Legislation is being pursued to incorporate a balance between location and electricity supply and demand into policies supporting the expansion of artificial intelligence (AI) data centers. It would prioritize support and special provisions for data centers consuming electricity generated locally, while excluding certain building permits related to the protection of residential and educational environments from provisions deeming permits and approvals complete. The aim is to supplement industrial promotion policy so that it considers grid burdens and community impacts while supporting the rapid provision of facilities.
A partial amendment bill to the Special Act on the Promotion of the Artificial Intelligence Data Center Industry, introduced on October 30 by National Assembly Foreign Affairs and Unification Committee member Han Jeoung-ae of the Democratic Party of Korea, representing Seoul's Gangseo C constituency, would incorporate regional electricity production and consumption conditions into special zone designation and developer support.
An earlier proposed amendment to the Special Act on the Promotion of Distributed Energy focused on establishing a basis for designating and supporting electricity-consuming facilities that use locally generated power. This bill has significance as a follow-up measure because it connects that approach to special zone designation and the industrial support framework for AI data centers.
Linking electricity production and consumption to data center support
The amendment would require consideration of regional electricity self-sufficiency and the proportion of electricity-consuming facilities using locally generated power when designating AI data center special zones. It also includes provisions allowing priority application of support and special provisions to AI data center developers using locally generated electricity.
This approach would assess conditions for attracting data centers not only through land availability and permit-processing speed, but also through regional electricity supply capacity. The article interprets it as an approach that would reduce demand for long-distance transmission and expand local electricity consumption by placing large demand facilities in regions with generating facilities.
If both bills are enacted, support under energy policy for using regional electricity could be linked to support under data center industrial policy. Companies would have greater scope to consider locations by assessing electricity prices, equipment costs and special zone support together. Power-generating regions could also gain a means of attracting related industries and investment, beyond their role as electricity suppliers.
However, a high regional electricity self-sufficiency rate alone does not mean that electricity can be supplied reliably to a new data center. Even where annual generation exceeds consumption, a particular substation or distribution network may lack connection capacity, and supply conditions at different times may vary depending on the generation mix.
Special zone designation therefore needs to reflect not only self-sufficiency within administrative boundaries but also available grid capacity at the actual connection point, the electrical proximity of generation and demand, and the need for additional transmission and substation facilities. Distinguishing annual supply-demand statistics from the feasibility of supplying individual projects is necessary if support is to help reduce grid burdens.
Maintaining faster permitting while ensuring substantive reviews of living environments
Another aspect is adjusting the relationship between special permitting provisions and protection of living environments.
Responding to concerns that building permit rules intended to protect residential and educational environments could become less effective, the amendment would prevent deemed-completion provisions from applying to certain building permits.
This differs from abolishing all special permitting provisions for data centers. The aim is to ensure that, even when facility construction receives expedited support, decisions on permits affecting the surrounding environment do not become merely procedural.
For developers, some review procedures could become variables affecting schedules and location selection. On the other hand, adequately assessing compatibility with the surrounding environment at an early stage could help reduce the risk of project delays caused by complaints or disputes after construction begins.
Clear definitions of the exemptions from special provisions and the review criteria are important for making the system effective. Reviews should specifically assess facility impacts, including noise, cooling equipment and emergency generator operation, while also making review periods and procedures for requesting supplementary information predictable. Unclear protection standards could increase differences in local decisions and permitting uncertainty.
Regional dispersal also does not automatically resolve community acceptance issues. Facilities outside the Seoul metropolitan area must still explain their effects on living environments and consult local communities. Procedures need to address both reduced concentration in the metropolitan area and protection of residents in host communities.
Linking support to actual grid contributions and local benefits
A key task will be ensuring that designation as a facility using locally generated electricity leads to actual reductions in grid burdens and benefits for the region.
First, assessments need to distinguish contractual requirements to use regional electricity from actual contributions to electricity supply and demand. Even a contract with a developer generating electricity in the same region may leave a data center dependent on the external grid if generation and consumption occur at different times. This is why assessments should examine not only electricity purchase volumes but also the degree of time-specific supply-demand matching and peak-demand management.
Support could also be linked to operating performance rather than concentrated at the time of designation. This could involve periodically checking regional electricity use, demand-management performance and delivery of promised investment, with support adjusted if targets are not met. A management framework is also needed to check whether support under related laws overlaps and to distinguish costs and outcomes by support objective.
Regional economic effects are also difficult to judge from investment amounts alone. Assessments should include benefits that continue during operation, such as local companies' participation in maintenance, specialist workforce training and waste heat use. In particular, the commercial viability of waste heat use varies with nearby heat demand, supply temperatures and pipeline construction costs, making assessment from the location-planning stage advisable.
To encourage companies to choose regional locations, operational foundations such as telecommunications networks, water supplies and specialist personnel must be available alongside electricity support. If the central and local governments jointly present regional timelines for grid access and infrastructure development plans, they could reduce investment uncertainty for companies.
The amendment is significant in treating AI data centers both as facilities for industrial development and as large electricity consumers affecting regional supply and demand. Future legislative scrutiny will need to clarify criteria for identifying regional electricity use, support priorities and the scope of reviews of living environments. Clearer standards are expected to make it possible to pursue data center expansion, reduced grid burdens and regional industrial development together.
Original Korean article: energydaily.co.kr
English brief by Korea Wind Intelligence, koreawindintel.com
