As demand for electricity surges due to the expansion of artificial intelligence (AI), semiconductors, and data centers, experts are advocating for an increased role of liquefied natural gas (LNG) generation to ensure stable power supply. They argue that extending the lifespan of existing LNG power plants and securing new facilities are necessary to complement the intermittency of renewable energy and transmission network constraints.
Jeon Woo-young, a professor at Seoul National University of Science and Technology, stated on September 9 at the 12th LNG Forum held at the Oakwood Premier Coex in Seoul, "The power demand from AI data centers and the semiconductor and advanced industries supporting AI is becoming significant."
According to Professor Jeon, the government's upcoming 12th Basic Plan for Power Supply and Demand forecasts that domestic electricity consumption will increase by 52.6% from approximately 550 TWh in 2024 to 847.3 TWh by 2040. In an upward scenario, this could rise to 886.1 TWh. Notably, new demand is expected to add a total of 35.7 GW, with 24.6 GW from advanced industries and 11.1 GW from data centers.
He emphasized that the role of LNG generation is essential in responding to the rapidly increasing power demand. Even as renewable energy generation grows quickly, its variability due to weather necessitates a reliable backup source for stable power supply.
"In the next 10 to 15 years, a fierce competition for AI supremacy will unfold, and realistically, LNG is the only resource that can back up the intermittency of renewable energy during this period," Professor Jeon said. He added that even as the industry transitions to hydrogen in the long term, LNG must serve as a bridge.
There were also calls to maximize the use of existing LNG power facilities. The construction of new power plants requires significant time, and the global shortage of gas turbine supplies complicates the acquisition of new generation facilities.
"We should not shut down LNG power plants just because they are 30 years old," Professor Jeon remarked. "Given the rising costs and supply challenges of building new alternatives, extending the lifespan of LNG power plants beyond 30 years is a way to secure existing infrastructure and prevent gaps in power supply during the AI era."
Professor Son Yang-hoon from Incheon University also assessed that utilizing existing power facilities is crucial to meet the surging power demand. He emphasized that, especially with high interest rates increasing project financing costs, it is practical to maximize the use of existing coal, LNG, and nuclear power facilities.
Additionally, there were calls for a stable fuel procurement strategy alongside the expansion of LNG generation. Kim Tae-sik, a researcher at the Korea Energy Economics Institute, presented on the topic of "Global LNG Supply and Demand Changes and Implications for the Domestic LNG Industry," highlighting the need to prepare for uncertainties in the international LNG market.
As domestic LNG import contracts are expected to see a rapid increase in expirations starting in the mid-2030s, he explained the importance of securing flexibility to respond to changes in demand while appropriately utilizing long-term contracts and spot imports to manage price and supply risks.
Kim emphasized the need to establish a contract portfolio that reflects both upward and downward fluctuations in demand rather than relying solely on a single demand forecast. He stated, "It is necessary to secure quantities and review contract terms considering the potential for demand increases and international price volatility, ensuring both supply stability and economic viability through diversification of price indices and quantity pathways."
Meanwhile, the LNG Forum, hosted by the Private LNG Industry Association, is regarded as a key platform for policy discussions in the domestic LNG industry. The association plans to continue holding LNG forums to discuss policy directions for stable energy supply.
* This article has been translated by AI.
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