The National Assembly passed the "Special Act on the Promotion of the Artificial Intelligence Data Center Industry" (AIDC Law) on May 7, but industry experts are calling it a "toothless special law."
As of May 14, the IT sector reported that from August 2024 to June 2025, approximately 290 applications for power use for data centers were submitted nationwide, with 195 applications (67%) concentrated in the capital region.
While there is a high volume of power use applications for AIDC in the capital area, all hyper-scale AIDCs currently under construction nearby lack permits for power line and tower installations. The Ministry of Climate and Energy and local governments are responsible for granting these permits, and industry insiders express skepticism that the passage of the AIDC Law will resolve transmission and distribution issues.
The most significant practical barrier to AIDC development is the power infrastructure. Hyper-scale AIDCs, which require continuous operation for large-scale computations, need a stable power supply of tens to hundreds of megawatts (MW). This necessitates the installation of power lines and substations.
According to the IT sector, multiple AIDC construction companies and operators have indicated that the current stance of relevant authorities is clear: "Permits will not be granted unless the project is outside the capital region." The consensus in the industry is that the only areas where hyper-scale transmission permits are effectively granted are non-capital regions, including underserved areas. The capital region is nearing saturation in terms of system capacity, with available power also concentrated in non-capital areas.
The situation for AIDCs in the capital region is even more dire. Article 19 of the AIDC Law grants exemptions from power system impact assessments under the "Special Act on the Activation of Distributed Energy" only for non-capital regions. This exemption does not apply in the capital area, where businesses must still undergo power system impact assessments that take over 150 days. Even after completing the assessment, the lack of a change in the permitting stance means no real benefits.
Additionally, the designation of special zones for AI data centers under Article 24 is also limited to non-capital regions. Being designated as a special zone provides various benefits, including reductions in alternative forest resource creation fees, agricultural land preservation fees, and traffic impact fees, as well as priority guarantees from the credit guarantee fund. However, capital region businesses are excluded from these benefits, directly contradicting the fact that 67% of national data center power use applications are concentrated in the capital area.
While Article 4 of the law states that it takes precedence over other laws, and Article 20 allows for direct trading of renewable energy, this does not replace the permitting process for the installation of power lines and towers.
The actual authority regarding power delivery remains within the frameworks of the Electricity Business Act and the Act on the Promotion of Power Development. Even if the AIDC Law legalizes direct trading routes for electricity, without permits for laying power lines, such contracts become meaningless.
Direct trading of renewable energy is also expected to lead to operating losses due to supply prices exceeding 200 won per kWh.
Another flaw in the legislation is that most of its key provisions are delegated to presidential decrees. The minimum size criteria for supported AIDCs, the power capacity limits for exemptions from power system assessments in non-capital regions, and the criteria for special zone designations are all left to the implementation decree. The actual scope of benefits will depend on how these decrees are formulated. Since the law will take effect nine months after its promulgation, its actual legal efficacy will not occur until after the end of this year. Concerns have also been raised that if the criteria for the supported size are set too high during the decree consultation process, small and medium-sized AIDCs may again fall into a gap.
Industry experts agree that resolving the power issues for AIDCs in the capital region requires solutions outside the AIDC Law. Suggestions include simplifying the installation procedures for AIDC power facilities through amendments to the Act on the Promotion of Power Development, mandating KEPCO's connection to the grid, and allowing direct trading of nuclear power. Analysts also point out that the current legal framework, which disperses jurisdiction over the AIDC Law, the Act on the Promotion of Power Development, and the Electricity Business Act among the Ministry of Science and ICT, the Ministry of Climate and Energy, and the Ministry of Trade, Industry and Energy, creates structural bottlenecks for investments in AIDCs in the capital region.
A representative from a company responsible for AIDC construction near the capital stated, "While we can obtain building and transmission permits, we cannot lay the lines, making the AIDC Law effectively meaningless."
* This article has been translated by AI.
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