Experts urge flexible PPA for LNG, SMR to meet AI power demand
At a symposium, experts and industry representatives proposed expanding Power Purchase Agreements (PPAs) to include LNG and Small Modular Reactors (SMRs) to address the urgent electricity demands of AI data centers.
Our take
Will Korea open PPAs to LNG and SMR plants to serve AI data centres?
Korea has not opened PPAs to LNG or SMR plants for AI data centres, since the idea remains an expert proposal from a symposium with no rule change announced.
The pressure is timing, because a data centre developer says big tech wants supply commitments by June 2029 and transmission projects run years late. The answer depends on whether government extends direct contracts beyond renewables, and whether firm plants can deliver without waiting for the same grid.
What the source says
- Ha Min-yong (SK Telecom) Global big tech companies require specific power supply commitments by June 2029 to even engage in negotiations.
- Ha Min-yong (SK Telecom) SK Telecom aims to secure 15 GW of AIDC infrastructure by 2035.
- Ha Min-yong (SK Telecom) The current reliance on grid expansion is a significant constraint for securing power for AI data centers.
- Ha Min-yong (SK Telecom) Power Purchase Agreements (PPAs) need to be utilized more flexibly.
- Jeon Woo-young (Seoul National University of Science and Technology) Allowing PPAs for LNG and SMRs is necessary for stable power supply to the AI industry.
- Jeon Woo-young (Seoul National University of Science and Technology) Domestic transmission grid construction projects are delayed by an average of 5.3 years compared to schedule.
- Ha Min-yong (SK Telecom) AI data centers prioritize 24-hour stable supply, price, and timely supply, not the source of electricity.
- Jeon Woo-young (Seoul National University of Science and Technology) Last year, the combined facility utilization rate for solar and wind power fell below 15% for approximately 66 hours, indicating a need for longer-duration backup than typical 6-8 hour ESS.
- Jeon Woo-young (Seoul National University of Science and Technology) Firm power sources like LNG and eventually SMRs are needed to complement the variability of renewable energy, as ESS has limitations for multi-day low generation periods.
For investors — Solar and wind developers should test data centre offtake against 24-hour supply terms, since a data centre developer at this symposium ranked firm supply, price and timing above the source of power.
Merchant storage investors and optimisers should size any data centre case around short-term balancing and peak support, because speakers said 6 to 8 hour storage cannot cover multi-day low output.
Watch: Further discussions or official proposals from the Korean government or regulatory bodies regarding the expansion of PPA eligibility to include LNG and SMR.
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