[비즈한국] The dawn of the artificial intelligence (AI) era is bringing the issue of "power shortages" to the forefront. The electrification of the entire economy and the expansion of electric vehicles are also factors driving up electricity demand. Data centers, which consume massive amounts of power for 24-hour server operation and maintaining internal temperature and humidity, are known as "power-hungry hippos." The government has recognized the importance of data centers and power, implementing related policies. Following regulations to disperse the risks associated with the overcrowding of the Seoul metropolitan area, a 2 trillion won private-public infrastructure construction plan was announced last September. However, as efforts to move data centers to regional areas remain sluggish, the phenomenon of concentration in the metropolitan area has not improved; instead, critics argue that the development of new data centers has hit a roadblock.
Big Tech and Major Nations Prepare for 'Power Shortages', South Korean Government Focuses on 'Regional Dispersion'
"Last year, the problem was chip shortages, and after that, it's transformers. Next year, it will be electricity." The concerns raised by Tesla CEO Elon Musk early this year have become a reality. Data centers, which handle the storage, processing, and distribution of data, are called the brains and hearts of IT services. Global big tech companies, competing to secure data centers, are staking their existence on securing energy to keep up with the explosive growth in power demand.
AI consumes massive amounts of power by processing data through high-performance semiconductors. A Google search requires an average of 0.3 watt-hours (Wh) of electricity, while the generative AI ChatGPT uses nearly 10 times that amount, at 2.9Wh. Image and video-based models consume 40 to 60 times more power than text. It is estimated that a single AI model training run consumes more electricity than 100 households use in a year. This is why global big tech firms and domestic semiconductor companies are pursuing low-power, high-efficiency chips.
The South Korean government has identified the resolution of metropolitan concentration as a way to provide stable power to data centers. The intent is to prevent the strain on transmission and distribution infrastructure and concerns over grid congestion caused by the concentration of high-power facilities like data centers in the Seoul capital area. The goal is to induce dispersion toward non-metropolitan regions where major power plants, such as nuclear power stations, are concentrated.
The government believes that once a basis is established to deny electricity supply applications through the implementation of evaluations, data centers can be built by fully considering factors such as transmission grid saturation and electricity price hikes. Unlike before, an environment will be created where massive power-consuming facilities can be screened. This is expected to mitigate localized load surges and the costs of constructing long-distance transmission grids for large-scale power distribution to the capital area.
However, the "Power Grid Impact Assessment" system, which was piloted in the field this August, has shown no results over the past four months. According to the Ministry of Trade, Industry and Energy and the industry, there have been zero applications for the power grid impact assessment as of December. This evaluation system, based on the Distributed Energy Activation Special Act introduced in June, is mandatory for power grid projects requesting 10 megawatts (MW) or more of electricity, yet not a single "challenger" has stepped forward.
The response from the data center industry is cold due to the limitations in business feasibility caused by cost risks. It is interpreted that if a data center is moved to an area outside the capital region (about 100km away) under these regulations, annual line costs could increase by approximately 5 billion won. There are also concerns that increased line costs or the construction of sub-standard data centers could lower the profitability of companies moving into these facilities and increase the burden on customers using the services provided by these tenants. An industry official pointed out, "The focus has been on tightening site regulations, making it difficult to get permits in the capital area," adding, "It is a policy that doesn't fully consider the reality of transmission and distribution networks or the various costs associated with building and operating data centers."
'Metropolitan Concentration' Persists: "Incentives Also Needed"
If the government's dilemma is how to stably secure the massive amount of power needed for "bottomless pit" data centers, companies are worried about the costs of data centers outside the capital region. Because expert personnel and data center demand are concentrated in the metropolitan area, the cost burden increases significantly the more data centers are dispersed to rural areas.
Kim Myung-han, a senior researcher at IDC Korea, noted, "The problem of labor shortages will intensify as the demand for AI data centers grows and technical requirements become higher," adding, "Securing land and power remains a challenge that is difficult to solve in the short term, as the government's regional dispersion policy conflicts with the stance of companies that prefer the metropolitan area. As the demand for data centers is expected to continue to increase, policy support and long-term investments by companies to resolve this are necessary."
The industry believes that the concentration of data centers in the capital area will continue for some time. According to the Ministry of Trade, Industry and Energy, there were 150 data centers in Korea as of last year. More than half of these are in the public sector, with only a fraction being private data centers, and most are concentrated in the capital area, including Seoul, Gyeonggi, and Incheon. According to the Korea Data Center Council, among the 36 data centers currently in specific stages of progress—such as investment attraction, land acquisition, design and building permit acquisition, or construction—21 (58.3%) are being built in the metropolitan area. Including Busan, the concentration in major cities remains as high as 86.1%. The Korea Data Center Association explained, "Private data centers have limitations in that they inevitably prefer the capital area due to customer accessibility and superior infrastructure."
Yoo Jae-gook, a senior researcher at the National Assembly Research Service, noted, "It is clear that the future installation of AI data centers will act as a burden on power production and grid operation," adding, "We need preemptive power supply, a review of appropriate power generation mixes, comprehensive consideration of power supply and communication network costs, and support systems to increase the efficiency of data center operations."