Kentucky Utilities Study $1.3 Billion Pumped Storage Project as Power Demand Climbs

A Legacy Storage Technology Gets a New Look

Two Kentucky utilities are studying a proposed 266-MW pumped storage project in the southeastern part of the state, a sign that rising electricity demand is reviving interest in one of the grid’s oldest large-scale storage technologies.

Louisville Gas and Electric and Kentucky Utilities, both PPL utilities, are assessing Rye Development’s Lewis Ridge project, a planned $1.3 billion closed-loop pumped storage facility near Blackmont, Kentucky. Rye received a preliminary permit from the Federal Energy Regulatory Commission in 2022 and filed a license application in June, according to the source report.

The project would be the first of its kind for Kentucky, according to LG&E and KU President John Crockett III, who described it as a way to explore additional flexible and sustainable generation resources. Pumped storage works by moving water between reservoirs. When power is cheap or plentiful, electricity pumps water uphill. When the grid needs power, water flows back down through turbines to generate electricity.

Demand Growth Is Changing the Storage Conversation

The renewed interest is being driven by a familiar but intensifying set of pressures: data centers, AI computing, industrial expansion and manufacturing load growth. Rye Development CEO Paul Jacob told Utility Dive that the company sees a large market for storage of all kinds, with pumped storage playing a major role.

That demand context matters because pumped storage is capital-intensive and slow to develop. It is not a short-cycle battery project that can be sited and interconnected quickly. But it can provide large-scale, long-duration flexibility that becomes more valuable as the power system adds variable renewable generation and faces sharper peak demand.

Rye’s own business shift reflects that broader market movement. The company initially focused on adding generation at non-powered dams, typically in the 5-MW to 10-MW range. About four years ago, it shifted toward pumped storage and now has seven to eight projects under development at any given time.

The Economics Remain Difficult

The Lewis Ridge proposal also shows why pumped storage has been hard to build in the United States. At about $4.9 million per MW, the project’s cost profile is challenging. The source report notes that it does not appear viable without a large power customer, such as a data center hyperscaler, willing to help pay for the resource.

That point is central to the current power market. AI and cloud infrastructure operators are increasingly shaping utility resource planning because their load growth can be large, concentrated and fast-moving. A hyperscaler-backed storage project could give a utility more confidence to support an expensive long-lived asset while giving the customer a way to secure more reliable power.

If LG&E and KU pursue the project with Rye, Kentucky Utilities would take a 63% ownership stake and Louisville Gas and Electric would own 37%, based on an August filing with the Kentucky Public Service Commission. The utilities said they would update the allocation if they seek permission from regulators, taking into account their loads and resource plans.

Why Pumped Storage Still Matters

Battery storage is expanding quickly, but pumped storage remains attractive for certain grid needs because it can store large amounts of energy and discharge over longer periods. It can help manage daily demand swings, support reliability and provide a form of dispatchable capacity that is not tied to fuel deliveries.

The United States has not built a utility-scale pumped storage facility in decades, which makes the Kentucky study notable even before any final investment decision. The project is still at the assessment and regulatory stage, and cost remains a major obstacle. But the fact that utilities are seriously evaluating it shows how much the demand outlook has shifted.

For Kentucky, the project could diversify the resource mix and add a large flexible asset to the regional grid. For the broader energy sector, Lewis Ridge is another example of how AI-driven load growth is changing which technologies look viable. Tools that once appeared too expensive or too slow may get a second hearing if they solve a reliability problem that batteries, gas plants or transmission upgrades cannot address alone.

This article is based on reporting by Utility Dive. Read the original article.