Encinal project chosen as South Korea’s first U.S. investment, with AI data centers providing a stable power market

South Korea’s decision to choose a gas combined-cycle power plant in Encinal, Texas, as its first U.S. investment project reflects the rapid growth of electricity demand from nearby artificial intelligence data centers.

The project is expected to benefit from a stable potential customer base. A long-term power purchase agreement with a data center could secure a market before the plant starts operating, improving the chances of recovering the investment.

Officials and people familiar with the government’s deliberations also considered the project’s relatively favorable conditions. The power plant site and natural-gas supply are already available, meaning the project could advance more quickly than alternatives such as a nuclear plant or an LNG export terminal.

Several other projects had been reviewed as possible first investments, including an LNG export terminal in Louisiana and nuclear construction in the United States. The Encinal project gained an advantage as AI data center construction drove rapid growth in power demand.

The project’s actual profitability remains uncertain. It will depend on the terms of agreements with data centers and on how additional construction costs are divided. The government is targeting operation by 2030.