TLDR: The Korea District Heating Corporation (KDHC) is actively participating in initiatives to advance data-based energy services, signing an MOU with key energy entities to leverage data safety zones and foster cooperation in the burgeoning AI era. This move comes as South Korea anticipates a significant surge in power demand driven by the rapid expansion of AI data centers, necessitating innovative solutions in energy infrastructure and management.
The Korea District Heating Corporation (KDHC) is embarking on a strategic transformation to integrate artificial intelligence into its operations, as evidenced by its recent collaboration with other major players in the energy sector. On May 30, 2025, KDHC joined Korea Power Exchange (KPX), Korea Electric Power Corp., Korea National Oil Corp., and Korea Electrical Safety Corp. in signing a Memorandum of Understanding (MOU) at the KEPCO Art Center in Seoul. This agreement aims to promote the joint use of data safety zones and foster cooperation in data-based energy service innovation and industrial development, signaling KDHC’s commitment to adapting to the demands of the AI era.
The initiative is particularly timely given the explosive growth of the AI industry in South Korea. Experts at the “2025 Data Center Establishment Strategy Seminar,” held on June 13, 2025, highlighted that power and energy infrastructure are now critical success factors for the data center industry. The number of data centers in Korea is projected to increase from 72 in 2024 to over 100 by 2029, with power demand expected to more than double from 1.08GW to 2.37GW during the same period. This surge in demand, equivalent to the power supply of two nuclear power units for data centers in downtown Seoul alone, underscores the urgent need for a fundamental shift in how the industry approaches policy, design, and investment.
A key challenge identified is the escalating power density of AI data centers, which can consume between 40 to 100kW per rack, significantly higher than the 20-40kW of conventional high-performance computing centers. This necessitates inevitable innovation in equipment such as cooling and conditioning systems. Ji Hyung-cheol, director of AR System, noted that traditional air cooling systems are no longer adequate, predicting that liquid immersion cooling technology, with its 20 times higher thermal conductivity than air, will become a mainstream method. This technology has demonstrated a power usage effectiveness (PUE) of less than 1.03, promising dramatic improvements in energy efficiency.
The collaboration also addresses the need for harmony with the existing power grid. Jang Dong-hyun, deputy general manager of KPX, proposed “dispersed energy special zones” as an alternative. These zones would allow independent power producers to contract directly with consumers and sell surplus power, while data centers could receive compensation for load flexibility through a two-way bidding structure. Such a system is expected to reduce construction and operational costs.
Concerns have been raised about Korea’s global competitiveness due to potential power shortages in the Seoul metropolitan area and a lack of strategies to attract tenant companies, especially as other Asian countries offer policy incentives and robust power infrastructure. Deus President Lyou Ki-hoon emphasized that AI data centers require integrated industry strategies encompassing technology, site placement, policy, and tenant networks. He advocated for core response strategies including the development of clusters in promising sites, standardized data center designs, eco-friendly ESG infrastructure, global tenant attraction marketing, and strong localization and government R&D connectivity.
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KDHC’s participation in this MOU signifies its proactive stance in navigating the complexities of the AI-driven energy landscape, aiming to contribute to sustainable and efficient energy solutions for the future.
