Transmission constraints and growing power demand
Gangwon Special Self-Governing Province has substantial generating facilities but is unable to make full use of them.
A leading example is the Samcheok Blue Power plant, which was built to expand electricity supply capacity following nationwide rolling blackouts in 2011 but has been unable to raise its utilization rate sufficiently because of transmission constraints.
More than a decade later, electricity supply and demand face a different situation.
New electricity demand is emerging from the expansion of semiconductor production facilities and the arrival of AI data centers.
The biggest challenge is building transmission and distribution networks on time.
Given South Korea's experience building transmission lines over the past 20 or so years, many experts are concerned about whether transmission infrastructure can be completed on time for advanced industrial complexes to be developed within the next 15 years.
This problem is not unique to South Korea.
How to supply the electricity required by advanced industries is becoming an important challenge worldwide.
As a result, a model that places generating facilities and large electricity-consuming facilities close together, removing the need for large-scale transmission networks, is attracting attention.
A prominent example is Project Kilby, which technology company Microsoft and energy company Chevron are pursuing in Texas in the United States.
The idea is for an energy company to build generating facilities and a technology company to construct a very large AI data center on the same site, connecting the electricity supply directly.
Direct power supply opportunities in Samcheok
Samcheok has favorable conditions for applying this model.
It has large-scale generating facilities and substation infrastructure, can secure the cooling water needed to operate data centers, and, most importantly, has land around power plants where AI data centers could be located.
Attracting AI data centers to sites near power plants could reduce the time and cost required to build long-distance transmission lines and large-scale substation facilities while creating jobs and new sources of tax revenue.
An approach worth considering for this purpose is behind-the-meter (BTM) supply.
This structure places generating facilities and large electricity-consuming facilities close together to reduce dependence on the existing grid.
If a developer and a data center operator sign a long-term power purchase agreement (PPA), they can secure both stable demand and a predictable electricity supply.
The Electric Utility Act, amended in 2023 following a proposal by National Assembly member Lee Cheol-gyu, provides a legal basis for directly supplying electricity generated in transmission-constrained areas to facilities in neighboring areas.
Although the government still needs to establish follow-up arrangements setting out specific project requirements, a basis now exists for reviewing a model directly linking Samcheok's generating facilities with AI data centers.
Related industries and regional employment
Some argue that AI data centers have limited spillover effects on local economies. In essence, however, they are a facilities-intensive industry in which precision air conditioning and large-scale cooling infrastructure determine success. Just as South Korean semiconductor companies expanded into the United States alongside air-conditioning and support contractors, attracting AI data centers, which share constant-temperature, constant-humidity and cooling technologies with the semiconductor industry, means developing related industries in large-scale air conditioning and facilities management.
Growth in these related industries could become a key driver of job creation, helping prevent young people from leaving and revitalizing the local economy.
Gangwon must no longer limit itself to generating electricity and sending it to the Seoul metropolitan area.
It must turn locally generated electricity into local industry and jobs. Rather than passively waiting for transmission infrastructure to be completed, it needs an active strategy to attract power-intensive AI data centers to sites near power plants.
Samcheok's electricity and cooling conditions, substation infrastructure and land are assets for developing Gangwon's future industries.
I hope Gangwon Special Self-Governing Province will take the lead in pursuing a model directly linking power plants and AI data centers, turning transmission constraints into an opportunity to attract new industries and offering a new approach to South Korea's energy and advanced-industry policies.
Original Korean article: kwnews.co.kr
English brief by Korea Wind Intelligence, koreawindintel.com
