Calls have been made for South Korea to broaden eligibility for investment tax credits and reduce the burden of power-related regulations to gain an advantage in the global competition to attract artificial intelligence (AI) data centers. The argument is that, given its stable electricity supply and competitive semiconductor industry, Korea needs institutional support from the government to actively attract investment from overseas technology giants. Lee Young-tak, vice president of SK Telecom's AIDC Integrated Promotion Group, made these remarks at the 12th AI Future Value Forum, held at the Korea Telecommunications Operators Association (KTOA) in Samseong-dong, Gangnam-gu, Seoul, on October 21. Lee assessed that Korea has favorable conditions for attracting AI data centers, including a stable power grid, its geographical location, submarine cable infrastructure and semiconductor industry base. This assessment reflected Lee's view that Japan faces power supply constraints and earthquake risks, Southeast Asia lacks an AI industry ecosystem, and Australia has limitations in its proximity to major sources of AI demand. “The time is right to attract AI data centers from foreign technology giants,” Lee said. “If we miss this opportunity, global technology giants could turn back to Japan, Australia and Southeast Asia.” Lee emphasized the economic effects of AI data centers and the need for institutional support. According to an analysis by the National Assembly Research Service, a 105 MW AI data center is estimated to generate 3.5 trillion won in production and 1.3 trillion won in added value. Lee explained that building AI data centers could contribute not only to semiconductors but also to the growth of related industries, including power, cooling and air conditioning, and to revitalizing regional economies. To expand these economic benefits, Lee first proposed improving the scope of eligibility for investment tax credits. Although the government has introduced a 15% investment tax credit by including AI data centers among facilities for commercializing national strategic technologies, Lee pointed out that colocation data centers operating on a rental basis face difficulty receiving benefits under the current system. Assets intended for rental are excluded from investment tax credits under the Restriction of Special Taxation Act, meaning eligibility may be restricted depending on whether a facility is leased out. “AI data centers are facilities that produce intelligence and supply it externally, rather than for their own consumption,” Lee said, explaining that consideration should be given to extending a certain level of tax credits to colocation facilities as well. Lee also called for a reasonable level of regulation in introducing a Grid Code to maintain power system stability. A Grid Code sets the technical standards required for large electricity-consuming facilities to connect to and operate on the power grid. Lee explained that excessive requirements to install equipment such as an energy storage system (ESS) to address sudden fluctuations in electricity consumption could increase developers' investment costs and the burden of securing land. “A Grid Code is absolutely necessary for power system stability,” Lee said, while expressing concern that excessively stringent requirements could become an obstacle to attracting investment from major technology companies. Lee added that the government, private developers and experts should consult to establish standards that consider both grid stability and investment conditions.
Original Korean article: ETNews
English brief by Korea Wind Intelligence, koreawindintel.com
