▲ Minister of Trade, Industry and Energy Kim Jung-kwan reports on the preliminary report for U.S. investment under the Special Act on the Operation and Management of Strategic Investments between the Republic of Korea and the United States to the National Assembly's Trade, Industry, Energy, SMEs and Startups Committee on the 22nd.
The South Korean government has decided to pursue the construction of the Encinal combined-cycle gas turbine power plant in Texas, U.S., as the first project under its USD 200 billion strategic investment plan for the United States.
Minister of Trade, Industry and Energy Kim Jung-kwan attended a plenary session of the National Assembly's Trade, Industry, Energy, SMEs and Startups Committee today (the 22nd) and reported on one project the government has decided to pursue regarding U.S. investment negotiations, along with implementation plans for two other projects.
Minister Kim stated, "Today, through the Project Management Committee chaired by the Minister of Trade, Industry and Energy and the Steering Committee chaired by the Minister of Economy and Finance, I would like to report on one project for which the government has decided its intent to proceed."
He added, "Although we have not yet decided on specific implementation intent, we would like to report the implementation plans for two projects that reflect the mutual interests of both countries."
According to the parliamentary industry committee, the first U.S. investment project mentioned by Minister Kim was confirmed to be the construction of a combined-cycle gas power plant in the Encinal area of Texas.
Power demand in Texas has surged recently due to a massive influx of advanced semiconductor plants and artificial intelligence (AI) data centers.
The Encinal project is designed to address this demand, with a total facility capacity of approximately 6.3 GW (gigawatts).
It is reported that the plan is to first build a 1.4 GW gas turbine power plant to test actual demand and economic feasibility, and then sequentially expand with a 4.9 GW combined-cycle power generation facility boasting high power generation efficiency.
The total project cost is estimated at USD 22.3 billion, and the government reportedly reported to the National Assembly that feasibility studies show it can sufficiently recover its principal and interest by generating USD 43.29 billion to USD 45.43 billion over 20 years.
Unlike the first project, the two projects classified for future consultation tasks were identified as the construction of eight large-scale nuclear reactors in the United States and the Alaska liquefied natural gas (LNG) development project.
Securing stable revenue, such as through long-term power purchase agreements (PPAs), is key for the Encinal power plant, and a memo reading 'PPA rejection' was found in the industry committee report documents partially disclosed today.
The nuclear power plant construction and Alaska LNG development projects have also continuously faced criticism that they violate the government's long-standing principle of 'commercial rationality' due to opaque investment recovery and project risks.
In particular, regarding the project to build eight new nuclear reactors in the U.S., the government pushed to secure around a 20% stake in U.S. nuclear firm Westinghouse, but negotiations faced setbacks as the U.S. side expressed reluctance.
Minister Kim reportedly explained in his parliamentary report, "We are negotiating with the U.S. aiming to secure a 5% to 10% stake in Westinghouse," adding, "Even with a 5% to 10% stake level, voting rights can be secured."
Furthermore, the government is pushing to configure the eight new nuclear reactors to be built in the U.S. with six units of the Westinghouse model AP1000 and two units of South Korea's homegrown APR1400, though agreement has still not been reached.
Despite these controversies over commercial rationality, the government's decision to select the first project and report on follow-up project plans is interpreted as a decision considering national interests from a comprehensive perspective, including South Korean companies entering the U.S. market, beyond simple project viability.
Minister Kim stated, "The government has fiercely consulted with the U.S. to pursue projects with commercial rationality," and added, "It was necessary to approach U.S. investment in a balanced manner from the perspective of national interests, ensuring that beyond simple capital injection and recovery, it serves as an opportunity to expand our companies' entry into the U.S. market and further lay the groundwork for entering the global market."
Minister Kim also made clear the principle that the actual investment execution scale must not exceed the USD 200 billion limit of the U.S. investment fund.
It is reported that Minister Kim expressed his intent that no investments will be made if it exceeds USD 200 billion.
Despite the South Korean government's decision to proceed, the timing for signing a memorandum of understanding (MOU) remains unclear.
Minister Kim stated, "First of all, we need to go through the consultative committee with U.S. Commerce Secretary Howard Lutnick today, and we also need to go through the investment committee procedures within the U.S.," adding, "We will have to get through all those procedures."
He then did not respond to a question asking, "Has the date for the MOU been set?"
Regarding this, a member of the industry committee conveyed, "The MOU will be announced directly by Trump," and "Since it coincides with local U.S. election schedules, it appears Trump will announce it at a time when he can maximize political impact."
(Photo: Yonhap News)
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