Pay $10 billion upfront first…‘U.S. midterm election fallout’ What now for South Korea nuclear power investment - 경향신문
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In the U.S., 32 of 34 gubernatorial candidates who pledged data center regulation won
Up to $120 billion to build eight U.S-Korea nuclear units…variables emerge ahead of advance payment disbursement
UAE Barakah Nuclear Power Plant Unit 2. Provided by Korea Electric Power Corporation
Following the Democratic Party victory in the U.S. midterm elections, uncertainty is growing over South Korea plans to invest in nuclear power in the United States. This is because local backlash over the electricity consumption and water use of artificial intelligence (AI) data centers was reflected in the results, increasing the likelihood of tighter restrictions on data center construction in the United States. There are concerns that this could also affect nuclear projects that have proceeded on the assumption that data centers would be a major source of power demand.
U.S. President Donald Trump announced at the White House on the 30th of last month (local time) that South Korea plans to make large-scale energy investments in the United States, including constructing eight large nuclear reactors. The next day, the Ministry of Trade, Industry and Energy unveiled a plan to invest up to $120 billion through a U.S.-Korea nuclear framework and said it had also discussed paying up to $10 billion upfront by the end of the year to secure key components such as reactor pressure vessels and steam generators, which take years to manufacture. However, the disbursement of advance payments is contingent on a review of commercial reasonableness and domestic procedures such as reporting to the National Assembly.
Detailed terms of the project have not yet been finalized. At a National Assembly audit by the Trade, Industry, Energy, SMEs and Startups Committee on the 12th of last month, Kim Hoe-chun, president of Korea Hydro & Nuclear Power, said that Korea Electric Power Corporation, Korea Hydro & Nuclear Power, and Westinghouse had not yet signed a specific project agreement. He explained that the agreement on technology licensing fees for two Korean-designed reactors and the supply of equipment remains at a general level. Although the plan to build eight reactors has been announced, procedures to finalize actual contracts and business conditions still remain.
The problem is that the business environment in the United States is changing just as large advance payments are being considered. The Democratic Party not only secured control of the federal Congress in these midterms but also won successive victories in states where data centers are concentrated. As criticism that data centers burden the power grid and exacerbate resident electricity bills and water shortages emerged as a campaign issue, it influenced the results.
The Associated Press reported on the 6th (local time) that with many Democratic candidates who advocated stronger regulation of data centers winning, the likelihood of tighter regulation of the data center industry in the United States has increased. An analysis of the pledges of 34 governor-elects found that 32 supported strengthening or limiting regulation of data centers. Among them, 12 even supported bans or moratoriums on construction.
Opposition from local residents was also confirmed in the results. According to the Associated Press, of 45 referendums restricting data center construction where counting has been completed, 44 passed the restrictions. About three quarters of U.S. voters said they oppose having a new data center built in their area. This reflects concerns that data centers consume large amounts of electricity, driving up power bills, and use large volumes of water for cooling.
Opposition also surfaced in areas cited as potential nuclear plant sites. In Ohio, which the U.S. Department of Commerce mentioned as a candidate region for nuclear construction, referendums to ban or restrict data center construction passed one after another. Industry outlet Data Center Dynamics reported on the 4th that at least 14 bans or restriction measures on data center construction were approved via referendum in Ohio. Some areas prohibit building data centers above a certain size, while others require referendums for large projects.
Reuters also analyzed on the 4th that the Democratic victory in the midterms could affect not only U.S. energy policy but also South Korea and Japan investment plans in the United States. Reuters reported that the win increases the possibility that South Korea and Japan could delay or reconsider the execution of investments worth hundreds of billions of dollars that they had pledged in the United States. It pointed out that although the South Korean government announced last month that it would invest $120 billion to build eight reactors in the United States and $22.3 billion in a gas-fired power project in Texas, the related agreements are not binding final contracts.
Another burden is the possibility that power offtakers, which determine the profitability of nuclear projects, could become uncertain. Because nuclear plants require massive costs and time to build, securing customers who will purchase power stably is crucial. If AI data center construction is delayed or scaled back due to regulation and resident opposition, it will be necessary to assess whether the power produced by the plants can be sold as initially planned. This is why experts say it is necessary to confirm specifics such as plant sites, grid interconnection, and companies that will sign long-term power purchase agreements.
Some, however, believe that the U.S. move to regulate data centers will not necessarily be a headwind for nuclear projects. The core of resident opposition to data centers is concern that rapid demand growth without sufficient expansion of power supply facilities could raise electricity bills for existing residents. If nuclear plants are built alongside data centers to guarantee stable power supply, observers say it could provide grounds to persuade local communities.
