[Report] Ulsan to Host Asia-Pacific’s First 'Amazon AI Zone'... Equipped with Power, Gas, and Land

"Dedicated Power Plant for the Data Center... Lower Electricity Costs"
"Stable Gas Supply... Utilization of LNG Cold Energy Also Possible"
Establishing Itself as an 'AI Data Center Developer'

On August 20, SK Multi Utility's LNG/LPG combined cogeneration power plant, located within the Ulsan Mipo Industrial Complex, was in the midst of trial operations ahead of its scheduled completion in November. SK Multi Utility, which was spun off from SK Chemicals, has converted its existing coal-fired power plant into a more eco-friendly LNG/LPG combined cogeneration plant. This facility is equipped to generate 300 megawatts (MW) of electricity and can also produce 543 tons of steam per hour.

Starting in 2027, SK Multi Utility will supply electricity directly to the newly established SK Ulsan AI Data Center located nearby. At the site of the SK Ulsan AI Data Center, several excavators were busy preparing the ground for the groundbreaking ceremony scheduled for the end of this month. Song Yeonju, Head of Corporate Field Support at Ulsan City Hall, explained, "SK Multi Utility will serve as a dedicated power plant for the SK Ulsan AI Data Center."

"A Dedicated Power Plant for the Data Center... Lower Electricity Costs"

In June, SK Group announced its plan to build an AI data center in Ulsan in partnership with Amazon Web Services (AWS). This facility, with a capacity of 100 MW, is expected to become the largest AI data center in Korea. It will be able to accommodate approximately 60,000 graphics processing units (GPUs).

While Amazon operates data centers in Australia, Japan, and Singapore, the Ulsan AI Data Center is unique in that it will be purpose-built for AI. This is why Amazon refers to the Ulsan AI Data Center as an "AI Zone." The Ulsan AI Data Center is the first "AI Zone" designated by Amazon in the Asia-Pacific region and the second in the world, following Saudi Arabia.

One of the decisive factors behind Amazon's choice of Ulsan as the site for its AI data center is the stable power grid. A senior official from SK Group stated, "We actively explained to Amazon that having an LNG/LPG combined cogeneration plant nearby allows us to supply the large amounts of electricity required for the data center in a stable manner."

AI data centers consume five to ten times more electricity than regular data centers. For this reason, major tech companies such as Google, Facebook, and Microsoft, which are competing for leadership in AI, are placing utmost importance on securing a stable power supply.

In this respect, Ulsan offers an optimal location. Electricity produced by SK Multi Utility can be supplied directly to the data center. Since the data center is located within the industrial complex, there is no opposition from local residents, which is often seen elsewhere.

In particular, the SK Ulsan AI Data Center is expected to benefit from lower electricity rates. In May, Ulsan City was selected as a final candidate for a Distributed Energy Specialized Zone. If designated as such, direct power purchase agreements can be established between electricity producers and consumers.

An Ulsan City official stated, "We expect that electricity can be purchased at about 4% less than from Korea Electric Power Corporation." As a district electricity supplier, SK Multi Utility can directly supply electricity to the AI data center.

SK Multi Utility's LNG/LPG combined cogeneration power plant. Photo by Heejong Kang

The potential for future expansion is also significant. In addition to SK Multi Utility, SK Group also operates the Ulsan LNG/LPG combined cogeneration power plant (Ulsan GPS), run by SK Gas, with a capacity of 1.2 GW. SK plans to expand the data center to a capacity of 1 GW in the future, aiming to establish itself as a Northeast Asian AI hub, and believes it will be able to supply sufficient power for this expansion.

LNG/LPG combined cogeneration plants emit fewer greenhouse gases and air pollutants compared to traditional coal-fired power plants. SK Multi Utility reported reductions of 30.2% in greenhouse gases, 35.7% in nitrogen oxides, 94.3% in sulfur oxides, and 97.7% in particulate matter.

There is also the possibility of converting the electricity supplied to the data center to renewable energy in the future. In the Ulsan region, a floating offshore wind farm with a capacity of 6 GW, the largest in the world, is being developed. Last year, the 750 MW Firefly Offshore Wind Project was selected as the final power generator, and additional operators are expected to be selected this year.

"Stable Gas Supply... Utilization of LNG Cold Energy Also Possible"

At Ulsan North Port, construction was underway for the Korea Energy Terminal (KET) and the Clean Energy Complex (CEC). SK Group's cogeneration power plants receive a stable supply of gas for electricity generation from the two LNG terminals.

The Ulsan LNG terminal was one of the decisive factors for Amazon's selection of the AI site. At the time of the announcement in June, Amazon stated, "Above all, Ulsan is considered the most suitable site for establishing an AI Zone, as SK Group possesses a stable gas supply network, advanced energy solutions, and optimal land."

LNG storage tanks for the Clean Energy Complex (CEC) and Korea Energy Terminal (KET), projects promoted by SK Gas, are being constructed at Ulsan Bukhang. Each tank can store 1.2 million tons of LNG. Photo by Heejong Kang

KET is a joint venture between Korea National Oil Corporation (52.5%) and SK Gas (47.6%). CEC is an LNG terminal solely developed by SK Gas. Combined, the two facilities can store up to 7.2 million tons of LNG annually. KET, the first facility in Korea capable of storing both oil and LNG, completed its first phase of construction in November last year and began commercial operations. As of August, construction of CEC's LNG tanks is about 70% complete.

There are also plans to supply cold energy generated at the LNG terminal to the AI data center. Cold energy refers to the cold released when LNG, stored at minus 162 degrees Celsius, is vaporized to 5 degrees Celsius.

An Ulsan City official revealed, "Amazon also expressed interest in utilizing LNG vaporization cold energy." The method involves transferring the cold energy via refrigerant through pipelines to the data center. However, after review, it was decided not to apply this technology to the current project due to economic feasibility. There remains the possibility of introducing cold energy utilization if the AI data center is expanded in the future.

The AI data center being built will be the first in Korea to use a hybrid cooling system combining air cooling and water cooling. Air cooling uses cold air, similar to an air conditioner, to cool the data center. Water cooling involves direct contact between coolant-carrying pipes and heat-generating components such as CPUs and GPUs to absorb heat. Contrary to some reports, seawater will not be used for cooling the AI data center.

'Establishing Itself as an AI Data Center Developer'

This project is being carried out with SK Group responsible for the construction and facility operations of the data center, while Amazon will build the servers necessary for AI services. Of the approximately 7 trillion won investment, Amazon is reportedly investing about 5 trillion won. Through investments from SK and Amazon, the SK Ulsan AI Data Center expects to create over 78,000 jobs and generate an economic impact of about 25 trillion won over the next 30 years.

SK Group is mobilizing the capabilities of more than ten affiliates, including SK Telecom, SK Broadband, SK Hynix, SK Gas, SK Chemicals, SK Multi Utility, SK AX, and SK Ecoplant. SK Ecoplant has extensive experience in the design and construction of data centers and semiconductor facilities, while SK AX possesses expertise in mechanical, electrical, and piping (MEP) systems for data centers. SK Hynix can collaborate in the field of AI semiconductors, such as high-bandwidth memory (HBM). By consolidating the group's capabilities, SK can enhance its competitiveness as an "AI data center developer."

SK Group plans to leverage the successful experience of this project to expand Ulsan into a hub for AI data centers in Northeast Asia. Ulsan also has ample additional land owned by SK Group's energy and chemical affiliates. The Busan landing station (a facility connecting submarine cables to land communication networks) is nearby, enabling ultra-high-speed connections to North America and the Asia-Pacific region.

An SK Group official stated, "Based on the technologies and experience accumulated in energy, semiconductors, and information and communication technology (ICT), we can maximize synergies in various businesses linked to AI data centers. Starting with Ulsan, we will expand AI innovation hubs nationwide and contribute to Korea's emergence as one of the world's top three AI powerhouses."