South Korea Follows Japan's Playbook With $22.3 Billion Texas Gas Bet

South Korea has completed the first step in a $350 billion investment plan to America, choosing a $22.3 billion gas-fired power complex in Encinal, Texas. The White House is expected to announce the decision as soon as Wednesday. This decision follows a meeting between US President Donald Trump and South Korean President Lee Jae Myung on the sidelines of the UN General Assembly.

The complex is designed to supply electricity for data centers and chip factories. The project, which will be constructed in stages, involves an initial 1.4GW of simple-cycle gas turbines and a later addition of approximately 4.9GW of more efficient combined-cycle generation. However, no customers have been confirmed yet, and there is no power purchase agreement in place, with signing targeted for 2027.

The US administration had requested a 25% increase in the project's size, which would raise the investment to around $25 billion. Korean officials claim that the Encinal complex could generate $43 billion to $45 billion in revenue over 20 years, but this is before accounting for fuel, operations, maintenance, and financing costs.

The Korean government is providing $200 billion in upfront capital for strategic industries, with a separate $150 billion for shipbuilding. The investment is split 50/50 with the US until Korea recoups its principal and interest, after which Korea's share drops to 10%. Critics argue that the revenue generated by the project may not be sufficient to recover the investment, especially considering the high cost of gas as a main input for the plant.