Rising demand for data centers in S. Korea sparks energy concerns

Korea Gas Corporation (KOGAS) is building LNG terminal at Seokmun Industrial Complex in Dangjin, South Chungcheong Province, South Korea. [Photo by Song Gwang-sup]

South Korea is witnessing a rapid increase in the number of data centers and raising concerns over the increased electricity consumption. As of September 2022, there were 147 data centers in the country, but projections indicate that this number could surge to a staggering 637 by 2029 and the estimated power demand for these data centers is a substantial 41 GW, equivalent to around 30 nuclear reactors generating 1.4 GW each. The government also announced plans earlier in the year to diversify the centers’ locations in a bid to address the concentration of data centers in the capital area.

Korea has long been considered a country with high levels of electricity consumption relative to its population, primarily due to its industrial-based economy, and ranked 8th in terms of annual electricity consumption per country in 2022. Alongside Korea, other countries with high electricity consumption include China, the United States, India, Russia, Japan, Canada, Brazil, Germany, and France. In terms of per capita electricity consumption among these nations, Canada ranks highest at 14,833 kWh, followed by the United States (12,192 kWh), and Korea (11,001 kWh).

China’s per capita electricity consumption stands at 5,730 kWh, followed by Japan at 7,670 kWh. These figures include electricity usage for industrial and commercial purposes in addition to residential use, highlighting Korea’s significant electricity consumption across various sectors.

The power demand in the industrial sector is bound to increase rapidly in the future, a market watcher said, adding that without expanding the power generation capacity as well as enhancements in power transmission and distribution, power shortages are imminent.

As electricity consumption is expected to surge with industrial growth, Korean companies are taking initiatives to enhance energy efficiency, with the steel industry, considered an electricity-intensive sector, being particularly proactive. Steel manufacturers face an approximate cost increase of 10 billion won ($7.55) for every 1 won increase in the per kWh rate, and companies such as Hyundai Steel have adopted self-generation methods to use excess heat generated within their steel plants through facilities like cogeneration.

Of the steelmaker’s total electricity consumption of about 9,600 GWh last year, its Dangjin steelworks accounted for around 6,000 GWh, or about 60 percent. The effects of replacing purchased electricity with electricity generated from cogeneration using waste gas amount to about 400 billion won. The company is also exploring the use of “green hydrogen” in their power facilities, aligning with the growing demand for carbon neutrality in the steel industry.

Dongkuk Steel employs solar self-generation facilities at its Pohang plant, resulting in annual savings of about 1.5 billion won in electricity costs. It also utilizes environmentally friendly electricity known as ECOARC, which reduces power consumption by about 30 percent compared to the standard electricity levels.