South Korea’s AI Data Center Push Gains Momentum as New Law Passes, but Power Supply Questions Linger
May 11, 2026
South Korea’s AI Data Center Push Gains Momentum as New Law Passes, but Power Supply Questions Linger
South Korea is accelerating its drive to become a regional leader in artificial intelligence infrastructure after the National Assembly passed a landmark bill designating AI data centers as national strategic facilities. The legislation, approved during a plenary session on Wednesday, is expected to simplify construction and cut red tape for projects outside the Seoul metropolitan area, a key part of the government’s “5 mega-regions and 3 special zones” strategy to bolster regional AI competitiveness. However, the exclusion of a provision allowing direct liquefied natural gas (LNG) power purchase agreements (PPAs) has raised concerns about whether the country can secure the long-term electricity supply needed to support the rapid expansion of energy-intensive AI data centers.
The "Special Act on the Promotion of the AI Data Center Industry," which will take effect in February after a nine-month grace period following Cabinet approval, represents a significant step forward for the industry. Under the new law, AI data center projects designated as national strategic facilities will undergo integrated approval procedures through deliberation by the National AI Strategy Committee, a move that industry officials and researchers say could dramatically shorten approval timelines and reduce regulatory barriers. Additionally, certain non-metropolitan AI data center projects below a specified scale will be exempted from power grid impact assessments when building, expanding, or converting facilities.
Science and ICT Minister Bae Kyung-hoon welcomed the legislation, describing it as the foundation for an "AI highway" capable of attracting large-scale overseas investment amid intensifying global competition in artificial intelligence. The law is designed to streamline the construction process, particularly in regional areas, as the government pushes its development strategy aimed at strengthening regional AI competitiveness. Experts believe that reducing bureaucratic hurdles could significantly speed up the establishment of AI infrastructure in areas outside the capital, which have historically lagged behind Seoul in technological investment.
One of the most closely watched provisions during the legislative process—a special exemption for LNG-based direct PPAs—was ultimately removed from the bill. The Ministry of Science and ICT and the Ministry of Climate and Energy reportedly concluded that the current national electricity supply system would be sufficient to meet AI data center demand over the next five years. The two ministries are also expected to sign a memorandum of understanding to strengthen coordination on stable power supply measures. However, experts said the exclusion reflected broader concerns over electricity market stability and national power allocation priorities.
Choi Kyung-jin, a law professor at Gachon University, described the decision as "regrettable but reasonable" given the country's overall electricity supply conditions. "The government appears to have considered potential price distortions in the electricity market and the importance of LNG in supplying power to the broader public," Choi said. He added that renewable and environmentally friendly energy sources are likely to become increasingly important as regional AI data centers expand. "Local governments with strong renewable energy infrastructure and expertise in related technologies will have a competitive advantage in attracting and operating AI data centers," he said.
The passage of the law marks a pivotal moment for South Korea’s AI ambitions, but the unresolved power supply challenge underscores the complexity of building a sustainable digital infrastructure. As global competition in AI intensifies, the ability to secure reliable, affordable, and clean energy will be a decisive factor in determining which regions can successfully host the next generation of data centers. Without a clear framework for direct LNG procurement, industry stakeholders may face uncertainty in planning long-term operations, potentially slowing the momentum that the new law aims to create.
Source: upi
