South Korean regulators face calls to raise the cap on direct power purchases by data centers from the grid amid surging AI infrastructure demand.

As the construction of artificial intelligence data centers gains momentum, there is growing urgency around modernizing South Korea's power regulations. Gigawatt-scale AI data centers are being pursued as part of the government's national strategy under three major projects. However, companies can procure power directly through power purchase agreements (PPAs) only from facilities of 500 megawatts (MW) or less. This effectively prevents large nuclear or liquefied natural gas (LNG) power plants—which exceed 500 MW—from directly supplying AI data centers. Despite efforts to establish a local generation and local consumption power system by siting plants near demand centers, capacity limits remain in place.

Industry groups are calling for the 500 MW limit to be lifted ahead of the Special Act on the Promotion of the Artificial Intelligence Data Center Industry (AIDC Special Act), due to take effect next March. The government, however, is reluctant to act, citing concerns that directly connecting specific data centers to LNG power plants would strain the national power grid's operation.

The industry is also requesting revisions to power system impact assessment rules, which currently mandate assessments for any facility 10 MW or larger. Current assessment timelines cannot keep pace with project development speeds, they argue. Traditional data centers typically required 10 to 25 MW, but power demands have surged to between 100 and 400 MW.

On assessment exemptions, the Ministry of Science and ICT reportedly supports exempting facilities up to 100 MW in non-metropolitan areas. The Ministry of Climate, Energy and Environment, however, insists the exemption remain limited to 50 MW facilities.

Some industry voices contend that incrementally raising thresholds from 10 MW to 50 MW to 100 MW falls short for gigawatt-scale infrastructure. As AI data centers expand from hundreds of megawatts to the gigawatt scale, both power procurement and impact assessment systems must be redesigned in stages to match facility sizes.

A senior executive at a major AI data center developer stated: "With construction speed becoming a competitive advantage, we will inevitably lose ground in global competition if securing power takes months or years. The PPA system should expand to include stable power sources—renewable energy, LNG, nuclear power, small modular reactors, and hydrogen—and impact assessment thresholds must reflect current realities."

Regulatory relief calls extend beyond AI data centers. POSCO is exploring small modular reactors to secure stable power for HyREX (hydrogen reduction ironmaking technology). In August of last year, POSCO signed a memorandum of understanding with North Gyeongsan Province and Gyeongju to attract the country's first SMR demonstration unit and use its electricity output for nuclear power.