Korea, US unveil 3 investments in energy projects

Seoul and Washington unveiled plans for three investment projects in the United States — a $22.3 billion Texas gas-fired power plant for data centers, a framework to build eight large nuclear reactors and a review of an Alaska liquefied natural gas (LNG) project.

The projects are part of a $200 billion investment commitment under a Korea-U.S. agreement signed in November 2025, with the two governments seeking to expand cooperation in energy and other strategic industries while creating new openings for Korean suppliers in the U.S. market.

"The colossal package of investments we are announcing today is a major step toward securing our critical energy supply chain, ensuring American energy dominance, and making our partnership with South Korea and the entire Pacific region stronger than ever before," U.S. President Donald Trump said during a press conference in Washington, Wednesday (local time).

The Texas power plant project, dubbed Project Star, calls for a 6,472-megawatt combined-cycle gas power plant in Encinal to supply electricity directly to artificial intelligence (AI) data centers.

The plant's initial 1,952-megawatt gas turbine phase is scheduled to begin commercial operations in 2029, with the facility's full-capacity operations expected in 2032.

The plant will use a tolling-style power purchase agreement (PPA), under which data center operators pay a fixed charge for contracted capacity and bear variable costs such as fuel. The PPA is expected to be finalized in 2027.

Industry Minister Kim Jung-kwan said Seoul had assessed whether the project could recover its principal and interest over the investment period, adding that the government conducted stress tests for potential declines in electricity prices, major changes during construction and changes among project participants.

“We are looking at whether we can recover the principal and interest within the period of the investment,” Kim said during a recent briefing in Seoul. “If you multiply 6.5 gigawatts by $70 or $80, that generates stable cash flow.”

Korea will provide the full investment for the project, while U.S. developers Related Companies and NextEra Energy will lead the project and Texas-based Lewis Energy Group will provide the land, natural gas and water-related infrastructure.

Meanwhile, Project Power involves building eight large nuclear reactors — two Korean-designed APR1400 reactors and six Westinghouse AP1000 reactors.

The nuclear framework will use up to $120 billion, including about $100 billion in construction costs, excluding financing costs, and $20 billion in contingency reserves. Korea could provide up to $10 billion by the end of this year, pending the necessary legal approvals, to order long-lead equipment for the reactors.

The framework is expected to be signed by the two governments, along with companies from both sides: Westinghouse from the U.S. and Korea Electric Power Corp. and Korea Hydro & Nuclear Power from Korea.

Construction would begin with two AP1000 reactors, followed by two APR1400 and two AP1000 units, then a final two AP1000 units.

The framework also plans for Korean companies to acquire a 5 to 10 percent stake in Westinghouse, with the final investment terms to be negotiated between the companies.

Kim said the framework will amend an existing settlement agreement that had restricted the APR1400's entry into the U.S. market.

“For Westinghouse, this is a good opportunity to bring its reactor technology to the U.S. market and reduce the risk of cost overruns,” Kim said. “For Korea, it is an opportunity to enter the U.S. nuclear market, which has strong pride as the home of the nuclear industry.”

Kim noted that the framework sets only broad terms of nuclear cooperation, with final decisions on individual projects to follow after sites, project structures and construction schedules are finalized, commercial reasonableness is reviewed and parliamentary procedures are completed.

However, Trump said building “eight new large-scale nuclear power plants” is already included in the investment package, while Secretary of Commerce Howard Lutnick also said, “It’s $100 billion plus a $20 billion contingency to build eight gigantic nuclear power plants,” adding that the plants will be built in Ohio, Tennessee, South Carolina and other regions.

The Alaska LNG project, or Project North, will first undergo a review of its commercial reasonableness and legal requirements, according to the industry ministry. Seoul said it will decide whether to proceed only after those conditions are met.

The project involves a 1,300-kilometer pipeline to transport North Slope natural gas and building an LNG export terminal.

Kim said the government acknowledged that the project's commercial reasonableness remains a concern but said its potential strategic value warranted further review.

“It is true that the project’s commercial reasonableness is low, and we need to review it. But we believe we also need to consider its strategic aspects,” he said. “The U.S. also knows that its commercial reasonableness is low and is aware of why the project has been delayed.”

He said the project faces a range of challenges, including delays in permitting, labor shortages, weather conditions and technical issues. The government plans to examine the issues individually, and permitting and securing a sufficient workforce is likely to be among the biggest hurdles.

“Even if the project has strategic benefits, we have agreed with the U.S. side not to proceed if it is not commercially reasonable,” Kim said.

However, Trump and Lutnick both said Korea will participate in the Alaska LNG project, with the secretary saying "just over $50 billion invested in Alaska for the Alaska LNG project."

Kim said Seoul is also seeking measures from Washington to improve the project's commercial reasonableness, including tariff relief for steel and other equipment, addressing state and local tax issues and securing long-term LNG offtake arrangements and preferential access to natural gas for Korea.

He said he had repeatedly raised the issue of steel tariffs with U.S. Commerce Secretary Howard Lutnick and had received a response that the U.S. side would provide relief.

All three projects will be managed through an umbrella investment special purpose vehicle (I-SPV) and separate project-specific P-SPVs. The I-SPV will handle overall funding and revenue distribution, while each P-SPV will manage an individual project.

Under the structure, the Korea-U.S. profit-sharing ratio will remain at 5:5 until Korea recovers the principal and interest on its overall investment. The 1:9 split — 1 for Korea and 9 for the U.S. — will not take effect until the projects have recovered their combined principal and interest.

“While the (previous) memorandum of understanding was vague about risk pooling, we specified it this time,” Kim said. “Even if one project does not work out, the other projects will continue with a 5:5 distribution for principal and interest recovery, and the shift to 1:9 will not happen until the overall amount is recovered.”

The investment agreement also sets a legal ceiling of $20 billion per year and $200 billion in total.