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Kentucky   Kentucky Profile

State Profile and Energy Estimates

Profile AnalysisPrint State Energy Profile
(overview, data, & analysis)

Last Updated: May 16, 2019

Overview

Bordered on the north by the Ohio River, Kentucky stretches from the Appalachian Mountains in the east to the flat plain of the Mississippi River in the west.1 In between, the rolling hills of the state's fertile Bluegrass region extend southward from the Ohio River to the Pennyroyal region, which is famous for its thousands of caverns and springs, including Mammoth Cave National Park.2,3 Major coal deposits are found both in the Central Appalachian Basin in the eastern part of the state and in the Illinois Basin in the northwest.4 Those basins also contain oil and natural gas reserves.5,6,7 Dams on the Tennessee, Cumberland, Ohio, and Laurel rivers provide Kentucky with hydroelectric power.8 Although two-thirds of Kentucky's agricultural economy is livestock, primarily thoroughbred horses and beef cattle, the state's ample rainfall, temperate climate, and fertile soils provide ideal conditions for growing several crops, including tobacco, soybeans, corn, and wheat.9,10,11 Corn and beverage waste from Kentucky distilleries provide feedstock for the state's ethanol production.12,13

Kentucky has an energy-intensive economy, and is among the top states in consuming the most energy to produce a dollar of gross domestic product (GDP).14 The industrial sector is the state's largest energy consumer, accounting for just over one-third of total energy use.15 Kentucky's location and low energy prices have helped attract manufacturing to the state. The industrial activities that make the largest contribution to Kentucky's GDP include the manufacture of motor vehicles; food and beverages; agriculture and forestry; tobacco products; and chemicals. Kentucky also has a large coal mining sector and petroleum refineries, both energy-intensive industries.16,17

Coal

In 2017, Kentucky accounted for about 5% of U.S. coal production.

In 2017, Kentucky ranked fifth in the nation in estimated recoverable coal reserves and fifth in coal production.18,19 Coal was mined in Kentucky as early as 1790. Since then, nearly 10 billion tons of coal has been mined in the state.20,21 The state's mines produce only bituminous coal.22 For many years, Kentucky was the third-largest coal-producing state, after Wyoming and West Virginia, and typically accounted for about one-tenth of total U.S. coal production.23 However, Kentucky's coal production has declined as coal-fired electricity generating plants that had been customers of Kentucky coal have retired.24,25,26 Also, Kentucky does not produce the metallurgical coal used in steelmaking like next-door West Virginia and Virginia.27,28,29 By 2017, Kentucky's total coal production decreased to about 5% of U.S. production.30 Still, about one-fifth of all U.S. operating coal mines are located in Kentucky, more than in any other state except Pennsylvania. About 60% of Kentucky's coal mines are surface mines, but the underground mines account for three-fourths of the state's total coal production.31

Benchmark prices for eastern U.S. coal are determined in the Central Appalachian (CAPP) coal delivery zone, which is located around the area where the Big Sandy River flows into the Ohio River. Kentucky meets Ohio and West Virginia at the rivers' confluence, and coal arrives from mines in those three states, Virginia, and Tennessee. The coal is delivered, typically by rail or truck, for transport by multi-car trains and barges to customers—including coal-fired electricity generating plants, industrial plants, commercial and institutional facilities, and coking plants—throughout the country.32

Kentucky sends half of its coal production to nearly two dozen states, where it is primarily used by power plants to generate electricity.33,34 Kentucky also exports some of the coal it produces to other countries. Coal exports were the highest in four years in 2017, when about 14% of the coal mined in the state was shipped abroad.35,36 Almost all the coal consumed in Kentucky is used for electricity generation. About half of the coal consumed in the state in 2017 was brought in from other states, primarily Wyoming, Illinois, and Indiana.37,38

Electricity

Kentucky relies on coal to generate a greater share of its electricity, about 75%, than any other state except West Virginia and Wyoming.

In 2018, coal-fired power plants supplied three-fourths of Kentucky's electricity generation.39 Historically, coal-fired power plants had produced more than nine-tenths of Kentucky's net electricity generation, but as older coal-fired generating units became more costly to operate, a number of coal-fired power plants in Kentucky were shut down or were retrofitted to burn natural gas.40,41,42,43 The state's coal-fired generation declined by about one-third over the past decade from nearly 90.6 million megawatthours in 2008 to 59.2 million megawatthours in 2018.44 Kentucky still relies on coal to generate about three-fourths of its electricity, a greater share than any other state except West Virginia and Wyoming.45 Kentucky remains among the top 10 states in the nation in coal-fired generating capacity—about 11,500 megawatts.46

Natural gas provides an increasing amount of Kentucky's net generation, fueling more than one-tenth for the first time in 2016. In 2018, the share of the state's electricity generation from natural gas-fired power plants increased to nearly one-fifth, reaching a record 14.6 million megawatthours.47 The rest of Kentucky's electricity generation, less than one-tenth, comes mostly from hydroelectric power plants, with small contributions from biomass and solar energy generation.48

Electricity in Kentucky is supplied to consumers by three investor-owned electric utilities, 26 cooperatives, and 20 municipal utilities.49 Electricity prices vary by provider, but, in 2018, Kentucky had the seventh-lowest average power price of any state and the lowest price east of the Mississippi River.50 About half of Kentucky households use electricity as their primary heating source.51

Petroleum

Kentucky has two refineries that can process about 283,000 barrels of crude oil per calendar day.

Kentucky accounts for less than 0.1% of U.S. proved crude oil reserves and production.52,53 Although half of the state's counties have producing oil wells, the biggest producers are located in far western and eastern Kentucky.54 The state's oil wells have produced fewer than 3 million barrels of crude oil annually for three decades, and Kentucky's annual crude oil production meets less than 3% of state demand.55,56

Crude oil is processed at Kentucky's two oil refineries.57 The largest refinery is in the city of Catlettsburg in northeastern Kentucky and can process 277,000 barrels of crude oil per calendar day to make motor gasoline, distillates, asphalt, heavy fuel oil, and propane.58 The smaller Somerset refinery in southeastern Kentucky can process about 5,500 barrels of crude oil per calendar day and produces transportation fuels, including diesel fuel and motor gasoline, as well as heating oil that is marketed in the region.59 Additional refined petroleum products arrive in Kentucky via interstate pipelines and by river barges at ports along the Ohio River.60,61

The transportation sector accounts for three out of four barrels of petroleum consumed in Kentucky,62 and motor gasoline accounts for almost half the state's total petroleum use.63 Although the use of conventional motor gasoline is not restricted in most of the state, all or part of three counties around Louisville are voluntary opt-in areas for the use of motor gasoline reformulated with ethanol to reduce air pollution. In July 2018, the state withdrew three of its counties that make up the southern suburbs of Cincinnati from the federal reformulated gasoline program.64,65,66 The industrial sector accounts for about one-fifth of the petroleum consumed in Kentucky. The remaining small amount of petroleum use is split between the commercial sector and the residential sector, where about 7% of Kentucky households heat with propane, fuel oil, or kerosene.67,68

Natural gas

Kentucky holds less than 1% of U.S. proved natural gas reserves, but organic-rich shales that underlie eastern Kentucky may hold substantial additional natural gas resources.69,70 The state also accounts for less than 1% of the nation's natural gas production.71 Most of the state's natural gas is produced from wells located in eastern Kentucky.72 The state's annual natural gas production rose in the early 2000s, peaking in 2010, but has declined by about one-third since then as natural gas prices decreased.73,74

Consumption of natural gas in Kentucky is greater than the state's production, and several interstate natural gas pipelines bring natural gas supplies to Kentucky consumers.75,76,77 For years, most of the natural gas that entered Kentucky arrived by pipeline from Tennessee. However, starting in 2015, Kentucky began receiving more natural gas produced in the Utica and Marcellus shale formations in Ohio and West Virginia. These two states are now the thoroughfare for more than two-thirds of natural gas transported by pipeline to Kentucky. More than 90% of the natural gas that enters Kentucky is sent on to other states, primarily Tennessee, Indiana, and Illinois.78 Some natural gas that enters the state is placed in storage. Kentucky has 23 underground natural gas storage facilities that can hold 222 billion cubic feet of gas—about 2.4% of total U.S. storage capacity.79,80

In 2018, Kentucky's industrial sector used nearly two-fifths of the natural gas consumed in the state, and the electric power sector was not far behind. Natural gas consumption in the state's electric power sector was almost eight times greater in 2018 than in 2013. The residential sector, where almost 4 out of 10 Kentucky households use natural gas for home heating, received about one-sixth of the natural gas delivered to end users in the state.81,82 In part because of the state's relatively mild winters, residential natural gas use per capita in Kentucky is lower than in about two-thirds of the states.83,84,85

Renewable energy

Renewable resources are a relatively small part of Kentucky's energy mix, and the state has no renewable energy standard.86 Hydroelectric power provides nearly all of the state's renewable electricity generation. In 2018, about 6% of the state's electricity generation was produced at nine dams.87,88 About one-tenth of the renewable generation in Kentucky, 0.6% of the state's total net generation, comes from biomass.89 Most of the biomass-fueled electricity generating facilities in Kentucky use landfill gas, but the largest facility—accounting for three-fourths of the state's biomass generation capacity—uses wood waste.90 The state's biomass resources also provide feedstock to a wood pellet plant, which has a production capacity of 55,000 tons a year.91

Kentucky has both utility-scale (1 megawatt or larger) and distributed (customer-sited, small-scale) solar power generation facilities, which together accounted for 0.1% of the state's electricity generation in 2018.92 The state's first utility-scale solar photovoltaic (PV) generating facility, the 2-megawatt Bowling Green Solar Farm, came online in 2011.93 Kentucky has few wind resources suitable for developing utility-scale power projects, and no commercial wind power facilities have been built in the state.94,95

Kentucky has ethanol and biodiesel manufacturing facilities. The state has two ethanol plants with a combined capacity of about 51 million gallons per year.96 Most of the ethanol is produced at a plant owned by a farmers' cooperative that uses corn as its primary feedstock.97 The smaller ethanol facility is a recycling operation in an abandoned bourbon distillery that produces ethanol from waste non-alcoholic and alcoholic beverages; sugars; industrial alcohols; health and beauty alcohols; and pharmaceutical manufacturing by-products.98 Kentucky also has three biodiesel production plants with a combined capacity of about 47 million gallons per year. The biodiesel plants use several feedstocks, including soy oil, used cooking oil, and waste vegetable oil.99

Kentucky does not have a renewable portfolio standard, but state law provides for net metering of distributed renewable generation from solar, wind, hydro, biomass, and biogas facilities of 30 kilowatts or less. Each power provider's obligation to connect eligible customer generators is limited to 1% of the provider's peak single-hour electricity load in the previous year.100 Kentucky also does not have an energy efficiency resource standard, but the state is home to the nation's first net-zero energy-use public elementary school building. The school design combines energy efficient systems, geothermal heat pumps, insulated concrete walls with high heat retention values, and a thin film rooftop solar PV system.101

Endnotes

1 World Atlas, Kentucky, Kentucky Geography, accessed April 16, 2019.
2 Kentucky Geological Survey, Physiographic Map of Kentucky and The Mississippian Plateau or Pennyroyal Region, updated August 1, 2012.
3 Kentucky Geological Survey, The Bluegrass Region, updated December 16, 2016.
4 U.S. Geological Survey, USGS Coalfields of the Conterminous United States, accessed April 16, 2019.
5 U.S. Energy Information Administration (EIA), Kentucky Profile Overview, Map, Layers/Legend, Oil and Gas Wells, Coal Field, and Tight Oil/Shale Gas Play, accessed April 16, 2019.
6 U.S. EIA, Natural Gas Reserves Summary as of Dec. 31, Wet NG, Kentucky, 2017.
7 U.S. EIA, Crude Oil Proved Reserves, Reserves Changes, and Production, Proved Reserves as of 12/31, Kentucky, 2017.
8 U.S. EIA, Kentucky Profile Overview, Map, Layers/Legend, Hydroelectric Power Plant and Pumped Storage Power Plant, accessed April 16, 2019.
9 Kentucky Geological Survey, The Bluegrass Region, updated December 16, 2016.
10 Kentucky Climate Center, Narrative, Climatography of Kentucky, Climate, accessed April 16, 2019.
11 NETSTATE, Kentucky, Kentucky Economy, updated December 19, 2017.
12 U.S. Ethanol Plants, All Plants, Ethanol Producer Magazine, updated September 6, 2018.
13 Parallel Products, Beverage Destruction and Recycling, accessed April 16, 2019.
14 U.S. EIA, State Energy Data System, Total energy consumption, real GDP, and energy intensity, 1960-2016, XLSX file.
15 U.S. EIA, State Energy Data System, Table C1, Energy Consumption Overview: Estimates by Energy Source and End-Use Sector, 2016.
16 Kentucky Energy and Environment Cabinet, Office of Energy Policy, Final Report on Kentucky's Participation in NGA Policy Academy on Power Sector Modernization (2018), Key Demographic and Economic Considerations, p. 4.
17 U.S. Bureau of Economic Analysis, Interactive Data, Regional Data, GDP & Personal Income, Annual Gross Domestic Product (GDP) by State, GDP in Current Dollars, Kentucky, All statistics in table, 2016.
18 U.S. EIA, Annual Coal Report 2017 (November 26, 2018), Table 15, Recoverable Coal Reserves at Producing Mines, Estimated Recoverable Reserves, and Demonstrated Reserve Base by Mining Method, 2017.
19 U.S. EIA, Annual Coal Report 2017 (November 26, 2018), Table 6, Coal Production and Number of Mines by State and Coal Rank, 2017.
20 Kentucky Geological Survey, Kentucky Coal Production, accessed April 16, 2019.
21 U.S. EIA, Coal Data Browser, Aggregate coal mine production for all coal (short tons), Total, Annual, Kentucky, 2001-17, accessed April 16, 2019.
22 U.S. EIA, Annual Coal Report 2017 (November 28, 2018), Table 6, Coal Production and Number of Mines by State and Coal Rank, 2017.
23 U.S. EIA, Coal Data Browser, Aggregate coal mine production for all coal (short tons), Total, Annual, U.S., Wyoming, West Virginia, Pennsylvania, Illinois, Kentucky, Middle Atlantic, East North Central, East South Central, and South Atlantic, 2001-17, accessed April 16, 2019.
24 U.S. EIA, "More than 60% of electric generating capacity installed in 2018 was fueled by natural gas," Today in Energy (March 11, 2019).
25 U.S. EIA, "U.S. natural gas-fired combined-cycle capacity surpasses coal-fired capacity," Today in Energy (April 10, 2019).
26 U.S. EIA, Electricity, Form EIA-860 detailed data, 2017 Form EIA-860 Data, Schedule 3, 'Generator Data' (Retired & Canceled Units Only).
27 Estep, Bill, "Coal employment ‘ain't like it once was.' Number of jobs in Kentucky hits new low," Lexington Herald Leader (February 12, 2019).
28 Kentucky Geological Survey, Metallurgical Coal, Are any Kentucky coals metallurgical grade coals?, accessed May 6, 2019.
29 U.S. EIA, Annual Coal Report 2017 (November 26, 2018), Table 8, Coal Disposition by State, 2017.
30 U.S. EIA, Annual Coal Report 2017 (November 26, 2018), Table 6, Coal Production and Number of Mines by State and Coal Rank, 2017.
31 U.S. EIA, Annual Coal Report 2017 (November 28, 2018), Table 1, Coal Production and Number of Mines by State and Mine Type, 2017 and 2016.
32 U.S. EIA, "Trading Point: Central Appalachian (CAPP) Is the Nation's Benchmark Price for Eastern Coal," Today in Energy (September 19, 2012).
33 U.S. EIA, Annual Coal Distribution Report 2017 (November 5, 2018), Domestic distribution of U.S. coal by origin State, consumer, destination and method of transportation, Kentucky, Table OS-9, Domestic Coal Distribution, by Origin State, 2017.
34 U.S. EIA, Annual Coal Report 2017 (November 26, 2018), Table 6, Coal Production and Number of Mines by State and Coal Rank, 2017.
35 U.S. EIA, Annual Coal Distribution Report 2017 (November 5, 2018), Domestic and Foreign Distribution of U.S. Coal by State of Origin, 2017.
36 U.S. EIA, Annual Coal Distribution Report, Archive, Domestic and Foreign Distribution of U.S. Coal by State of Origin, 2007-16.
37 U.S. EIA, Annual Coal Report 2017 (November 26, 2018), Table 26, Coal Consumption by End Use Sector, Census Division, and State, 2017 and 2016.
38 U.S. EIA, Annual Coal Distribution Report 2017 (November 5, 2018), Domestic distribution of U.S. coal by destination State, consumer, destination and method of transportation, Kentucky, Table DS-16, Domestic Coal Distribution, by Destination State, 2017.
39 U.S. EIA, Electricity Data Browser, Net generation for all sectors (thousand megawatthours), Kentucky, Annual, 2001-18.
40 U.S. EIA, Electricity, Form EIA-860 detailed data, 2017 Form EIA-860 Data, Schedule 3, 'Generator Data' (Retired and Canceled Units Only).
41 U.S. EIA, "More than 60% of electric generating capacity installed in 2018 was fueled by natural gas," Today in Energy (March 11, 2019).
42 U.S. EIA, "U.S. natural gas-fired combined-cycle capacity surpasses coal-fired capacity," Today in Energy (April 10, 2019).
43 Estep, Bill, "Paradise no more. TVA votes to close iconic coal-burning power plant in Kentucky," Lexington Herald Leader (February 14, 2019).
44 U.S. EIA, Electricity Data Browser, Net generation for all sectors (thousand megawatthours), Kentucky, Annual, 2001-18.
45 U.S. EIA, Electric Power Monthly (February 2019), Tables 1.3.B and 1.4.B.
46 U.S. EIA, Electric Power Monthly (February 2019), Table 6.2.C.
47 U.S. EIA, Electricity Data Browser, Net generation for all sectors (thousand megawatthours), Kentucky, Annual, 2001-18.
48 U.S. EIA, Electricity Data Browser, Net generation for all sectors (thousand megawatthours), Kentucky, Annual, 2001-18.
49 U.S. Environmental Protection Agency, Energy Efficiency and Electric Infrastructure in the State of Kentucky, updated December 21, 2015.
50 U.S. EIA, Electric Power Monthly (February 2019), Table 5.6.B.
51 U.S. Census Bureau, American FactFinder, Kentucky, Table B25040, House Heating Fuel, 2013-2017 American Community Survey 5-Year Estimates.
52 U.S. EIA, Crude Oil Production, Annual-Thousand Barrels, 2012-17.
53 U.S. EIA, Crude Oil Proved Reserves, Reserves Changes, and Production, Proved Reserves as of 12/31, Annual, 2012-17.
54 Kentucky Geological Survey, Oil & Natural Gas in Kentucky, Fact Sheet No. 7 (July 2016).
55 U.S. EIA, Kentucky Field Production of Crude Oil, Annual, Thousand Barrels, 1981-2017.
56 U.S. EIA, State Energy Data System, Table F15, Total Petroleum Consumption Estimates, 2017.
57 U.S. EIA, Refinery Capacity Report 2018 (June 25, 2018), Table 1, Number and Capacity of Operable Petroleum Refineries by PAD District and State as of January 1, 2018.
58 Marathon Petroleum, Catlettsburg Refinery, accessed April 17, 2019.
59 Continental Refining Company, About Continental Refining Company, accessed April 17, 2019.
60 World Port Source, Jefferson Riverport, Port Commerce, accessed April 17, 2019.
61 U.S. Department of Energy, State of Kentucky Energy Sector Risk Profile, p. 4, accessed April 17, 2019.
62 U.S. EIA, State Energy Data System, Table F15, Total Petroleum Consumption Estimates, 2017.
63 U.S. EIA, State Energy Data System, Table C2, Energy Consumption Estimates for Major Energy Sources in Physical Units, 2016.
64 U.S. Environmental Protection Agency, Gasoline Standards, Reformulated Gasoline, "Opt-In" Areas, accessed April 17, 2019.
65 Larson, B.K., U.S. Gasoline Requirements, Map, ExxonMobil (January 2018).
66 U.S. Environmental Protection Agency, Removal of the RFG Program from the Northern Kentucky Area of the Cincinnati-Hamilton Ozone Maintenance Area, accessed April 17, 2019.
67 U.S. EIA, State Energy Data System, Table F15, Total Petroleum Consumption Estimates, 2017.
68 U.S. Census Bureau, American FactFinder, Kentucky, Table B25040, House Heating Fuel, 2013-2017 American Community Survey 5-Year Estimates.
69 U.S. EIA, Natural Gas Reserves Summary as of Dec. 31, Wet Natural Gas, Annual, 2012-17.
70 Peterson, Erica, "Is Fracking Coming to the Cumberlands?" WFPL.org (January 6, 2015).
71 U.S. EIA, Natural Gas Gross Withdrawals and Production, Gross Withdrawals, Annual-Million Cubic Feet, 2013-18.
72 U.S. EIA, Kentucky Profile Overview, Map, Layers/Legend, Oil and Gas Wells, accessed April 18, 2019.
73 U.S. EIA, Kentucky Natural Gas Marketed Production, Annual, 1967-2017.
74 U.S. EIA, Natural Gas Prices, 1922-2018.
75 U.S. EIA, Natural Gas Gross Withdrawals and Production, Marketed Production, Annual-Million Cubic Feet, 2013-18.
76 U.S. EIA, Natural Gas Consumption by End Use, Kentucky, Annual, 2013-18.
77 U.S. Department of Energy, State of Kentucky Energy Sector Risk Profile, p. 6, accessed April 18, 2019.
78 U.S. EIA, International & Interstate Movements of Natural Gas by State, Kentucky, Annual, 2012-17.
79 U.S. EIA, Underground Natural Gas Storage Capacity, Total Number of Existing Fields, Annual, 2012-17.
80 U.S. EIA, Underground Natural Gas Storage Capacity, Total Storage Capacity, Annual, 2012-17.
81 U.S. EIA, Natural Gas Consumption by End Use, Kentucky, Annual, 2013-18.
82 U.S. Census Bureau, American FactFinder, Kentucky, Table B25040, House Heating Fuel, 2013-17 American Community Survey 5-Year Estimates.
83 Kentucky Climate Center, Narrative, Climatography of Kentucky, Climate, accessed April 18, 2019.
84 U.S. EIA, Natural Gas Consumption by End Use, Volumes Delivered to Residential, Annual, 2013-18.
85 U.S. Census Bureau, American Factfinder, Table PEPANNRES, Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2018.
86 Durkay, Jocelyn, State Renewable Portfolio Standards and Goals, National Conference of State Legislatures (February 1, 2019).
87 U.S. EIA, Electricity Data Browser, Net generation for all sectors (thousand megawatthours), Kentucky, Annual, 2001-18.
88 U.S. EIA, Electricity, Form EIA-860 detailed data, 2017 Form EIA-860 Data - Schedule 3, 'Generator Data' (Operable Units Only), Conventional Hydroelectric.
89 U.S. EIA, Electricity Data Browser, Net generation for all sectors (thousand megawatthours), Kentucky, Annual, 2001-18.
90 U.S. EIA, Electricity, Form EIA-860 detailed data, 2017 Form EIA-860 Data, Schedule 3, 'Generator Data' (Operable Units Only), Wood/Wood Waste Biomass and Landfill Gas.
91 U.S. EIA, Monthly Densified Biomass Fuel Report, (April 16, 2019), Table 1, Densified biomass fuel manufacturing facilities in the United States by state, region, and capacity, January 2019.
92 U.S. EIA, Electricity Data Browser, Net generation for all sectors (thousand megawatthours), Kentucky, Annual, 2001-18.
93 Solar Energy Industries Association, Kentucky Solar, accessed April 22, 2019.
94 U.S. Department of Energy, Energy Efficiency and Renewable Energy, WINDExchange, Wind Energy in Kentucky, Maps & Data, accessed April 19, 2019.
95 American Wind Energy Association, AWEA State Wind Energy Facts, Kentucky, accessed April 19, 2019.
96 U.S. Ethanol Plants, RINs, Operational, Ethanol Producer Magazine, updated September 6, 2018.
97 Commonwealth Agri-Energy, About Us, accessed April 19, 2019.
98 Parallel Products, Louisville, KY, accessed April 19, 2019.
99 U.S. Biodiesel Plants, operational, Biodiesel Magazine, updated December 13, 2017.
100 NC Clean Energy Technology Center, DSIRE, Kentucky Net Metering, updated November 27, 2018.
101 Kelly-Detwiler, Peter, "Net Zero Schools in Kentucky: Models for the Future Come from Surprising Places," Forbes Magazine (December 10, 2012).