South Korea Eyes $22.3 Billion Energy Investment in Texas Gas Plant for AI Data Center

In Texas, the construction of new data centers for AI training and operation is underway, but the state's power grid is already strained. South Korea is considering a $22.3 billion investment in a gas power plant in Encinal, Texas, which could also be the first move under a significant trade deal with America. Without new power plants, there could be power outages or rising electricity prices.

The South Korean media reported that the planned 6.3-gigawatt gas power plant would be South Korea's first US investment under the 2025 trade agreement. The plant's primary purpose would be to provide electricity for the new AI data centers being built in the area. The deal includes an initial payment of about $50 million, with the possibility of further payments.

The exact details of the investment remain uncertain, as South Korea's Industry Ministry has not confirmed the information and ongoing talks with Washington are taking place. Initial reports suggest the plant could have a capacity of 6.4 gigawatts, with 1.4 gigawatts from gas turbines and 5 gigawatts from combined-cycle generation.

The first phase of the plant could start operating in 2030. The investment is not only about generating electricity; it's also about who will consume it. A data center complex with up to 5 gigawatts of capacity is planned near the Texas site, meaning the gas plant would secure buyers before its even completion. Power purchase agreements with these data centers could provide steady revenue for over a decade, ensuring the investment's safety for South Korea.

Seoul plans to invest through a special company, with Korean engineering firms assisting in the construction. The funds would come from Korea's US strategic investment fund. The Texas gas plant is not the only US energy project Korea is considering. Other options include a large-scale nuclear power plant in the US and a liquefied natural gas project in Alaska.

All these projects are linked to the $350 billion pledge. As part of this deal, South Korea committed to buying $100 billion worth of US liquefied natural gas and other energy. Korea also pledged to buy more US oil. Korea is already the world's third-largest buyer of LNG, following China and Japan. This $22.3 billion project is more than just power lines.

In July 2025, President Trump announced a 15% tariff on Korean imports instead of the 25% that was threatened. The $350 billion investment promise was a part of this agreement to secure a lower rate. For the US, it means job creation, new power plants, and inflow of energy money. For South Korea, it means stable energy exports and smooth trade with America.

Lastly, for AI, it means one less barrier: data centers can't function without power. By directly funding a gas plant, South Korea is ensuring the AI boom in Texas has the necessary electricity.