South Korea Unveils 'Mega-Projects' for Semiconductor Hubs, Citing Power and Water Needs

South Korea's government has unveiled ambitious plans for a "mega-project" centered on constructing four semiconductor plants in the Jeonnam and Gwangju regions. This initiative is part of a broader vision to establish the nation as a leader in advanced industries such as semiconductors, artificial intelligence (AI) data centers, and physical AI.

The project necessitates a substantial increase in power capacity, requiring an additional 15 gigawatts (GW) for the Seoul metropolitan area and 6.3 GW for the southwestern region. To meet this demand, the government aims to accelerate its existing plan to reach 100 GW of renewable energy capacity by 2030. It also intends to complete new nuclear reactors on schedule and continue the operation of nine existing ones. Furthermore, plans include expanding the transmission grid, substations, and significantly increasing flexible resources like battery energy storage systems (BESS) and pumped-storage hydropower.

While the southwestern region already has a high capacity for renewable energy generation, a significant portion of this power is transmitted to the Seoul area due to insufficient local consumption and transmission network limitations. The new semiconductor plants are expected to help alleviate these transmission constraints by creating local demand for electricity. Reinforcing local transmission and distribution networks, rather than building new long-distance transmission lines, is seen as crucial for enabling local power consumption.

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If large power demands like semiconductor plants arise, it will significantly help alleviate output control.

Addressing water supply is another critical aspect. The government must secure an additional 1.5 million tons of water daily for the Seoul metropolitan area and 650,000 tons for the southwestern region. Plans include accelerating the "integrated water supply project" to bring water from Paldang and Hwacheon dams to Yongin, increasing wastewater recycling rates, and securing surplus water from Han River sources like Soyanggang, Chungju, and Hwacheon dams. For the Jeonnam and Gwangju areas, the government proposes securing about 1 million tons through multipurpose dams, alternative water resources, and new aqueducts, noting that current water usage from the Yeongsan and Seomjin rivers leaves some capacity for expansion.

The government also plans to integrate new power demands from AI data centers and semiconductor industrial complexes into the 12th Electricity Supply and Demand Plan, potentially delaying its finalization by several months. To encourage efficient power usage and distribution, a "regional electricity pricing system" will be introduced later this year, offering discounts in areas near power generation or higher prices in consumption areas. Additionally, a dedicated pricing system for AI data centers and public disclosure of 345 kV substation statuses are planned to support distributed and stable operations.

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There is a considerable amount of additional water that can be secured in this region, but a process to accurately reassess and reallocate the total water volume is necessary.