Recently, as extreme cold hit New York and the northeastern United States, a silent power crisis unfolded. Since these areas are dominated by market principles, electricity rates are immediately affected by market conditions, and local news has been continuously reporting concerns about rising electricity prices. This region has strong Democratic leanings and was relatively less favorable toward nuclear power until a few years ago, leading several nuclear plants to choose to shut down rather than add equipment to meet regulatory requirements. This has come back as a boomerang. With limited gas pipeline capacity, there isn't enough gas for power generation, and pipeline expansion has been blocked due to environmental destruction controversies.
In terms of not directly producing energy sources, New York and the northeastern United States are similar to Korea. As a result, electricity rates in this region are about 50% higher than average. If pipelines are insufficient, liquefied natural gas (LNG) should be shipped in, but even this was blocked due to the Jones Act enacted in 1920. The law requires ships operating along U.S. coasts to be built in America, but not a single LNG carrier has been constructed in the United States.
In other words, the current situation is the combined result of natural environmental conditions, man-made regulations, and social systems. Given these circumstances, electricity rates that were already higher than other states have become even more expensive. This doesn't happen in upstate New York within the same region, where nuclear plants have remained relatively intact. This is because nuclear and hydropower can meet almost all electricity demand. In contrast, near New York City, where the Indian Point nuclear plant was shut down several years ago, electricity rates rose 10% last year alone.
Amid all this, with the added electricity demand from artificial intelligence (AI) and data centers, securing power supply sources has now become an issue that determines a region's economy. In the United States, competition between local governments is no less intense than competition between nations. Data centers serve as beachheads for information and AI-based industries, but they can also trigger soaring rates due to enormous electricity consumption, making it difficult to find solutions that satisfy both sides. Europe's situation, having lost competitiveness across industries due to soaring energy prices, is more desperate than America's. In that sense, they will soon be forced into a dead end where choices must be made. Our country cannot be an exception.
It is ironic that such situations occur even in the United States, the overwhelming world's largest oil-producing nation, but there is much for our country to reference in establishing energy strategies. Particularly, the American public's perspective on energy issues and the political environment have changed significantly recently. A Gallup survey conducted this year showed that 60% of Americans support nuclear power, far exceeding opposition (35%). Also, Democratic politicians who traditionally prioritized renewable energy are shifting their power policies toward nuclear. For example, Democratic New York Governor Kathy Hochul's announcement of a 1GW nuclear plant construction plan last year was called a surprising change, but earlier this year she revealed an enhanced plan to build 5GW of nuclear plants, indicating a transition to nuclear-centered power supply.
Crisis brings opportunity on the other side. This means such situations could become new opportunities for Korea's nuclear and energy companies. Amid the wave of power demand from major powers that must secure energy immediately, our companies will be able to seize opportunities to advance into new and large markets. Whether it becomes a crisis or an opportunity depends on us. This is a time when the foresight of our policymakers is desperately needed.