Dive Brief:

• Kentucky Utilities and Louisville Gas and Electric on Friday asked state utility regulators for permission to build two 645-MW gas-fired units, a 400-MW/1,600-MWh battery storage project and a selective catalytic reduction project for a coal-fired unit at a combined cost of $3.7 billion.
• The new capacity is needed to serve potential data center customers and the BlueOval SK Battery Park being built by Ford and SK On, a South Korean battery manufacturer, the PPL subsidiaries said in a filing with the Kentucky Public Service Commission. The utilities have about 6 GW in potential data center customers and another 2 GW in other possible customers, according to the filing.
• Without the proposed resources, KU and LG&E would have to buy large amounts of power from the wholesale market — which would be contrary to the recent PSC directives — or institute blackouts or deny service to new customers, which would violate their obligations to serve new and existing loads, they said.

Dive Insight:

The data center pipeline for PPL utilities in Kentucky and Pennsylvania continues to grow, according to the parent company. The utilities have about 48 GW in active data center requests in Pennsylvania and nearly 6 GW in Kentucky, PPL said Feb. 13 in an earnings presentation.

In Kentucky, attracting data centers is of “paramount importance,” according to legislation passed last year by state lawmakers, KU and LG&E told the PSC.

Those efforts appear to be succeeding. Largely driven by data center development, KU and LG&E expect their annual electricity sales will jump 47% to about 48,130 GWh in 2032 from 32,800 GWh this year, according to their filing with the PSC. They expect their summer and winter peaks to increase nearly 30% to about 8,030 MW and 7,930 MW, respectively.

Electricity use in the utilities service areas also jumped during recent winter storms, such as Winter Storm Enzo in January, indicating more generating resources are needed, according to KU and LG&E.

U.S. utilities are turning to gas-fired generation to meet their resources needs, according to KU and LG&E. “Natural gas is the dominant fuel source for generation utilities are installing and planning to install now as reliable, around-the-clock, year-round, fully dispatchable capacity,” Stuart Wilson, director of energy planning, analysis and forecasting for KU and LG&E, told the PSC.

The utilities expected the gas-fired projects will cost about $2.8 billion, the lithium-ion Cane Run battery facility will cost $775 million and the SCR project will cost $152 million, according to their application with the PSC.

It will take five years to build the gas-fired units and three years to build the energy storage facility, the utilities said.

KU and LG&E expect to finance the proposed facilities with a combination of cash flow and new debt and equity. They said they plan to seek cost recovery for the gas-fired units and energy storage projects in future general rate cases.

The PPL subsidiaries anticipate the PSC will rule on the proposal by November.

In part, KU and LG&E said they want to self-build their proposed battery storage project because of the failure to develop six solar projects they contracted for through power purchase agreements.

Three of the projects were canceled and the remaining face pricing challenges, according to the utilities.

“In addition to land control and local permitting and zoning challenges, recent dramatic increases in solar pricing mean that the three remaining solar PPAs’ pricing is now significantly below the current market price for solar, making it less likely they would proceed even absent the other challenges,” Chuck Schram, KU and LG&E director of power supply, told the PSC. “If the companies had been counting on these facilities to develop and produce energy as initially anticipated to maintain reliable service (rather than to serve primarily as fuel price hedges), this execution risk turned lack-of-execution reality could have adversely affected customers.”