"If 100km Away from Capital Area, Circuit Fees Increase by 5 Billion Won" [Data Center Power Regulation]

Government Issues 'Blackout' Warning Due to Capital Region Concentration
Industry Fears Increased Communication Costs Will Be Passed to Consumers

The industry feels burdened by the decentralization of data centers to regional areas because the costs increase the farther they are from the main demand areas for data. However, the government maintains that dispersing the risks associated with concentration in the Seoul metropolitan area is the top priority.

According to the data center industry on the 9th, currently 72.9% of private data centers are concentrated in the Seoul metropolitan area. The government’s position is that this puts a strain on the power grid and, in the worst-case scenario, could lead to power outages such as blackouts. Data centers concentrated in the metropolitan area also raise concerns about potential data loss or internet delays in the event of a disaster. To prevent this, data centers need to be dispersed to regions outside the metropolitan area.

Additionally, since data centers consume a large amount of electricity, transmission costs to the metropolitan area increase, and relocating to regional areas is argued to solve this problem.

On the other hand, the data center industry complains that the farther the dedicated communication lines are from Seoul, the higher the costs and the slower the speeds become. If a 40MW scale data center is relocated about 100 km outside the metropolitan area, the line fees increase by 5 billion KRW annually compared to when it was established in the metropolitan area. The line fees are paid by ICT companies that provide services to customers residing in the data center. Therefore, the industry is concerned that relocating data centers to regional areas will reduce the profitability of tenant companies or transfer costs to online service users.

In particular, since the power grid impact assessment targets data centers of 10MW or more, there may be increased demand to build small data centers in the metropolitan area. The industry argues that this could result in inefficient energy consumption without achieving economies of scale.

The Korea Data Center Council stated, "While data centers are energy-intensive facilities as buildings, they achieve economies of scale by consolidating scattered small computer rooms and operate efficiently, which leads to energy savings and carbon emission reductions," and added, "Energy-related regulations and discrimination against data centers should not be imposed by only highlighting their reputation as ‘electricity guzzlers.’"