Legislation is being pursued to expand the scope of power grid impact assessments as large-scale electricity demand grows rapidly with the spread of artificial intelligence (AI) and increasing numbers of data centers. The proposal would require the statutory electricity-use threshold to be set at 5 MW or less, compared with the current enforcement decree's assessment threshold of 10 MW or more. The intention is to examine in advance the grid impacts of medium-sized electricity-consuming facilities as well.
If the amendment passes, it is expected to have a substantial effect on the siting and grid connections of large electricity-consuming facilities, including data centers. While it could help verify grid stability in advance and curb the concentration of electricity demand in particular areas, a substantial increase in the number of developers subject to assessment could also raise their costs and permitting burdens. Setting an appropriate threshold is therefore expected to become a central issue in legislative scrutiny.
Chae Hyun-il, a Democratic Party of Korea lawmaker representing Seoul's Yeongdeungpo A constituency and a member of the National Assembly's Public Administration and Security Committee, introduced a partial amendment bill to the Special Act on the Promotion of Distributed Energy containing these provisions on October 29. A total of 10 lawmakers, including Chae, joined in introducing the bill, numbered 2222261.
The current Special Act on the Promotion of Distributed Energy requires developers intending to use electricity at or above a specified scale, as prescribed by presidential decree, to conduct power grid impact assessments in areas subject to the assessment requirement.
The threshold set by the current enforcement decree is 10 MW or more.
Chae considered that the recent rapid increase in large electricity-consuming facilities, including data centers, could leave facilities capable of significantly affecting the grid outside the assessment requirement even though they fall below the current threshold.
The amendment would therefore require the electricity-use threshold for facilities subject to power grid impact assessments, which the law delegates to a presidential decree, to be set at 5 MW or less.
Data centers below 10 MW could also face assessments: expanding coverage is the key
The amendment's central purpose goes beyond a simple numerical adjustment to broaden the application of power grid impact assessments.
Under the current 10 MW threshold, facilities below that level may fall outside the assessment requirement. The concern underlying the amendment, however, is that multiple electricity-intensive facilities concentrated in a particular area could place a cumulative burden on the local grid even if each facility is below 10 MW.
Unlike ordinary buildings, data centers must operate servers and cooling equipment around the clock and therefore require a highly reliable electricity supply. If electricity demand per facility increases as AI data centers expand, securing transmission and substation infrastructure, as well as generation facilities, and determining whether grid connections are available are likely to become major factors in site selection.
Lowering the assessment threshold would therefore allow broader consideration not only of individual developers' electricity use but also of existing demand and spare grid capacity in the area where a facility would be located.
Stronger grid stability expected, with a potential reduction in metropolitan concentration
The amendment is also linked to distributed energy policy.
The power grid impact assessment system is one of the institutional mechanisms intended to ease the concentration of large electricity-demand facilities in the Seoul metropolitan area and distribute demand to regions with available electricity supply capacity.
Expanding assessment coverage is expected to benefit grid stability by enabling advance management of further concentrations of electricity-intensive facilities in areas with insufficient spare grid capacity.
In particular, because the need to expand transmission networks grows as the distance between power plants and electricity-consuming areas increases, directing demand itself toward generation sources or areas with spare grid capacity could help reduce the long-term burden of transmission investment.
There may also be scope to link the proposal with policies for specialized distributed energy zones. Expanding a distributed electricity system in which locally generated power is consumed locally requires coordination of the siting of large electricity-demand facilities as well as additional generation capacity.
Ultimately, power grid impact assessments could function as a policy tool influencing the future regional distribution of data centers and advanced industries, rather than simply as a permitting procedure.
Data center developers could face greater burdens: the suitability of 5 MW or less needs scrutiny
Potential adverse effects of stricter assessment criteria also need examination during legislative scrutiny.
A lower threshold could newly subject medium-sized data centers and industrial facilities that previously fell outside the requirement to assessments. This could extend the project preparation period, add administrative procedures and increase assessment costs.
It is also necessary to consider that excessive regulatory tightening could burden new investment and project schedules at a time when data center investment is needed to expand the AI and cloud industries.
In particular, because the amendment would require the presidential decree to set the electricity-use threshold for assessments at 5 MW or less, the final level chosen for application will be important.
Whether applying a uniform capacity threshold alone is appropriate also needs examination. Even facilities with the same 5 MW capacity could have different grid impacts depending on whether they are located in areas with ample spare grid capacity or concentrated electricity demand.
Alongside electricity use, consideration should therefore be given to incorporating regional spare grid capacity, peak-load timing, and the use of emergency generation and an energy storage system (ESS) into the assessment framework.
Design the policy to guide site selection rather than merely tighten regulation
The article's analysis is that improving policy effectiveness requires not only lowering the assessment threshold but also offering incentives to guide large electricity-consuming facilities toward areas with spare grid capacity.
Possible approaches include simplifying power grid impact assessment procedures or supporting grid connections, renewable energy procurement and related infrastructure when data centers locate in areas with a low grid burden or in specialized distributed energy zones.
Conversely, the extent to which developers should bear the necessary grid reinforcement costs when additional electricity-intensive facilities locate in areas with saturated grids is also a matter for long-term consideration.
With such a framework, power grid impact assessments could serve as a siting policy that shifts electricity demand toward suitable areas, rather than simply as a regulation restricting projects.
Before expanding assessment coverage, it is also necessary to analyze the performance of the system currently operating under the 10 MW threshold. Determining whether stricter criteria would be effective requires examining how much actual project siting has changed in response to assessment results and how much the burden on the grid has been reduced.
Managing electricity demand becomes as important as building power plants in the AI era
The bill shows how the expansion of AI and data centers is broadening the focus of electricity policy from securing generation facilities to managing the location of electricity demand.
If large-scale electricity demand from AI data centers, semiconductors and advanced industries continues to grow, adding generation facilities alone will not readily resolve grid problems. Even if the required electricity can be generated, accommodating new demand is difficult without sufficient transmission and substation infrastructure to deliver it to the relevant areas.
The amendment's success will not depend on increasing the number of facilities subject to assessment. The key is to establish precise criteria that identify facilities with real grid impacts early, without unnecessarily delaying investment in areas with spare grid capacity.
Future National Assembly scrutiny needs to consider the scale of facilities newly covered if the assessment threshold is lowered to 5 MW or less, the resulting administrative workload and the effects on data center investment. If differentiated assessments reflecting regional grid conditions are also linked with siting incentives, it remains to be seen whether power grid impact assessments can become a policy tool that jointly addresses grid stability, advanced-industry investment and regional dispersal.
Original Korean article: energydaily.co.kr
English brief by Korea Wind Intelligence, koreawindintel.com
