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Kentucky   Kentucky Profile

State Profile and Energy Estimates

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

Last Updated: May 18, 2017

Overview

Kentucky, one of the nation's top coal producers, is a net energy supplier to the nation.1,2 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.3 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.4 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,5,6 and those basins also contain oil and natural gas resources.7,8 Dams on the Tennessee, Cumberland, Ohio, and Laurel Rivers provide Kentucky with hydroelectric power.9,10 Although two-thirds of Kentucky's agricultural economy is livestock, primarily thoroughbred horses and beef cattle,11 the state's abundant rain, temperate climate, and fertile soils provide ideal conditions for several crops, including tobacco, soybeans, corn, and wheat.12,13,14 Corn and beverage waste from Kentucky distilleries provide feedstock for the state's ethanol production.15

Kentucky is among the top 10 states in energy consumed per dollar of gross domestic product.16 The industrial sector is the state's largest energy consumer.17 Low energy prices have helped attract manufacturing to Kentucky,18 and the state's largest manufacturing industries include motor vehicles; food, beverage, and tobacco products; and chemicals. The state is also a major transportation and logistics hub.19

Petroleum

Kentucky's oil-producing wells are located primarily in the state's west and south.20,21 Kentucky has produced fewer than 10,000 barrels per day of crude oil for two decades,22 and the state accounts for less than 0.1% of U.S. crude oil production23 and proved reserves.24 Kentucky's annual crude oil production meets less than 3% of state demand.25,26

Kentucky has two oil refineries that can process more than 275,000 barrels of oil per day.

Crude oil is brought to Kentucky's two oil refineries by three interstate pipelines.27 The larger refinery, in the city of Catlettsburg in the state's northeast, can process 273,000 barrels of crude oil per calendar day and produces motor gasoline, distillates, asphalt, heavy fuel oil, propane, and other petroleum products. The smaller Somerset refinery in southeastern Kentucky can process about 5,500 barrels of crude oil per calendar day and produces motor gasoline, kerosene, diesel fuel, and heating oil that is marketed in the region.28,29,30

Two interstate pipelines bring refined petroleum products to Kentucky consumers.31 The transportation sector uses nearly three-fourths of all petroleum products consumed in the state.32 Motor gasoline makes up the largest share of Kentucky petroleum consumption.33 Although most of the state can use conventional motor gasoline, the counties around Louisville, Kentucky, and to the south of Cincinnati, Ohio, are voluntary opt-in areas for the use of gasoline reformulated with ethanol to reduce air pollution.34,35

Natural gas

Kentucky holds less than 1% of U.S. proved natural gas reserves and produces less than 1% of nation's natural gas.36,37 Most of the state's natural gas is produced from wells in eastern Kentucky.38,39 The state's annual natural gas production rose in the early 2000s, peaking in 2010, but dropped back to its pre-2000 level when natural gas prices declined.40,41,42 Black shales from the Devonian period, which underlie two-thirds of Kentucky, may hold substantial additional natural gas resources.43

Natural gas production in Kentucky is lower than consumption,44 and 11 interstate natural gas pipelines cross the state and supply Kentucky consumers.45 Most natural gas entering Kentucky originates in the Gulf region and comes by pipeline through Tennessee, but, in 2014, Kentucky also began receiving natural gas from the Marcellus and Utica shales by pipeline from Ohio and West Virginia.46 More than nine-tenths of the natural gas entering Kentucky is shipped on to other states, primarily Illinois, Indiana, and Tennessee. Kentucky has 23 underground natural gas storage facilities that comprise 2.4% of U.S. storage capacity.47,48

Kentucky's industrial sector uses more than two-fifths of the natural gas consumed in the state. Natural gas consumption in the electric power sector quadrupled from 2011 to 2016, and electric power is now the second-largest consuming sector. The residential sector receives about one-sixth of the natural gas delivered to end users,49 and nearly 4 out of 10 households in Kentucky use natural gas as their primary fuel for home heating.50 Natural gas use per capita by Kentucky's residential sector is below the national average.51,52

Coal

Kentucky's estimated total recoverable coal reserves are the fifth largest in the nation,53 and, for decades, Kentucky was the third-largest coal-producing state, after Wyoming and West Virginia.54,55 Kentucky typically accounted for almost 8% of total U.S. coal production and nearly one-fifth of production east of the Mississippi River.56

In 2016, Kentucky accounted for almost one-sixth of U.S. coal production east of the Mississippi River.

In 2016, however, Kentucky coal production fell by 30%, to about 6% of U.S. production and one-sixth of production east of the Mississippi River. Kentucky became the fifth-largest producer among the states, as coal-fired electricity generating plants that had been customers of Kentucky mines were retired.57,58 All of the coal produced in the state is bituminous.59 About one-fourth of all U.S. coal mines are located in Kentucky, more coal mines than in any other state. Although nearly two-thirds of Kentucky's mines are surface mines, the underground mines produce seven-tenths of the coal mined in the state.60

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, Ohio, and West Virginia meet at the rivers' confluence, and bituminous coal arrives from mines in those states, Tennessee, and Virginia. The coal is delivered, typically by rail or truck, for shipment by multi-car trains and barges to final customers in various states, including coal-fired electricity generating plants, industrial plants, commercial and institutional facilities, and coking plants.61

Kentucky ships about three-fifths of its coal production out of state. Coal is sent to more than 20 other states, where it is used primarily by power plants to generate electricity.62 Kentucky also usually exports some of the coal it produces; in 2015, Kentucky coal fields shipped about 6% of their production overseas.63,64

Almost all the coal consumed in Kentucky is used in electricity generation. A little over two-fifths of the coal consumed in the state is brought in from other states, primarily Wyoming, Illinois, and Indiana.65

Electricity

In 2016, for the first time, natural gas supplied more than one-tenth of Kentucky’s net generation.

Coal-fired power plants have routinely produced more than nine-tenths of Kentucky's net electricity generation,66 but both total electricity generation and coal's share of generation have declined sharply since 2014, as older coal-fired units have been retired. Total generation dropped by nearly 12%, from nearly 90.9 million megawatthours in 2014 to 80.3 million megawatthours in 2016; coal generation declined by 20%, from 83.6 million megawatthours in 2014 to 66.9 million megawatthours in 2016. Natural gas-fired electricity production more than tripled during 2015 and 2016, rising to 8.3 million megawatthours. However, Kentucky still relied on coal to generate a greater share of its electricity than did any other states except West Virginia and Wyoming.67 The rest of Kentucky's electricity generation comes from hydroelectric power plants, with a small contribution from biomass.68

As of December 2016, Kentucky had the fifth-largest coal-fired generating capacity in the nation, after Texas, Indiana, Ohio, and Illinois.69,70 But with coal-fired generating units aging and becoming more costly to operate, a number of coal-fired power plants in Kentucky are being shut down or retrofitted to burn natural gas.71 More than 1,700 megawatts of Kentucky's coal-fired generating capacity were shut down in 2015 and 2016, and none of the 1,100 megawatts of new generation brought on line was coal-fired. Four-fifths of new generation was powered with natural gas, and almost all the rest was hydropower.72 Between 2012 and 2025, actual and scheduled retirements of coal-fired generating capacity surpass 2,800 megawatts, nearly one-fifth of the state's 2012 coal-fired capacity.73,74,75,76

Kentucky has not restructured its electric utility industry. Utilities in the state remain vertically integrated generators, transmitters, and distributors of electric power.77 Electricity is supplied to consumers by three investor-owned electric utilities, 26 cooperatives, 20 municipal utilities, and the Tennessee Valley Authority (TVA).78 Electricity rates vary by provider, but, on average in 2016, Kentucky had the seventh lowest rates of any state, and the lowest rates east of the Mississippi River.79,80 About half of Kentucky households use electricity as their primary heating source.81

Renewable energy

Renewable resources are a small part of Kentucky's energy mix, and the state has no renewable energy standard.82 The largest source of renewable energy in Kentucky is hydroelectric power, which provides more than 4% of the state's electricity generation83 at nine dams around the state, two of which began operating in 2016. One-half of all new U.S. hydroelectric generating capacity brought into service in 2016 was located in Kentucky.84,85 A 10th hydroelectric facility is scheduled to begin operating in 2017.86 Biomass accounts for the other 0.6% of the state's net generation from renewables.87 Wood wastes are the largest source of biomass for electricity, and the state's forests and agricultural industry could provide additional biomass resources.88

Kentucky has few wind resources suitable for developing utility-scale power projects89 and no commercial wind power facilities, but the state does have some solar power potential.90 Kentucky's first utility-scale solar photovoltaic (PV) generating facility, the 2-megawatt Bowling Green Solar Farm, came online in 2011 and sells its power to the TVA.91 A second utility-scale solar farm, a 10-megawatt facility located at the E.W. Brown coal-fired generating station near Harrodsburg, Kentucky, began operating in 2016.92 A Kentucky cooperative is building an 8.5-megawatt community solar project and selling "leases" on the panels to coop members. The leases will give members credit for solar generation just as though they had the panels on their own rooftops.93 Increasing amounts of distributed (customer-sited, small-scale) solar PV capacity, in locations ranging from home rooftops to commercial and industrial complexes, have been installed across the state.94 Solar facilities are by far the largest component of distributed generation in Kentucky, with more than 12 megawatts of solar PV installed.95 In 2016, three-fifths of solar electricity generation in Kentucky came from distributed facilities.96

Kentucky law provides for net metering of distributed 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 load in the previous year.97 Kentucky is home to the nation's first net-zero energy-use public school building. The school design combines energy efficient systems, geothermal heat pumps, daylight harvesting, and a thin film rooftop solar PV system.98

Kentucky has two ethanol plants with a combined capacity of 36 million gallons per year.99 Most of the ethanol is produced at a plant owned by a farmers' cooperative that uses corn as its primary feedstock.100,101 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.102 Kentucky also has three biodiesel production plants with a combined capacity of about 47 million gallons per year. The biodiesel plants use multiple feedstocks, including waste vegetable oil and soy oil.103

Endnotes

1 U.S. Energy Information Administration (EIA), State Energy Data System, Table P3, Energy Production and Consumption Estimates in Trillion Btu, 2014.
2 U.S. EIA, State Energy Data System, Table P2, Energy Production Estimates in Trillion Btu, 2014.
3 NETSTATE, Kentucky Geography, updated February 25, 2016.
4 Kentucky Geological Survey, Physiographic Map of Kentucky, updated August 1, 2012.
5 Kentucky Geological Survey, The Eastern Kentucky Coal Field, updated August 1, 2012.
6 Kentucky Geological Survey, The Western Kentucky Coal Field, updated August 1, 2012.
7 U.S. EIA, State Profile, Kentucky, map, layer, fossil resources, accessed April 3, 2017.
8 U.S. EIA, Kentucky, Profile Data, Reserves and Supply, accessed April 3, 2017.
9 Power Plants Around the World, Hydroelectric Plants in Kentucky, updated October 19, 2016.
10 U.S. EIA, Kentucky Electricity Profile 2015, data tables, Table 4, Electric power industry capability by primary energy source, 1990 through 2015.
11 NETSTATE, Kentucky, Economy, updated February 25, 2016.
12 Kentucky Geological Survey, The Bluegrass Region, updated December 16, 2016.
13 Department of Geography and Geology, Western Kentucky University, Kentucky Climate Center, accessed April 3, 2017.
14 NETSTATE, Kentucky, Economy, updated February 25, 2016.
15 Ethanol Producer Magazine, U.S. Ethanol Plants, updated February 14, 2017.
16 U.S. EIA, State Energy Data System, Table C12, Total Energy Consumption Estimates, Real Gross Domestic Product (GDP), Energy Consumption Estimates per Real Dollar of GDP, Ranked by State, 2014.
17 U.S. EIA, Kentucky, Profile Overview, Kentucky Energy Consumption by End-Use Sector, 2014.
18 Kentucky Energy and Environment Cabinet, Department for Energy Development and Independence, Kentucky Energy Profile (2015), Executive Summary, p. 2.
19 U.S. Bureau of Economic Analysis, Regional Data, GDP & Personal Income, Begin using the data, Annual Gross Domestic Product (GDP) by State, GDP in Current Dollars, Classification NAICS, All Industries, Area Kentucky, Time Period 2013–15.
20 Kentucky Geological Survey, Distribution of Oil and Gas Production in Kentucky, accessed April 3, 2017.
21 Kentucky Energy and Environment Cabinet, Department for Energy Development and Independence, Kentucky Energy Profile (2015), p. 63.
22 U.S. EIA, Kentucky Field Production of Crude Oil, Annual-Thousand Barrels per Day, 1981–2016.
23 U.S. EIA, Crude Oil Production, Annual-Thousand Barrels per Day, 2011–16.
24 U.S. EIA, Kentucky, Profile Data, Reserves and Supply, accessed April 3, 2017.
25 U.S. EIA, Crude Oil Production, Annual-Thousand Barrels, 2011–16.
26 U.S. EIA, State Energy Data System, Table F15, Total Petroleum Consumption Estimates, 2015.
27 U.S. EIA, Kentucky, Profile Data, Distribution & Marketing, accessed April 3, 2017.
28 U.S. EIA, Refinery Capacity 2016, Table 3, Capacity of Operable Petroleum Refineries by State as of January 1, 2016.
29 Continental Refining Company, About Continental Refining Company, accessed April 3, 2017.
30 Marathon Petroleum Corporation, Catlettsburg Refining LLC, accessed April 3, 2017.
31 U.S. EIA, Kentucky, Profile Data, Distribution & Marketing, accessed April 3, 2017.
32 U.S. EIA, State Energy Data System, Table F15, Total Petroleum Consumption Estimates, 2015.
33 U.S. EIA, State Energy Data System, Table C2, Energy Consumption Estimates for Major Energy Sources in Physical Units, 2014.
34 U.S. Environmental Protection Agency, Gasoline Standards, Reformulated Gasoline, "Opt-In" Areas, updated December 5, 2016.
35 K.W. Gardner, Gasoline Requirements Map, ExxonMobil (June 2015).
36 U.S. EIA, Natural Gas Gross Withdrawals and Production, Marketed Production, Annual-Million Cubic Feet, 2011–16.
37 U.S. EIA, Natural Gas Proved Reserves, Wet After Lease Separation, Proved Reserves as of Dec. 31, Annual, 2010–15.
38 Kentucky Energy and Environment Cabinet, Department for Natural Resources, Division of Oil and Gas, Oil and Gas History, accessed April 3, 2017.
39 Kentucky Oil & Gas Association, The Economic Impact of Our Industry on Kentucky's Economy–2014, slide 4.
40 Kentucky Geological Survey, Oil and Gas Production, Entire State, accessed April 3, 2017.
41 U.S. EIA, Kentucky Natural Gas Marketed Production, Annual, 1967–2015.
42 U.S. EIA, Natural Gas Prices, 2011–2016.
43 Nuttall, Brandon, et al., Analysis of the Devonian Black Shale in Kentucky for Potential Carbon Dioxide Sequestration and Enhanced Natural Gas Production (U.S. DOE/NETL DE-FC26-02NT41442) (April 28, 2003), p. 1.
44 U.S. EIA, Natural Gas Consumption by End Use, Kentucky, Annual, 2011–16.
45 U.S. EIA, Kentucky, Profile Data, Distribution & Marketing, accessed April 3, 2017.
46 U.S. EIA, International & Interstate Movements of Natural Gas by State, Kentucky, Annual, 2010–15.
47 U.S. EIA, Underground Natural Gas Storage Capacity, Total Number of Existing Fields, Annual, 2010–15.
48 U.S. EIA, Underground Natural Gas Storage Capacity, Total Storage Capacity, Annual, 2010–15.
49 U.S. EIA, Natural Gas Consumption by End Use, Kentucky, Annual, 2011–16.
50 U.S. Census Bureau, American FactFinder, Kentucky, Table B25040, House Heating Fuel, 2011–15 American Community Survey 5-Year Estimates.
51 U.S. EIA, Natural Gas Consumption by End Use, Volumes Delivered to Residential, Annual, 2011–16.
52 U.S. Census Bureau, State Population Totals Tables: 2010–2016, Annual Estimates of the Resident Population for the United States, Regions, States, and Puerto Rico: April 1, 2010 to July 1, 2016 (NST-EST2016-01), 2015 Population Estimates.
53 U.S. EIA, Annual Coal Report 2015 (November 2016), Table 15, Recoverable Coal Reserves at Producing Mines, Estimated Recoverable Reserves, and Demonstrated Reserve Base by Mining Method. 2015.
54 U.S. EIA, State Energy Data System, Rankings: Coal Production, 2015.
55 U.S. EIA, Coal Data Browser, Aggregate Coal Mine Production for Total, Annual, U.S., Wyoming, West Virginia, and Kentucky, 2001–15.
56 U.S. EIA, Quarterly Coal Report, October–December 2014 (March 2016), Table 2, Coal Production by State.
57 Kentucky Business and Finance Review, Kentucky Coal Production and Consumption, accessed March 22, 2016.
58 U.S. EIA, Quarterly Coal Report, October–December 2016 (April 2017), Table 2, Coal Production by State, Year to Date 2016 and 2015.
59 U.S. EIA, Annual Coal Report 2015 (November 2016), Table 6, Coal Production and Number of Mines by State and Coal Rank, 2015.
60 U.S. EIA, Annual Coal Report 2015 (November 2016), Table 1, Coal Production and Number of Mines by State and Mine Type, 2015 and 2014.
61 U.S. EIA, "Trading Point: Central Appalachian (CAPP) Is the Nation's Benchmark Price for Eastern Coal," Today in Energy (September 19, 2012).
62 U.S. EIA, Annual Coal Distribution Report 2015 (November 2016), Domestic distribution of U.S. coal by origin State, consumer, destination and method of transportation, Kentucky, 2015.
63 U.S. EIA, Annual Coal Distribution Report 2015 (November 2016), Domestic and Foreign Distribution of U.S. Coal by State of Origin, 2015.
64 U.S. EIA, Annual Coal Distribution Report, Archive, Domestic and Foreign Distribution of U.S. Coal by State of Origin, 2014, 2013.
65 U.S. EIA, Annual Coal Distribution Report 2015 (November 2016), Domestic distribution of U.S. coal by destination State, consumer, destination and method of transportation, Kentucky, 2015.
66 U.S. EIA, Electricity, Detailed State Data, Net Generation by State by Type of Producer by Energy Source (EIA-906, EIA-920, and EIA-923), 1990–2015, see Kentucky data.
67 U.S. EIA, Electric Power Monthly (February 2017), Tables 1.3.B, 1.4.B, 1.7.B.
68 U.S. EIA, Electric Power Monthly (February 2017), Tables 1.10.B, 1.15.B.
69 U.S. EIA, Electric Power Monthly (February 2017), Table 6.2.C.
70 U.S. EIA, Electric Power Annual 2015 (November 2016), Table 4.7.C, Net Summer Capacity of Utility Scale Units Using Primarily Fossil Fuels and by State, 2015 and 2014.
71 U.S. EIA, "Scheduled 2015 Capacity Additions Mostly Wind and Natural Gas; Retirements Mostly Coal," Today in Energy (March 10, 2015).
72 U.S. EIA, Electric Power Monthly (February 2017) and (February 2016), Tables 6.3.B, 6.4.B.
73 U.S. Government Accountability Office, EPA Regulations and Electricity, Update on Agencies' Monitoring Efforts and Coal-Fueled Generating Unit Retirements, GAO-14-672 (August 2014), p. 21.
74 Lovan, Dylan, "Kentucky Plant Emblematic of Nationwide Move from Coal to Gas," FuelFix (June 5, 2014).
75 Cassell, Barry, "TVA Asks for More Time for Paradise Coal Units, Retires Johnsonville Units 5-10," Power Engineering (February 3, 2016).
76 Flessner, Dave, "TVA chair hopes new board keeps same direction," Times Free Press (January 27, 2017).
77 U.S. Federal Energy Regulatory Commission, Electric Power Markets: Southeast, updated March 10, 2016.
78 U.S. Environmental Protection Agency, Energy Efficiency and Electric Infrastructure in the State of Kentucky, updated December 21, 2015.
79 U.S. EIA, Electric Power Monthly (February 2017), Table 5.6.B.
80 Kentucky Energy and Environment Cabinet, Department for Energy Development and Independence, Kentucky Energy Profile (2015), Executive Summary, p. 2.
81 U.S. Census Bureau, American FactFinder, Kentucky, Table B25040, House Heating Fuel, 2011–2015 American Community Survey 5-Year Estimates.
82 Durkay, Jocelyn, State Renewable Portfolio Standards and Goals, National Conference of State Legislatures (December 28, 2016).
83 U.S. EIA, Electric Power Monthly (February 2017), Table 1.3.B, 1.10.B.
84 Power Plants Around the World, Hydroelectric Plants in Kentucky, updated October 19, 2016.
85 U.S. EIA, Electric Power Monthly (February 2017), Tables 6.2.C, 6.3.
86 U.S. EIA, Electric Power Monthly (February 2017), Table 6.5.
87 U.S. EIA, Electric Power Monthly (February 2017), Table 1.3.B, 1.15.B.
88 Kentucky Energy and Environment Cabinet, Department for Energy Development and Independence, Kentucky Energy Profile (2015), p. 69.
89 U.S. Department of Energy, Energy Efficiency and Renewable Energy, WINDExchange, Kentucky Wind Resource Map and Potential Wind Capacity, updated September 24, 2015.
90 Kentucky Energy and Environment Cabinet, Department for Energy Development and Independence, Kentucky Energy Profile (2015), p. 70, 75.
91 Solar Energy Industries Association, Major Solar Projects in the United States, Operating, Under Construction, or Under Development, updated February 23, 2015.
92 Kocher, Greg, "Utilities unveil Ky.'s largest solar power plant in Mercer County," Lexington Herald Leader (April 29, 2016).
93 "PSC OKs East Kentucky Power Community Solar Project," Kentucky Public Service Commission, Press Release (November 23, 2016).
94 Solar Energy Industries Association, Kentucky Solar, accessed April 4, 2017.
95 Kentucky Energy and Environment Cabinet, Department for Energy Development and Independence, Kentucky Energy Profile (2015), p. 74.
96 U.S. EIA, Electric Power Monthly (February 2017), Table 1.17.B.
97 Kentucky Public Service Commission, Information About Utilities, Electric Specific Information, Net Metering and Interconnection Guidelines, accessed April 4, 2017.
98 Solar Energy Industries Association, A Study on Solar in U.S. Schools: First Steps for Going Solar-A Practical Guide, see Richardsville Elementary School, accessed April 4, 2017.
99 Nebraska Government, Ethanol Facilities, Capacity by State and Plant, updated October 20, 2016.
100 Commonwealth Agri-Energy, About Us, accessed April 4, 2017.
101 Ethanol Producer Magazine, U.S. Ethanol Plants, updated February 14, 2017.
102 Parallel Products, Louisville, KY, accessed April 4, 2017.
103 Biodiesel Magazine, USA Plants, updated December 12, 2016.