The concentration of AI factories, including data centers, in the capital region must be alleviated by distributing their locations to areas with available generation capacity, according to a senior executive at HD Hyundai Electric.
During a special lecture on the innovation of the K-power grid for stable AI factory operations at the 18th Good Growth, Good Jobs Forum (2026 GGGF) held at The Plaza Hotel in Seoul on September 3, Jeong Ho-yong, head of the ICT Solutions Research Lab at HD Hyundai Electric, stated, "To expand AI factories, we need to decentralize power demand and the power grid to local areas while ensuring the flexibility of the grid."
Jeong identified the biggest issue with the current domestic power grid as the 'regional mismatch' between demand and generation facilities. Approximately 40% of the country's power demand is concentrated in the capital region, while most large-scale generation facilities, such as nuclear, coal, and offshore wind power plants, are located outside this area.
As a result, the capital region relies on long-distance transmission lines that can stretch hundreds of kilometers. If sufficient transmission lines are not secured, the capital region may not receive the necessary power, forcing reductions in power generation in non-capital areas.
The concentration of AI factories in the capital region exacerbates this imbalance. According to data from Korea Electric Power Corporation (KEPCO), of the 976 power system connection applications received from August 2024 to June this year, 652, or 67%, were from the capital region, while 324, or 33%, were from non-capital areas.
There was also a clear disparity in system capacity by region. The first technical review pass rate for applications from the capital region was 50%, significantly lower than the 88% pass rate for non-capital applications. The final review pass rate was 43% for the capital region, compared to 87% for non-capital areas. While demand for AI factories is concentrated in the capital region, the actual capacity for grid connections is relatively greater in non-capital areas.
Jeong proposed the 'Special Act on the Activation of Distributed Energy' and 'Power System Impact Assessment' as institutional measures to resolve regional mismatches. The Special Act, which took effect in June 2024, aims to encourage power generation and consumption near demand sites. It can facilitate the relocation of large-scale power demand to local areas through the designation of specialized distributed energy regions and differentiated electricity rates by region.
The Power System Impact Assessment is a system that reviews whether the grid can handle large power-consuming facilities with a contract power of 10 MW or more before they connect to the grid. It serves as a mechanism to regulate the influx of large loads into congested areas like the capital region and to promote decentralization to non-capital areas.
However, Jeong noted that simply decentralizing AI factories will not fully alleviate the burden on the power grid. AI factories consume power ranging from hundreds of megawatts to several gigawatts, and the load can fluctuate dramatically in seconds due to the nature of their operations.
He emphasized, "Existing grid codes primarily define the obligations of energy producers and transmitters, but we need to consider imposing obligations on demand sources that significantly impact the grid, such as AI data centers."
He added, "A system should be introduced that allows data centers to control some load fluctuations or to have energy storage systems (ESS) to mitigate these changes. ESS can help reduce load variability and stabilize grid frequency, making it a crucial power infrastructure for future AI data centers."
* This article has been translated by AI.
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