Liquefied natural gas (LNG) is likely to be excluded from the power purchase agreement (PPA) system, a direct electricity trading scheme that had been expected to ease the burden of electricity procurement costs for artificial intelligence data center (AIDC) operators. While the ruling and opposition parties had agreed to include both renewable energy and LNG as PPA energy sources in response to industry input, opposition from the Ministry of Climate, Energy and Environment has raised the likelihood that only renewable energy will be included in the final legislation.
According to the National Assembly on Wednesday, Ryu Je-myung, Second Vice Minister of Science and ICT, said at a plenary meeting of the Science, ICT, Broadcasting and Communications Committee the previous day, "We are currently considering other measures related to electricity rates," adding that "even if LNG PPA is excluded first, it is important to prioritize passing the AIDC Act."
The remarks reverse the committee's agreement that was passed in a plenary session on the 14th of this month. While the AIDC Act centers on shortening permit procedures for infrastructure construction, supporting purchases of graphics processing units (GPUs) as a core device, and training specialized personnel, its substantive core lies in the PPA provisions.
PPAs involve direct electricity trading with power generators, enabling relatively inexpensive power procurement by bypassing the transmission grid operated by Korea Electric Power Corp. The ruling and opposition parties had agreed to permit direct power trading limited to renewable energy and LNG, sharing the view on the strategic importance of the AI industry.
However, the Climate Ministry has put forward counterarguments based on fairness with other industries and power grid stability. "Other national strategic industries, such as steel and semiconductors, have also consistently demanded special electricity rate treatment," a ministry official said. "Granting rate exceptions to specific industries not only violates inter-industry fairness but could also disrupt stable power grid operation at the national level."
On the other hand, the industry maintains that an energy mix strategy including LNG in PPAs is essential, given the explosive growth expected in AIDC demand and power consumption in line with the government's strategy to become one of the top three AI powers.
"Renewable energy is highly intermittent depending on the season and weather," said Rep. Kim Jang-kyum of the People Power Party, a member of the National Assembly's Science, ICT, Broadcasting and Communications Committee. "The industry fundamentally views this as incompatible with the load characteristics of AIDCs, which continuously consume enormous amounts of electricity."
