AIDC Investment Slows? New Rules Could Block LNG Direct Deals

As the government moves to introduce a dedicated grid code for AI data centers (AIDC) within this year, concerns have emerged that the new rules could block direct LNG deals and increase the investment burden on AIDC projects.

In particular, if the scope of application includes projects already under way, observers say design changes would be unavoidable, along with delays in completion. A grid code is a set of rules that power plants and large power-consuming facilities must follow when connecting to the grid, and it requires measures to prevent facilities from disconnecting simultaneously in the event of grid problems, as well as support for maintaining voltage stability.

Against this backdrop, Rep. Cho Kyung-tae, who sits on the National Assembly's Science, ICT, Broadcasting and Communications Committee, on the 21st urged the Ministry of Science and ICT to respond actively to the introduction of a dedicated grid code for AIDC.

The grid code has mainly applied to power-generation facilities. In August, the Ministry of Climate, Energy and Environment launched the 'AIDC Research Group' and announced a plan to establish a dedicated grid code for AIDC within this year. The move came amid concerns that large data centers could destabilize the power grid because electricity use in AI computing can change sharply in a short period of time.

The problem is that direct electricity transactions between AIDC and LNG power plants were made impossible five months ago. The special bill for AIDC that passed the Science, ICT, Broadcasting and Communications Committee in April included a provision allowing direct power transactions between AIDC and LNG power plants, but the climate ministry opposed it, and the version passed by the National Assembly in May excluded that provision. Afterwards, the Ministry of Science and ICT and the climate ministry signed a memorandum of understanding, which included support for stable power supply through the national grid. In this context, the latest move is being interpreted as effectively raising the barrier to grid access even further after blocking direct LNG deals.

In South Korea, GW-scale AIDC buildout projects are being pursued in Ulsan and Donghae, but concerns are being raised in the investment community because the specific scope and timing of the grid code's application have not yet been finalized. As a result, tensions in the industry are rising.

In particular, because the possibility has been raised that the new standards could apply to projects whose design has already been completed, concerns are mounting that applying the new standards could force design changes and delay completion. There are also worries that server capacity could decline by the amount of space needed to install related equipment. If that capacity were reduced by just 1%, it would mean a 10 MW cut on a 1 GW basis, equivalent to the disappearance of one small or midsize data center.

Overseas, there have also been cases in which AIDC investments fell through because of delays in grid connection. According to a report by The Guardian, Microsoft (MS) recently withdrew from a project in Loughton, Essex, in the United Kingdom, which the U.K. government had presented as the country's largest sovereign AI data center. A notification from the local grid operator that sufficient power could not be supplied until the early to mid-2030s led to a delay in the power supply timeline, and that was behind MS's withdrawal. Nscale, the operator, is reviewing alternative power sources, including on-site generation.

Rep. Cho said the Ministry of Science and ICT, the lead ministry for AIDC, needs to take an active role in the relevant discussions. As grounds for that request, he pointed to the fact that the two ministries signed an MOU and that the MOU included an agreement to form a joint dedicated task force for GW-scale AIDC. He also noted that in July, the 'AIDC Mega Project Interagency Support TF,' involving the climate ministry and others, was launched.

Cho said he will check the related issues in this year's comprehensive audit of the ministry. The items to be confirmed are whether there are plans to participate in grid code discussions through the interagency support TF and whether there are plans for the climate ministry to request measures to protect projects.

Rep. Cho Kyung-tae said that safety standards for the power grid need to be established. However, he also said that, in principle, application of the grid code to projects already under way should be excluded. He added that the Ministry of Science and ICT, the lead ministry for AI DC, needs to actively use the interagency consultation channel and speak for the voices of the investment community.

Source: TECHWORLD · Kim Hye-jin
Original: https://www.epnc.co.kr/news/articleView.html?idxno=408516

References

• https://www.epnc.co.kr/news/articleView.html?idxno=408516