Reevaluating the Opportunity for Wind Energy in Kentucky: Advancing Technology, Changing Economics, and Generation Complementarity

Recent developments in wind turbine technology, new wind resource data, and new federal tax credits for renewable energy are increasing the suitability of wind electricity generation in Kentucky. In 2022, Kentucky had 68% of its electricity from coal and in 2023 was one of eight U.S. states with no utility-scale wind generation. In the past, the state has been viewed as being generally unsuitable for wind power generation. While wind is not the most economic resource in Kentucky, all states bordering the Commonwealth have wind power. Wind power generation in Kentucky appears increasingly likely in the coming decades to play a role in the state's energy mix, whether through regional utilities, third-party renewable energy developers, or through distributed behind-the-meter industrial customer deployments. New advancements in wind turbines are allowing them to effectively capture more power from lower speed winds and at higher distances above the ground where the wind is stronger and more consistent. Clean Electricity Tax Credits from the 2022 Inflation Reduction Act (IRA) dramatically change the economics of wind power. The tax credit can reach up to 50% of the capital costs of a wind farm if it is built in an area designated as an Energy Community, which most of Kentucky is. Evolving federal environmental regulations may further reduce the economic competitiveness of fossil fuel plants versus renewable sources like wind. Another boost to the prospect of wind power generation in Kentucky is the complementarity of wind power with solar power, where wind is often stronger in seasons and at times of day when solar power is lacking. This complementarity helps wind energy improve the power grid reliability versus just adding solar alone, and the scarcity of wind power in Kentucky's current energy mix increases the value of adding new wind generation. This scarcity of wind energy generation in the state and its surrounding region results in the region having one of the highest value-cost ratios for wind energy in the U.S.