The rise of generative artificial intelligence (AI) has led to a significant increase in power demand for AI data centers (AIDC), prompting the three major telecom companies in South Korea to expand their power-related businesses.
On May 18, the telecom giants announced their entry into the renewable energy resale market following their AIDC initiatives. They are utilizing AI technology to operate smart grids and virtual power plants, while also developing and testing intelligent power grid solutions.
SK Telecom (SKT) has proactively pursued renewable energy procurement at the group level. In 2023, SKT signed a direct power purchase agreement (PPA) with SK E&S and eight subsidiaries of the SK Group for an annual supply of 537 gigawatt-hours (GWh). This agreement will provide solar-based renewable energy to major business sites and data centers for the next 20 years, starting this year.
While SKT does not sell electricity directly, it is exporting a value chain that combines global data centers with generated power, leveraging its infrastructure and operational expertise in the domestic market.
LG Uplus is also focusing on long-term renewable energy procurement. In January, LG Uplus signed a PPA with GS Construction to receive power generated from a solar power plant in Taean, South Chungcheong Province, for approximately 20 years, with an annual supply of about 17 GWh. The company aims to enhance its energy response capabilities, including for AIDC.
Additionally, LG Uplus is working on a project to create a virtual power plant by connecting small-scale renewable energy facilities across the country through the cloud. It is also supplying IoT lines for a net-zero project to transition the energy needs of LG Group subsidiaries to eco-friendly renewable energy and for smart grid systems.
KT, which has received government approval as a 'renewable energy electricity supplier,' is engaged in a direct power trading contract (PPA) business to sell its procured renewable energy directly to companies. Recently, KT signed a memorandum of understanding with Tokyo Electron Korea to promote a direct PPA, planning to supply renewable energy to its Hwaseong office starting in September. Initially, it will supply 15 megawatts (MW) of renewable energy, with plans to expand to 50 MW in the future.
As the AIDC market continues to grow rapidly, the actions of the three telecom companies are expected to accelerate. According to the Korea Energy Economics Institute (KEEI), domestic data center power consumption is projected to rise from 5 terawatt-hours (TWh) in 2023 to 31.6 TWh by 2040, and 65.4 TWh by 2060.
The explosive demand for power is increasing the role of the telecom companies. Solar and wind energy generation varies with time and weather conditions, which limits stable power supply. This highlights the need for hybrid power structures that combine energy storage systems (ESS) and LNG generation, along with smart grids and AI power management systems.
Kim Cheol-hyun, a researcher at KEEI, stated, "Due to the intermittency and uncertainty of renewable energy, it is difficult to rely solely on it for data center power. A mixed power structure that combines the existing power grid with renewable energy and battery energy storage systems (BESS), along with intelligent supply technologies for efficient distribution, is necessary."
* This article has been translated by AI.
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