Data Centers in Kentucky

Kentucky – Low-Cost Power in a Strategic Location

Kentucky offers a compelling combination of low industrial power costs and a strategic geographic position, making it a strong contender for disaster recovery sites and latency-sensitive applications serving the Midwest and Southeastern United States. The state's supportive tax climate, with specific incentives for data centers, further enhances its appeal for new infrastructure investments.

Kentucky: At A Glance

Network & Connectivity Ecosystem

Kentucky serves as a viable secondary market with adequate connectivity for most enterprise needs. While not a primary interconnection hub, it provides reliable access to national networks.

Carrier Density & Carrier Neutrality: The state is served by over 12 network providers as of September 2025. Carrier-neutral facilities are available, primarily in the larger metro areas of Louisville and Lexington, offering choice and competitive pricing.

Direct Cloud On-Ramps: There are no public cloud on-ramps located within Kentucky as of September 2025. Businesses connect to cloud providers like AWS, Google Cloud, and Microsoft Azure through dedicated circuits to major hubs such as Chicago, Illinois, or Ashburn, Virginia.

Internet Exchange Points (IXPs): Public peering is limited within the state. Most network interconnection occurs privately within colocation facilities or is routed through major exchange points in nearby regional hubs like Chicago and Atlanta.

Bare Metal: Bare metal server options are available in Kentucky, providing a cost-effective alternative to hyperscale cloud for specific workloads. Providers such as ColoCrossing offer dedicated servers in the region.

Power Analysis

Kentucky's primary advantage is its exceptionally low cost of power, driven by a grid dominated by traditional energy sources.

Average Cost Of Power: Industrial electricity rates average $0.06/kWh as of 2023, which is one of the lowest in the United States. This pricing structure delivers significant operational savings for power-intensive computing. The state's energy mix is primarily composed of coal (around 70%) and natural gas (around 25%).

Power Grid Reliability: The power grid is generally reliable and well-engineered, particularly in the industrial and commercial corridors where data centers are located. Access to multiple substations is common for critical facilities, ensuring redundant power delivery.

Market Access, Business & Tax Climate

Kentucky combines a business-friendly tax environment with a central location ideal for regional distribution and service delivery.

Proximity To Key Business Districts: Data centers are concentrated near the economic hubs of Louisville and Lexington. These locations support key local industries including logistics, healthcare, and manufacturing, providing low-latency access for local enterprise operations.

Regional Market Reach: From its central position, Kentucky can effectively serve a large portion of the U.S. population in the Midwest and Southeast. It is a strategic location for companies requiring a middle-ground presence between major data center markets like Chicago and Atlanta.

Tax Advantage For Data Centers: The state offers significant financial benefits for data center operators and tenants. Approved projects can receive exemptions on sales and use tax for essential equipment like computers, servers, and cooling systems, directly reducing capital expenditure.

Natural Disaster Risk

Kentucky has a moderate natural disaster risk profile, with a FEMA National Risk Index score of 37.13 out of 100 as of September 2025. The risk landscape is free from major coastal threats like hurricanes.

Key risks for the region include severe weather events. The most significant threats are tornadoes, severe thunderstorms with hail and straight-line winds, riverine flooding, and earthquakes originating from the New Madrid Seismic Zone. Other notable risks include winter weather and lightning.