SKT Eyes Ulsan's 'Distributed Zone' Designation
Aiming for Electricity Rate Cuts for 'Electricity Guzzler' AIDC
Seeking Cost Savings Through Local Power Supply
SK Telecom, which has identified artificial intelligence (AI) data centers as a future business, is closely monitoring the Ministry of Trade, Industry and Energy's designation of 'Distributed Energy Specialized Zones' (hereinafter referred to as Distributed Zones). SK Telecom is currently preparing to build a 100-megawatt (MW) class AI data center in Ulsan Metropolitan City in collaboration with Amazon Web Services (AWS). If Ulsan is designated as a Distributed Zone, it will open the way to procure the electricity needed for the AI data center at a low cost and smoothly, allowing SK Telecom's AI data center business to proceed smoothly. Distributed Zones refer to areas where local power generation companies can sell electricity directly within the region.
According to industry sources on the 9th, SK Telecom is strongly considering the area around the SK Energy Ulsan plant in Nam-gu, Ulsan, as the site for the AI data center. An AI industry official said, "For SK Telecom, whether Ulsan is designated as a Distributed Zone is the biggest concern," adding, "For the AI data center to operate smoothly, it must receive large-capacity electricity at a low price and stably." AI data centers operate servers 24 hours a day and must maintain constant internal temperature and humidity, resulting in high power consumption, earning them the nickname 'electricity guzzler.' In particular, a 100-megawatt (MW) class AI data center is classified as a 'hyperscale' grade, mainly built by American big tech companies such as AWS, Google, and Microsoft (MS).
The Ministry of Trade, Industry and Energy is accepting applications for Distributed Zones from local governments from the 8th to the 15th. Within Distributed Zones, electricity is used close to power plants, reducing electricity rates by about 1.2 percentage points. The ministry is also considering additional electricity rate discounts for Distributed Zone areas. Ulsan has already completed preparations to apply for the Distributed Zone. Busan and Jeju are also known to be entering the race.
The Distributed Zones will be finalized by the Energy Committee in the second half of the year after a practical evaluation committee in the first half. A ministry official said, "Currently, AI data centers are concentrated in the metropolitan area. Large AI data centers with high power demand are encouraged to be located next to local power plants with surplus electricity," adding, "The purpose of Distributed Zones is to enable local supply and demand of electricity to be balanced independently."
Some in the tech industry argue that since AI investment is a national task, laws should be amended so that companies building AI data centers can receive sufficient electricity at low prices regardless of location. An industry official said, "Not all local governments can become Distributed Zones," adding, "Some companies that have to build AI data centers in areas that are not Distributed Zones will ultimately have to pay high prices for electricity." He suggested, "Instead of causing anxiety among companies by designating special zones as is done now, the Special Act on the Activation of Distributed Energy should be amended so that energy produced in any region can be consumed cheaply by companies operating in that region."
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