Kentucky
State Scorecard Rank
38
Kentucky
7.0Scored out of 50Updated 12/2022
State Government
Score: 1.5 out of 4.5
State Government Summary List All
Kentucky offers a variety of financial incentives for energy efficiency investments, as well as Property Assessed Clean Energy (PACE) financing. The state government leads by example by setting energy requirements for public buildings, benchmarking energy use, and encouraging the use of energy savings performance contracts. Energy efficiency research is conducted at the University of Louisville's Conn Center for Renewable Energy Research.
Financial Incentives List All
Financial Incentive information for Kentucky is provided by the Database of State Incentives for Renewables and Efficiency (DSIRE Kentucky) and State Energy Office contacts. Information about additional incentives not present on DSIRE is listed here. In addition to the state-funded incentives on DSIRE and below, Kentucky has enabled Property Assessed Clean Energy (PACE) financing and has one active program. For additional information on PACE, visit PACENation.
School Energy Managers Project: The School Energy Managers Project (SEMP) provides support for energy managers at the school district level. Matching funds are available to employ trained energy specialists or energy efficiency projects in school districts. The goal of the two year program is to reduce energy usage by five percent in participating districts from a 2012 baseline.
Industrial Revenue Bonds: State and local government-issued bonds to finance industrial buildings, as defined by KRS 103.200. This financing can cover the cost of energy efficiency projects.
Local Government Efficiency Retrofit Program (LGERP): This program is administered by the Department for Local Government and provides no-low cost loans and small matching grants to city and county governments in order to incentivize energy savings performance contracts.
Last Reviewed: July 2018
Equity Metrics and Workforce DevelopmentList All
We were unable to determine if the state's energy plans or electrification strategies establish specific policies or equity-related metrics to ensure access for underserved customers or if they include specific measures to prioritize clean energy workforce development.
Last Reviewed: September 2020
Carbon Pricing PoliciesList All
The State of Kentucky does not yet have carbon pricing policies in place.
At this time, the state does not have a statewide emissions reduction goal in place.
Last Reviewed: September 2022
Building Energy Disclosure List All
There is no disclosure policy in place.
Last Reviewed: July 2019
Public Building Requirements List All
House Bill 2, signed by Governor Beshear in 2008 requires that all construction or renovation of public buildings for which 50% or more of the total capital cost is paid by the state must be renovated or designed to meet high-performance building standards. All building leases entered into by the Commonwealth or any of its agencies on and after July 1, 2018 shall also meet the new standards.
House Bill 299 (2006) requires a life-cycle cost comparison of at least two types of energy-efficient HVAC equipment, including geothermal equipment when feasible, for every bid for new construction or for existing facility upgrade.
The High Performance Buildings Advisory Committee assisted the Finance and Administration Cabinet in establishing the regulations that set out the standards and benchmarks by which to evaluate buildings. Leadership in Energy and Environmental Design (LEED) certification is required for new buildings. The level of LEED certification depends on the project budge, and, in general, the higher the budget and bigger project, the higher level LEED certification required. The regulations also provide for exemptions from the requirements if compliance is shown to cause the agency an "extraordinary undue burden."
The Kentucky Finance and Administration Cabinet received $3.65 million over a two-year period to develop and pilot a software program to benchmark, track, control, and diagnose energy use in state government buildings. The software, CEMCS or Commonwealth Energy Management and Control System, won a 2012 national innovation award from the National Association of State Facilities Administrators. This facility presently accounts for 324 (and increase of 95% over last year) buildings and 10.8 million square feet and 23,663 occupants of state buildings, and is budgeted to add more buildings in the current biennium. Because of the positive budgetary impacts, it was one of few programs in state government granted a budget increase in the current biennium so that more buildings could be added to CEMCS. Current state policy is to publicly disclose building performance for all buildings in the CEMCS as they are added to the system, and as the budget allows over time.
Currently, 0% of buildings are benchmarked in Portfolio Manager. However, 801 buildings, representing over 16 million square feet (circa 5/13/19 at http://kyenergydashboard.ky.gov/), of facilities are tracked, benchmarked, and managed/controlled through the state Commonwealth Energy Management and Control System (CEMCS), with more added each year.
Last Reviewed: September 2020
Fleets List All
No mandatory policy in place or proposed. The Kentucky Division of Fleet Management is a member of the Green Fleets of the Bluegrass. Green Fleets of the Bluegrass aims to improve the environmental performance of vehicle fleets across Kentucky by reducing petroleum fuel use. Green Fleets of the Bluegrass is a voluntary recognition program of the Kentucky Clean Fuels Coalition (KCFC).
Note: For state efficient fleet initiatives, policies listed must make a specific, mandatory requirement for increasing state fleet efficiency. State alternative-fuel vehicle procurement requirements that give a voluntary option to count efficient vehicles are thus not included.
Last Reviewed: September 2020
Energy Savings Performance Contracting List All
Kentucky statutes incentivize agencies to review the possibility of using an ESPC and implement one if appropriate. ESPC projects are regularly implemented by the state government, with ESPC projects totaling over $250 million. The Department for Facilities and Support Services (Division of Engineering and Contract Administration) provides online information about state ESPC processes.
In recent years the state has increased its use of ESPCs. The state-funded Green Bank of Kentucky, originally capitalized with $14 million to provide low-interest loans to state agencies, has all been loaned and principle and interest payments have begun to provide loans for a second generation of ESPCs, with nearly $2.4 million currently in the bank available for more loans. All state-owned buildings above 20,000 sq. ft. have been evaluated and all those that were found to be viable candidates have now been included in an ESPC project. All seven state-supported universities have had ESPCs on their campuses. In addition, all 16 colleges (with more than 70 campuses) of the Kentucky Community and Technical College System have implemented ESPCs.
Kentucky has seen over $1 Billion in ESPC (state, local, and university) since enabling legislation in 1996.
Last Reviewed: September 2020
Research & Development List All
The Conn Center for Renewable Energy Research (CCRER) at the University of Louisville provides research in renewable energy and encourages the development of technologies and practices that increase energy efficiency. The Center's ongoing goal is to seek outcomes that enhance global energy and economic security and maintain US technological leadership in developing and deploying advanced energy technologies. The Conn Center leads research that increases homegrown energy sources to meet the national need while reducing energy consumption and dependence on foreign oil. The Center has steadily been increasing its annual research expenditures from $900 thousand in 2007 to $2.1 million in 2011 with the expected goal of reaching $5 million by 2016.
Last Reviewed: July 2019
Buildings
Score: 1 out of 12
Buildings Summary List All
Residential construction must comply with the 2009 IECC with state amendments, while commercial construction must comply with the 2012 IECC. The state completed a gap analysis and strategic compliance plan in 2011. The state is also undergoing a code improvement/compliance study in partnership with the U.S. Department of Energy and Pacific Northwest National Labs.
Residential Codes List All
As of October 1, 2014, the 2013 Kentucky Residential Code (KRC) mandates residential buildings must comply with the 2009 IECC or IRC with state amendments.
Last Reviewed: September 2021
Commercial Code List All
As of October 1, 2014, projects constructed under the 2013 Kentucky Building Code (KBC) must comply with the 2012 IECC and ASHRAE 90.1-2010.
Last Reviewed: September 2021
Compliance List All
- Gap Analysis/Strategic Compliance Plan: Kentucky partnered with the Building Codes Assistance Project to complete a gap analysis and strategic compliance plan in 2011.
- Baseline & Updated Compliance Studies: Beginning in late 2014, the Kentucky Departments for Housing, Buildings and Construction and Department for Energy Development and Independence are partnering with the Midwest Energy Efficiency Alliance, the US Department for Energy, and the Pacific Northwest National Laboratory in the administration of a three-year, $900,000 three-phase initiative to (1) measure the baseline energy codes compliance rate across the Commonwealth following the latest US DOE/PNNL protocol, (2) implement a range of code improvement activities, and (3) measure the post- energy code compliance rate to determine if there was improvement. The study was completed in 2017.
- Utility Involvement: NA
- Stakeholder Advisory Group: The current codes compliance study and improvement initiative fostered the development of a Codes Collaborative that meets three times per year.
- Training/Outreach: During code study, which funded outreach and training activities, the state embarked on: training workshop across the state; circuit rider who traveled around state, met with contractors on site, responded to calls, met with local code jurisdictions, code inspectors, etc., to answer questions and address concerns; series of mini-videos on key code topics on YouTube; web site with all code study information; and presentations at relevant industry-related conferences or events.
Last Updated: September 2019
CHP
CHP Summary List All
Few policies are in place that encourage the deployment of CHP systems. No new CHP systems were installed in 2018.
Interconnection StandardsList All
Policy: Kentucky Interconnection Standard
Description: Applicable only to systems powered by biomass or biogas, Kentucky’s interconnection standard also only is available to systems 30kW or below.
Last Updated: September 2018
Encouraging CHP as a ResourceList All
There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.
Last Reviewed: July 2019
Deployment IncentivesList All
Net Metering: Kentucky offers net metering to the same types of systems as it does interconnection. CHP systems would have to be powered by biomass or biogas, and must be no larger than 30kW.
During the 2019 Kentucky Legislative session, net metering legislation was passed that moved net metering into a net billing arrangement beginning in 2020.
Last Reviewed: July 2019
Additional Supportive PoliciesList All
Kentucky has implemented a focused technical assistance effort to encourage CHP deployment in the state. As part of an ongoing multi-year stakeholder process (2014 - 2016), a variety of education and outreach activities are being conducted in partnership with the Kentucky Association of Manufacturers (KAM), Kentucky Pollution Prevention Center (KPPC), and the Southeast CHP Technical Assistance Partnership (TAP). In addition, feasibility studies are conducted to help assess the potential for CHP in public buildings and at other sites in Kentucky. CHP projects could also qualify for expedited permitting through Kentucky's EXCEL program.
The State Energy Office currently includes landfill gas to energy training during the Landfill Operator's Training program hosted through the state Division of Compliance Assistance. In addition, the State Energy Office works in partnership with the Division of Compliance Assistance on the Sustainable Spirits initiative which includes opportunities for anaerobic digestion, biogas, and CHP projects. The initiaitve is targeted to the wine and spirits industry in Kentucky. In a partnership between the State Energy Office, the Division of Compliance Assistance and the Division of Water, wastewater treatment facility managers and operators are provided information on energy efficiency and how the use of biogas and anaerobic digestion in association with CHP projects could enhance operations at their facilities.
Last Reviewed: July 2019
Utilities
Score: 2.5 out of 15
Utilities Summary List All
Kentucky's 2007 Energy Act recommended that utilities examine specific issues regarding energy efficiency and related programs, and in 2008, Kentucky released its first statewide energy plan, proposing to use efficiency measures to offset at least 18% of the state’s projected energy demand in 2025. For years, energy efficiency programs were optional, but legislation in 2010—HB 240, which reenacts a bill that passed in 2008—allows the KPSC to create requirements for demand-side management programs.
However, in 2018 a public service commission order eliminated all of Kentucky Power’s demand-side management funding with the exception of low-income programs, reducing the DSM budget from $6 million to $2 million. The state’s other utilities have also made substantial reductions in similar programs. Since then, statewide levels of electric savings have fallen to just a fraction of those reported in previous years.
The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables.
Last updated: September 2019
Customer Energy Efficiency Programs List All
Kentucky's regulated utilities administer and implement DSM programs with oversight from the Kentucky Public Service Commission (KPSC). Several utilities administer some programs, although overall funding for and activity in energy efficiency programs have been relatively modest. Program costs are recovered through tariff riders on utility customer bills.
For years, these programs were optional, but a new interest in efficiency began in 2007 with Kentucky's 2007 Energy Act, which recommended that utilities examine specific issues regarding energy efficiency and related programs. The state has since established new rules to allow the Commission to require utilities to implement specific DSM programs. State legislation HB 240 was reenacted in 2010 (after first passing in 1994 and being amended in 2008) to allow the KPSC to create requirements for demand-side management programs. The Commission's authority is only to review and approve or deny DSM programs and associated cost recovery through surcharges on customer bills. Kentucky requires that utility programs allocate their costs and resources according to the sectors that the programs will benefit (residential, industrial, etc.). The legislation also requires that the KPSC consider equity between different classes of customers. Utilities are not required to report annually on energy efficiency programs to the Commission.
Natural gas programs are not required by legislation, but they are available for all sectors other than industrial customers. These programs are administered by utilities and implemented by third-party contractors.
The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables.
Last Updated: June 2016
Energy Efficiency as a Resource List All
Regulated utilities are required every three years to prepare and file integrated resource plans (IRPs) that consider how to use demand-side resources to meet forecasted requirements reliably and at the lowest possible cost.
Last Updated: June 2016
Energy Efficiency Resource Standards List All
There is currently no EERS in place.
For more information on Energy Efficiency Resource Standards, click here.
Last reviewed: July 2019
Utility Business Model List All
Kentucky is generally supportive of lost revenue recovery. The state reiterated this in 2010 in House Bill 240, which reenacted preexisting legislation from 2008. Lost revenue recovery is determined on a case-by-case basis, but the largest investor-owned electric utilities in Kentucky have DSM proposals in place that include similar lost revenue recovery methods. For these utilities, lost revenues are calculated using the marginal rate, minus variable costs and multiplied by the estimated kWh savings from a DSM measure (KY Statute Ch. 278, Title 285; Dockets 2007-00477; 2008-00473).
Natural gas utilities use a similar system to the one described above.
Statute 278.285 allows utilities to recover the full costs of DSM programs via rates and allows incentives designed to provide financial rewards for utilities and encourage implementation of cost-effective DSM programs. Duke Energy, Kentucky Power (AEP), and Louisville Gas & Electric (LG&E) each have a shared savings mechanism in place. Duke and AEP can earn an incentive of up to 10% of net savings after program costs while LG&E can earn up to 15% of net resource savings.
Last Updated: December 2017
Evaluation, Measurement, & Verification List All
- Primary cost-effectiveness test(s) used: total resource cost test
- Secondary cost-effectiveness test(s) used: utility cost test, participant cost test, ratepayer impact measure test
The evaluation of ratepayer-funded energy efficiency programs in Kentucky relies on regulatory orders (807 KAR 5:058). Evaluations are administered by the utilities, but there are no specific legal requirements for these evaluations in Kentucky.
According to the Database of State Efficiency Screening Practices (DSESP), Kentucky uses a Total Resource Cost model (TRC) as its primary cost effectiveness test for decision making. In addition, Kentucky uses the Utility Cost Test (UCT), Participant Cost Test (PCT) and Ratepayer Impact Measure test (RIM) in a secondary capacity. Kentucky uses four of the five classic benefit-cost tests identified in the California Standard Practice Manual. These are the Total Resource Cost (TRC), Utility/Programs Administrator (UCT), Participant (PCT), and Ratepayer Impact Measure (RIM). The rules for benefit-cost tests are stated in Case No. 1997-083. These benefit-cost tests are required for total program level screening, with exceptions for low-income programs, pilots, and new technologies.
Further information on cost-effectiveness screening practices for Kentucky is available in the Database of State Efficiency Screening Practices (DSESP), a resource of the National Efficiency Screening Project (NESP).
Last Reviewed: January 2020
Guidelines for Low-Income Energy Efficiency Programs List All
Requirements for State and Utility Support of Low-Income Energy Efficiency Programs
In 1994, Kentucky passed its DSM Statute (KRS 278.285), which allows utilities to propose and the PSC to review DSM programs aimed at reducing their customers’ energy use through efficiency and load management. However, the statute does not specifically address low-income programs.
Cost-Effectiveness Rules for Low-Income Energy Efficiency Programs
Requirements for low-income programming are similar to those governing other programmatic offerings, and these were established by precedent in a 1997 proceeding surrounding the approval of LG&E’s DSM program portfolio. The rules for benefit-cost tests are stated in Case No. 1997-083. These benefit-cost tests are required for total program level screening, with exceptions for low-income programs, pilots, and new technologies. The commission also found in Case No. 97-083 that “If [a] filing fails any of the traditional [cost-effectiveness] tests, LG&E and its Collaborative may submit additional documentation to justify the need for the program.”
Coordination of Ratepayer-Funded Low-Income Programs with WAP Services
Level of coordination is unclear from publicly available data.
Last updated: April 2017
Self Direct and Opt-Out Programs List All
Duke Energy offers a self-direct program option only to customers that take transmission service on rate TT, thus are described as having “energy intensive processes” and are therefore eligible under statute for such a program. Customers in a self-direct program do not pay any of the cost of the Duke Energy efficiency programs and are not eligible to join them. Duke does not measure or verify the savings of a self-direct program.
Industrial rate class customer statewide are eligible to opt out. About 80% of eligible load has opted out, with the remaining 20% made up primarily of TVA customers. Documentation is not required.
Last Updated: December 2017
Data AccessList All
Kentucky has no policy in place that requires utilities to release energy use data to customers or third parties.
Last Updated: June 2016
Important Links List All
Transportation
Score: 3 out of 13
Transportation Summary List All
Kentucky has not focused its efforts on policies to encourage energy-efficient transportation besides creating a state freight plan, leaving significant room for growth.
Transportation System Efficiency List All
Transportation and Land use Integration: No policy in place or proposed.
VMT Targets: No policy in place or proposed.
Complete Streets: No policy in place or proposed.
FAST Freight Plans and Goals: Kentucky has a state freight plan, which the state updated in 2017 to meet federal requirements, and identifies its multimodal freight network, though does not include freight energy or greenhouse gas reduction goals.
Last Reviewed: November 2022
Incentives for High-Efficiency Vehicles List All
No policy in place or proposed.
Last Reviewed: November 2022
Equitable Access to TransportationList All
Kentucky does not have any state programs in place to incentivize the creation of low-income housing near transit facilities, but it does consider the proximity of transit facilities when distributing federal Low-Income Housing Tax Credits to qualifying property owners.
Last Reviewed: November 2022