Government Promotes Decentralization of Data Centers... Electricity Fee Incentives for Relocation to Non-Capital Regions

Ministry of Industry to Announce 'Measures to Ease Data Center Concentration in the Seoul Metropolitan Area' Within the Year

Inside the NHN Data Center located in Pangyo, Gyeonggi.
Photo by Asia Economy DB

[Asia Economy Sejong=Reporter Lee Jun-hyung] The government will provide incentives such as partial electricity bill exemptions for data centers outside the metropolitan area. This is to alleviate the increasingly severe concentration of data centers in the metropolitan area. The government also plans to announce a comprehensive plan within the year to promote the decentralization of data centers to local regions.

The Ministry of Trade, Industry and Energy announced on the 9th that it held a 'Data Center Regional Decentralization Meeting' at the Korea Electric Power Corporation Gyeongin Construction Headquarters in Jung-gu, Seoul. The meeting was organized to ease the concentration of data centers in the metropolitan area. At the meeting, the ministry shared the preparation status of the 'Plan to Alleviate Data Center Concentration in the Metropolitan Area' and gathered opinions from the industry.

Data Center Fire Causes Errors in KakaoTalk and Others
(Seongnam=Yonhap News) Reporter Hong Gi-won = On the afternoon of the 15th of last month, an error message appeared on smartphone Daum applications in front of Building A at SK Pangyo Campus, Sampyeong-dong, Bundang-gu, Seongnam-si, Gyeonggi-do, where a fire broke out.
The building on fire is a business facility where Naver, Kakao, and SK Telecom manage data.
Due to this fire, communication disruptions are currently occurring in KakaoTalk, the portal site Daum, and others. 2022.10.15
xanadu@yna.co.kr
(End)


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60% of Data Centers Concentrated in the Metropolitan Area

The government's effort to decentralize data centers to local areas stems from the increasing burden on the metropolitan area's power grid. According to the Ministry of Trade, Industry and Energy, as of June this year, 58.9% (86 out of 146) of data centers nationwide are concentrated in the metropolitan area. Additionally, 70.1% (1.22GW) of the total domestic data center power demand of 1.74GW occurs in the metropolitan area. The ministry expects both the location and power demand ratio of data centers in the metropolitan area to soar to the 90% range by 2029.

The problem with the concentration of data centers in the metropolitan area is not limited to this. If a disaster occurs in the metropolitan area where data centers are concentrated, it could cause data loss, internet delays, and lead to paralysis of communication infrastructure. In fact, last month on the 15th, a fire at the SK C&C data center caused the 'Kakao incident,' disrupting financial and messenger services.

Accordingly, the ministry plans to prepare a comprehensive plan within the year to encourage the decentralization of data centers to local regions. The plan is expected to include improvements to data center-related regulations. The ministry is considering revising the 'Enforcement Decree of the Electricity Business Act' to more strictly evaluate the impact of new data centers on the power grid. They also plan to establish a system that can temporarily suspend electricity supply if a data center has a significant grid impact or causes excessive investment in power infrastructure.

The scene of the fire at Building A, SK C&C Pangyo Campus, Seongnam, Gyeonggi Province, on the 16th of last month. The fire, which broke out around 3:30 p.m. the previous day at the SK C&C data center, caused the services of server tenants such as Kakao and Naver to go down one after another. In particular, Kakao services including the KakaoTalk messenger, portal Daum, KakaoT, KakaoPage, and KakaoPay experienced widespread disruptions, resulting in a nationwide outage lasting over 10 hours. Photo by Hyunmin Kim kimhyun81@

Strengthening Incentives Such as Fee Exemptions

Incentives for data centers outside the metropolitan area will also be strengthened. The ministry has decided to consider supporting incentives such as discounts on facility charges for cables and switchgear, and partial exemptions of standby power fees for data centers located outside the metropolitan area. Additionally, KEPCO will set up dedicated consulting desks at its 15 regional headquarters nationwide to support smooth regional establishment of new data centers.

A data center decentralization strategy linked to regional power supply and demand conditions will also be established. The plan is to promote decentralization focusing on areas with frequent renewable energy output control or transmission constraints. Candidate regions where wasted energy such as cold heat and water heat from liquefied natural gas (LNG) power plants can be used for data center cooling will also be actively identified. Through consultations with related ministries such as the Ministry of Economy and Finance, the government plans to consider providing package incentives including financial and tax benefits if data centers are built in the candidate regions identified by the government.

At the meeting, Director Lee said, “KEPCO currently informs that additional establishment within the metropolitan area is difficult in the short term through notices of planned electricity use.” He added, “Without additional large-scale power grid reinforcement, it will be difficult to easily resolve the current situation.” Director Lee also emphasized, “For timely construction and stable operation of data centers, it is necessary to decentralize and locate them in regions with abundant power supply and smooth grid connection.”

This content was produced with the assistance of AI translation services.