Another EKY community explores a $250M Appalachian data center
Another Eastern Kentucky city is in talks with a data center developer to build a facility in Central Appalachia.
The city of Pikeville entered into a preliminary agreement with Lexington-based MD Squared Power to explore building a $250 million, 25- to 30-megawatt computing center on roughly 100 acres of identified parcels in the Kentucky Enterprise Industrial Park.
Officials in counties around Ashland announced an agreement they had signed with Maryland-based TeraWulf last week for a 1-gigawatt facility primed to become the largest artificial intelligence and cloud computing hub in the state. Less than a week later, concerns over the facility had spilled over in a raucous community hall rife with shouting and name-calling.
Tech firms are rapidly expanding into Central Appalachia in search of cheap land and electricity. In March, Google said it had purchased land for a data center in Putnam County, West Virginia. Wythe County, Virginia, just southeast of the easternmost tip of Kentucky, landed a $1 billion AI computing campus last year.
Small Appalachian communities like Pikeville and Ashland are shells of their former selves after coal mines came and went over the last century. Now, they are weighing the allure of a potentially enormous tax revenue windfall against another round of developers eager to capitalize on the region’s cheap resources.
But like the Ashland project, Pikeville City Manager Reggie Hickman said the city would site the computing facility in an industrial park, well away from residential areas.
“The city has put a big investment into that park, and this is exactly what an industrial park is supposed to do,” he said. “It’s an ideal fit for us. We have water; we have power available; we have the location. Our thought process was, look, let’s do our homework, find out how this is working and proceed from the mistakes others have made and try to do it the right way.”
The Memo of Understanding that Pikeville officials signed with MD Squared Power in late April gives both the city and developer the option to negotiate a final development agreement over the next 120 days. City officials say they will hire an independent attorney with experience in data center development to conduct an economic and site analysis before signing any agreement with the firm.
MD Squared Power projects that the facility would create more than 190 construction jobs and 40 permanent, full-time positions with wages above the $44,000 Pike County median household income. Officials say they want to verify and ensure enforceable commitments to those numbers before an agreement is signed.
We take a hard, honest look at every realistic opportunity to bring jobs and investment to this community,” Mayor Jimmy Carter said in a statement. “That means doing our homework, looking at the benefits, and protecting the public from any potential pitfalls. That’s what this process is designed to do.”
The Kentucky Enterprise Industrial Park is a 190-acre development owned by the city that houses two operating businesses. The site includes a nearly 40-acre Kentucky Cabinet for Economic Development Build-Ready Program site.
Officials stressed that the preliminary agreement the city signed does not constitute an agreement to negotiate or convey land. Although the details haven’t yet been hashed out, Hickman said the city would expect the developer to meet all of its local tax obligations.
“We’re approaching this cautiously and methodically,” Hickman told the Herald-Leader Friday.
The developer has expressed interest in growing the facility to between 75 and 100 megawatts should additional power capacity become available.
Kentucky Power is the primary electricity provider in Pike County and across a 20-county region along the Kentucky border with Ohio, West Virginia and Virginia. The utility charges some of the highest residential electricity rates in the state, which has stirred controversy in and around Ashland.
City officials the Herald-Leader spoke to Friday afternoon said they are aware of questions and concerns over data center development in other Kentucky communities and want to ensure that whatever decision the city and developer make will not raise rates for Kentucky Power customers in Pikeville or the surrounding communities.
Hickman said the city has reviewed its potable water production output and believes it can “comfortably meet” the data center’s requirement. The center would be a closed-loop system that doesn’t regularly rely on the municipal supply. The city also wants to negotiate over potential noise and air quality implications during the construction and operation phases as well as any potential for stormwater management and runoff water quality.
Officials also want to ensure that any commitments it makes with the data center developer will extend to any users or under a property sale or corporate restructuring.
