KEPCO Reportedly Seeks ₩25 Trillion Up Front From Samsung and SK Hynix for Grid Expansion

KEPCO is reportedly seeking a new way to finance the power grid needed for South Korea’s next wave of semiconductor manufacturing and AI data-centre development: asking its largest industrial customers to pay future electricity bills early.

Under the reported proposal, Samsung Electronics would prepay ₩20 trillion and SK Hynix ₩5 trillion, or ₩25 trillion combined, for electricity expected to be supplied between 2027 and 2031. The proposal is a pull-forward of future electricity revenue, not a reported additional charge on top of power bills. 124

What KEPCO has proposed

The reported ₩25 trillion figure represents five years of expected electricity payments. Samsung’s proposed share is ₩20 trillion, while SK Hynix’s is ₩5 trillion. The estimates were reportedly based on the companies’ electricity bills and projected across the 2027–2031 period. 2414

KEPCO has confirmed that it suggested an advance-payment program to major power users, including Samsung and SK Hynix. However, it has said that participation, payment amounts, coverage periods and interest rates have not been finalized. 78

Why the utility wants advance payments

The proposal addresses a financing challenge: new semiconductor complexes and AI data centres require substantial investment in generation links, transmission lines, substations and local distribution capacity before the facilities can draw power.

KEPCO plans to use the funds to build transmission and distribution infrastructure for semiconductor clusters in Yongin and the Honam region. Pulling forward revenue could also reduce the utility’s need to issue additional bonds for the work. 124

In other words, the suggested arrangement would turn two future-heavy electricity customers into an early source of grid-construction capital.

How the proposed payments and interest would work

Reports describe a structure in which Samsung and SK Hynix could make the prepayments in installments over roughly 12 months. Once electricity supply under the arrangement begins, KEPCO would deduct each monthly power bill from the remaining prepaid balance. 1114

KEPCO would also pay interest on the unused balance, with settlement reported every six months. One report said the utility planned to offer a rate above the yield on two-year South Korean government bonds, though the final interest rate has not been agreed. 1014

That feature matters because the companies would be providing capital well before much of the electricity is consumed. Interest would partly compensate them for tying up cash during that period.

What Samsung and SK Hynix could receive

The central potential benefit is greater certainty that electricity infrastructure will be ready when new factories and related AI-data-centre expansion need it.

By financing networks dedicated to fast-growing industrial demand, the arrangement could help reduce the risk that grid connections become a bottleneck for new semiconductor capacity. KEPCO’s reported objective is timely power supply for new facilities, while the companies would also earn interest on their unused prepaid balances. 1710

This is not the same as a blanket guarantee that all future power needs will be met under every condition. Rather, the reported proposal links early funding for specific grid expansion to the companies’ need for reliable, on-time supply as they build out facilities.

What remains unresolved

The plan was still a proposal, not a completed deal. Several material terms remained under discussion:

• Whether Samsung and SK Hynix will participate at all
• The final prepaid amounts and the period of electricity covered
• The payment schedule
• The interest rate and other contractual conditions 7811

Samsung and SK Hynix declined public comment in reports on the proposal. Until the companies and KEPCO finalize those terms, the ₩25 trillion split should be understood as a reported negotiating framework—not a binding commitment. 17

The larger significance

The proposal highlights how power-grid buildout is becoming part of the semiconductor investment equation. Chip fabs and AI data centres depend not only on land, equipment and capital, but also on timely access to large-scale electricity infrastructure.

For KEPCO, advance payments could provide capital for grid construction without relying as heavily on new bond issuance. For Samsung and SK Hynix, the trade-off would be earlier cash outlay in exchange for interest income and a stronger basis for securing the power infrastructure needed for future expansion. Whether that trade-off is attractive will depend on the final financial terms and the supply commitments that accompany them. 127