South Korea Eyes Power Plant Project as First Major US Strategic Investment

South Korea is nearing a decision to make its first investment in the United States under a bilateral trade deal through a power plant project, government and industry sources said Tuesday. The proposed project is likely to be a $19.8 billion gas-fired power plant located in Encinal, Texas, with a total generation capacity of 6.4 gigawatts, consisting of 5 GW of combined-cycle generation and 1.4 GW of gas turbine capacity.

The investment is intended to meet the rising electricity demand from artificial intelligence (AI) data centers, including a planned complex with up to 5 GW of capacity near the site. Industry Minister Kim Jung-kwan recently discussed the project's financing structure and commercial viability during a visit to Washington from July 22 to Saturday, meeting with US Commerce Secretary Howard Lutnick and Energy Secretary Chris Wright. The first phase of the plant is expected to begin commercial operations in 2030.

This initiative is part of a broader strategic investment framework agreed upon last year, under which Seoul committed to investing $350 billion in the U.S., with an annual cap of $20 billion. This total includes $150 billion for shipbuilding cooperation and $200 billion for other strategic projects. To manage this, Seoul has enacted legislation and launched the Korea-US Strategic Investment Corp.

While some sources indicate details could be announced as early as next month, others note that the project may be reviewed by a bilateral strategic investment committee in August before requiring further US review and presidential approval.