Korea to build nation’s largest data center cluster

Image of data center cluster

South Korea is eyeing Gangwon Province, located on the country’s east coast and home to several nuclear and coal-fired power plants, as the location for its largest data center cluster.

According to industry sources on Wednesday, the central government and the Gangwon provincial government are considering building a 1-gigawatt (GW) data center cluster near the cities of Gangneung and Donghae in the province, which is big enough to accommodate 50 data centers with the average capacity of 20 megawatts (MW). Once complete, it will be the largest data center cluster in the country alongside the Solaseado data center park, also being planned on a 1GW scale in the south coast of Haenam, South Jeolla Province.

The government plans to accelerate site selection and cluster formation, confirming sites including existing industrial complexes and land that is currently unused by the end of 2024 at the earliest. The industry insiders to estimate potential annual electricity cost reductions of about 10 billion won ($750 million) annually with a 40MW-class data center in the Gangneung-Donghae area, particularly following recent legislative amendments permitting local power plants to directly sell electricity to nearby consumers.

Power plants in the region have struggled with output issues due to transmission capacity constraints. “The Gangneung and east coast region faced power generation issues with output control at about 20 percent due to insufficient transmission capacity,” an industry insider said. “With direct electricity sales, data centers nearby those plants will be able to save around 20 percent of their annual operational costs,” the insider added, while also highlighting the appeal of data center investment in the area citing the affordable real estate prices in the region.

The Korean government has been seeking decentralization of data centers nationwide as part of measures to mitigate power demand imbalances. Given the considerable financial and time investments for constructing new transmission lines, the proximity of data centers to existing power infrastructure is advantageous.