professional organization for urban planners.
Businesses use data centers for virtual communication, file sharing, productivity applications and more recently, artificial intelligence. Tech companies are increasingly using data centers to train and operate artificial intelligence systems. Training an AI model using large amounts of data takes electricity, water, space and other resources. It’s data centers for AI models that have caused the most controversy.
Data centers date back to 1946, when a physical space dedicated to storing data was created for the first programmable, general use digital computer, the Electronic Numerical Integrator and Computer, which was pioneered by University of Pennsylvania engineers for the U.S. Army’s use in World War II.
Types of data centers
There are five main kinds of data centers, according to CoreSite, including colocation, edge, modular, enterprise and — the one communities are most often seeing proposed — hyperscale.
Modular data centers are portable and used when a temporary boost in data storage capacity is necessary, like on a construction site or for disaster relief efforts.
Edge data centers work to improve service speed between programs and devices. They function similar to cell towers; always working to find the strongest connection in the most timely way.
Data centers owned and used by companies to process their own activities are called enterprise data centers, like those built and operated by Google or Amazon.
Some data centers, called colocation data centers, are in business to provide digital space to a number of businesses looking for off-site data storage by leasing servers to process data for other companies.
Hyperscale data centers are what they sound like: large. They range from 500,000 square feet to millions of square feet.
With the increase of remote work comes a lack of central locations to source digital storage, said Davis from the American Planning Association. Data centers provide cloud storage without the need for central locations.
“This increase in data centers, it’s just to kind of keep up with the public’s consumption and need to be connected all the time,” Davis said. “So that’s kind of what we’ve evolved to.”
Recent data centers proposed in communities are often hyperscale, Davis said. That kind of facility has a number of moving parts in addition to servers, such as generators and water storage tanks to support cooling as a result of heat generated from running electricity.
Data stored in any type of facility sits inactive on a server until someone attempts to access it. But AI servers, especially those at hyperscale, are running nonstop so language models can solve math equations in training and then make inferences based on data it has collected.
Environmental impact of data centers
The environmental footprint of a data center extends far beyond the warehouse-sized buildings that house rows of computer servers. While often marketed as invisible infrastructure powering the digital economy, data centers are among the most resource-intensive facilities built today, consuming vast amounts of electricity and water to keep equipment running.
“We’re only now beginning to understand how much power and water these things use,” said Kentucky Conservation Committee executive director Lane Boldman. “We don’t know what we don’t know yet.”
Thousands of servers generate significant heat, requiring extensive cooling systems to prevent equipment from overheating. Many data centers rely on millions of gallons of water annually for cooling, while others use large amounts of electricity to power air conditioning and refrigeration systems.
Enhancements in technology are improving resource consumption. Several Kentucky data centers under development plan to use “closed-loop” cooling systems that recycle water.
But the surge in artificial intelligence has heightened concerns about resource consumption.
Those concerns have begun to surface in Kentucky, where local officials and residents are weighing the economic benefits of data center development against potential strains on public resources.
The state has marketed itself as an attractive destination for data centers because of its central location, relatively affordable land and access to electricity. But large facilities can require as much power as a small city, prompting questions about whether utilities will need to build new generation capacity or transmission infrastructure to meet demand.
Jobs at data centers
A vast majority of data center-related employment is temporary and is in trades like construction, infrastructure and electrical. While high in headcount, the jobs only last as long as the facility is being built. The number of jobs created varies by size of the data center, how long construction is projected to take and whether a new facility is being built or an existing building is being converted.
In Pikeville, officials are in talks with a data center developer to build a $250 million, 30-megawatt computing center on roughly 100 acres in the Kentucky Enterprise Industrial Park. Lexington-based developer MD Squared Power projects it would employ 190 people during construction and another 40 permanent, full-time positions would be needed to support daily operations once the center is built.
Project Lincoln, the now-withdrawn $6 billion data center campus proposal in Oldham County, estimated the hyperscale project would have supported about 175 on-site, permanent jobs following a years-long build that was projected to employ thousands who’d build nearly a dozen buildings across 265 acres.
Full-time data center jobs are filled by technicians who oversee functionality of servers and other equipment. Education background in computer science, information technology and electrical engineering is typical and the median annual salary for a data center technician is $88,000, according to CBS News.
Who pays for data centers?
The financial burden of constructing and operating data centers is divided among the builders, the governments offering financial incentives and the public, who usually pay the cost of grid and other infrastructure upgrades.
Government-backed subsidies and the financial strain of increasing electric and water bills for residents has led to the most pushback.
Residents worry deals may fall through and communities would shoulder the cost of a facility that doesn’t operate, like what’s happened with projects in Elizabethtown related to electric vehicles and in Ashland related to steel. There is also concern every day electricity customers would see their bills increase if a data center moves into their community and the demand for power increases.
As utilities invest billions to build new power plants and transmission lines to meet increasing demand which is in part driven by data centers, upgrade costs are spread across existing residential and commercial customers.
Last October, Kentucky Utilities and Louisville Gas & Electric were given approval to move forward with plans to spend $3 billion on two natural gas power plants. In its application, the utility companies said the need for the plants to support data centers was in part the result of tax incentives passed in 2024 by the Kentucky General Assembly to entice businesses to locate in the commonwealth.
A number of municipalities and the Kentucky General Assembly have debated putting rules in place that would mandate developers only build if they pay for infrastructure themselves. Consumer protection bills did not pass earlier this year in Frankfort.
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