Korea Will Pay AI Data Centres to Move South as LNG Costs Bite

South Korea has decided that the answer to its data centre power problem is geography. On 26 August 2026, the Ministry of Climate, Energy and Environment and the state utility Korea Electric Power Corp (KEPCO) presented the design of the country's first regional industrial electricity pricing system at a public hearing. The framework divides the country into zones and gives the deepest discounts to users in the south, where most nuclear and renewable generation sits, according to a report by Tech Times.

Developers of AI data centres in the south could receive a cut worth up to 18 won per kWh, roughly 10 per cent off the national industrial average of 181.9 won per kWh. The reform arrives as the Strait of Hormuz disruption has raised the cost of the liquefied natural gas (LNG) that sets Korea's wholesale power price in most hours. Greater Seoul draws about 40 per cent of its industrial electricity from outside the region, a KEPCO official said at the hearing, which drives up the cost of long-distance transmission.

Data centre vacancy in Seoul has fallen to 1.1 per cent, and larger facilities must pass a power grid impact assessment that now adds two to three years to approvals. Under the proposed map, rates in southern Seoul and southern Gyeonggi, home to the core semiconductor cluster, would fall by only around 1 won per kWh. The Ministry of Climate and Energy opposed that clause, arguing that tying gas plants to specific data centres could burden the national grid and conflict with the principle of regional production and consumption.

Korea's wholesale power price, the system marginal price, is set by LNG-fired generation most of the time. For data centre developers, the south now offers lower tariffs, more available grid capacity and proximity to nuclear and renewable generation that does not depend on imported gas. The first marker is the final rate design and its start date, which the government has said will come in the second half of 2026.