To meet the surging power demand from artificial intelligence (AI) data centers, there is a growing call to allow AI data center operators to sign direct power purchase agreements (PPAs) with liquefied natural gas (LNG) generators. Because AI data centers, where thousands of graphics processing units (GPUs) run 24 hours a day, need stable power, the argument is that they cannot be operated by expanding renewables alone.
According to the Ministry of Science and ICT on the 22nd, the ministry projects that data center power demand will reach 6.2 GW (gigawatts) in 2030. The government's 11th Basic Plan for Electricity Supply and Demand, released last year, predicted that data center power demand would reach 3.3 GW in 2030 and 6.2 GW in 2038, but soaring AI demand is expected to push consumption far beyond earlier expectations.
The draft of the AI data center special act, which passed the National Assembly plenary session in May, included a plan to allow "direct LNG trading" to meet rising data center power demand. A direct PPA is a system in which corporations buy electricity by contracting directly with a generator instead of purchasing through Korea Electric Power Corporation, but under current law, direct PPAs are limited to renewable energy. Data center operators have argued that stable power supply is difficult with renewables, whose output fluctuates with the weather, and that they need LNG, which allows easier load control.
Accordingly, the draft special act allowed AI data center operators to enter into direct PPAs for other energy sources such as LNG, but the plan ultimately fell through due to opposition from the Ministry of Climate, Energy and Environment. The Ministry of Science and ICT viewed the special exemption as necessary but decided that passing the law took priority even if the provision was deleted.
However, with power demand rising faster than expected, momentum is building again for direct LNG PPAs. Ulsan City recently decided to push for institutional changes with the government and the National Assembly to include LNG among eligible resources for direct PPAs. SK Group and Amazon Web Services (AWS) are building an AI data center in the Ulsan Mipo National Industrial Complex.
In the National Assembly, a bill to amend the special act on distributed energy is under discussion to remove the 40 MW (megawatts) generation capacity limit for generators supplying power to AI data centers within distributed energy specialized zones and to enable large-capacity direct PPAs. Under current law, generators can supply power directly within specialized zones, but the capacity is capped at 40 MW, making it difficult to meet the needs of large data centers that use hundreds of megawatts.
Bae Kyung-hoon, Deputy Prime Minister and Minister of the Ministry of Science and ICT, also said at a press briefing marking his first year in office at the Government Complex Sejong that LNG power supply is needed for data center electricity. Bae said, "To build AI data centers to 8.4 GW by 2029 and 15 GW by 2035, securing power is extremely important," adding, "We will expand nuclear power, significantly expand renewables, and although we have not yet reached agreement with the Ministry of Climate, Energy and Environment (MCEE), personally I believe we should even open the door to LNG and create a 'data center-only rate plan.'"
Overseas, cases of AI data centers procuring power directly are mounting. xAI, Elon Musk's AI corporation, is bypassing grid interconnection wait times by installing and operating natural gas turbine generators directly. Microsoft (MS) has secured an entire nuclear power plant. It will restart Unit 1 of the Three Mile Island nuclear plant in Pennsylvania, which had been shut down, and exclusively purchase the power produced there for 20 years starting in 2028.
Jung Beom-jin, a professor in the Department of Nuclear Engineering at Kyunghee University, said, "Designing the system to allow direct PPAs only with renewables, which are not supplied consistently 24 hours a day, is not technically appropriate," adding, "Big Tech companies such as Google have decided to sign direct PPAs with small modular reactor (SMR) plants to secure power." He also said, "Through the 'Bring Your Own New Generation (BYONG)' policy, the United States encourages corporations to build their own generation facilities or secure power on their own when they construct data centers, but in Korea the structure that allows bringing in generation sources and freely achieving self-sufficiency is restricted."