Korea mulls $19.8 billion Texas gas plant as first project under U.S. tariff deal

The Korean government is mulling a plan to build a $19.8 billion gas-fired power plant in Texas as the country's first large-scale investment in the United States under last year's bilateral trade agreement to lower U.S. tariffs.

The Korean government is in last-minute negotiations with the United States over the possible project in Encinal, Texas, according to sources in the energy sector. The deal would help meet rising power demand in the United States amid the AI data center boom, while also helping Korean construction and facility companies win orders, insiders say.

Industry Minister Kim Jung-kwan reportedly visited Washington from Wednesday through Saturday last week and discussed plans to initiate the deal with Secretary of Commerce Howard Lutnick and Energy Minister Chris Wright.

The plant is planned at a capacity of about 6.4 gigawatts — 1.4 gigawatts of simple-cycle generation and 5 gigawatts of combined-cycle generation.

The site for the plant has been secured, as has a long-term natural gas supply. The first phase of the plant would enter commercial operation in 2030.

A buyer for the energy the plant would produce has already been lined up — an AI data center of about 5 gigawatts planned next to the facility.

Data centers need uninterrupted power around the clock, so a long-term power purchase agreement would lock in steady revenue, making the project particularly attractive to Seoul.

Official and unofficial projects say the return could exceed 5 percent a year.

"A project that can generate a stable cash flow is the better project, all things considered," Minister Kim told reporters on arriving at Dulles International Airport near Washington last Wednesday. "On that front, we think energy-related projects are advantageous."

The investment would be routed through a special purpose vehicle set up for the project. Korea would put money into the vehicle from the Korea-U.S. strategic investment fund and recover the principal and interest from the plant's revenue.

Korean companies stand to pick up work. Samsung C&T and others are being considered for the engineering, procurement and construction, with Doosan Enerbility and others being considered for the gas turbines and generating equipment. If large-scale energy storage is added later to firm up the gas output, Korean battery makers would be in line as well.

The government plans to put the project to the Korea-U.S. strategic investment steering committee as early as next month. If approved, it would be reviewed by the U.S. investment committee and signed off on by the U.S. president.

Korea committed to $350 billion in U.S. investment under an agreement that capped U.S. tariffs on Korean goods at 15 percent, with $150 billion of that earmarked for shipbuilding and an annual cap of $20 billion. Nearly a year on, no project has been named. Kim said last week that an announcement could come in late August or September.

BY NAM SOO-HYOUN [[email protected]]