Korea’s Business Minister Kim Jung-kwan, third from proper, and U.S. Commerce Secretary Howard Lutnick, second from left, focus on commerce points between the 2 nations on the Division of Commerce in Washington, D.C., Jan. 29. Courtesy of Ministry of Commerce, Business and Sources
Seoul and Washington unveiled plans for 3 funding tasks in the US — a $22.3 billion Texas gas-fired energy plant for knowledge facilities, a framework to construct eight massive nuclear reactors and a assessment of an Alaska liquefied pure gasoline (LNG) venture.
The tasks are a part of a $200 billion funding dedication below a Korea-U.S. settlement signed in November 2025, with the 2 governments searching for to develop cooperation in power and different strategic industries whereas creating new openings for Korean suppliers within the U.S. market.
“The colossal package deal of investments we’re asserting right now is a significant step towards securing our essential power provide chain, guaranteeing American power dominance, and making our partnership with South Korea and the complete Pacific area stronger than ever earlier than,” U.S. President Donald Trump stated throughout a press convention in Washington, Wednesday (native time).
The Texas energy plant venture, dubbed Challenge Star, requires a 6,472-megawatt combined-cycle gasoline energy plant in Encinal to produce electrical energy on to synthetic intelligence (AI) knowledge facilities.
The plant’s preliminary 1,952-megawatt gasoline turbine section is scheduled to start industrial operations in 2029, with the power’s full-capacity operations anticipated in 2032.
The plant will use a tolling-style energy buy settlement (PPA), below which knowledge heart operators pay a set cost for contracted capability and bear variable prices equivalent to gas. The PPA is predicted to be finalized in 2027.
Graphic by Cho Sang-won
Business Minister Kim Jung-kwan stated Seoul had assessed whether or not the venture may get better its principal and curiosity over the funding interval, including that the federal government performed stress assessments for potential declines in electrical energy costs, main modifications throughout development and modifications amongst venture contributors.
“We’re whether or not we will get better the principal and curiosity throughout the interval of the funding,” Kim stated throughout a latest briefing in Seoul. “If you happen to multiply 6.5 gigawatts by $70 or $80, that generates steady money circulate.”
Korea will present the complete funding for the venture, whereas U.S. builders Associated Corporations and NextEra Power will lead the venture and Texas-based Lewis Power Group will present the land, pure gasoline and water-related infrastructure.
In the meantime, Challenge Energy entails constructing eight massive nuclear reactors — two Korean-designed APR1400 reactors and 6 Westinghouse AP1000 reactors.
The nuclear framework will use as much as $120 billion, together with about $100 billion in development prices, excluding financing prices, and $20 billion in contingency reserves. Korea may present as much as $10 billion by the top of this yr, pending the required authorized approvals, to order long-lead gear for the reactors.
Korea Hydro & Nuclear Energy’s nuclear plant in Gyeongju, North Gyeongsang Province / Courtesy of Korea Hydro & Nuclear Energy
The framework is predicted to be signed by the 2 governments, together with firms from either side: Westinghouse from the U.S. and Korea Electrical Energy Corp. and Korea Hydro & Nuclear Energy from Korea.
Building would start with two AP1000 reactors, adopted by two APR1400 and two AP1000 models, then a remaining two AP1000 models.
The framework additionally plans for Korean firms to accumulate a 5 to 10 % stake in Westinghouse, with the ultimate funding phrases to be negotiated between the businesses.
Kim stated the framework will amend an present settlement settlement that had restricted the APR1400’s entry into the U.S. market.
“For Westinghouse, it is a good alternative to carry its reactor expertise to the U.S. market and cut back the danger of price overruns,” Kim stated. “For Korea, it is a chance to enter the U.S. nuclear market, which has sturdy satisfaction as the house of the nuclear trade.”
Kim famous that the framework units solely broad phrases of nuclear cooperation, with remaining choices on particular person tasks to comply with after websites, venture constructions and development schedules are finalized, industrial reasonableness is reviewed and parliamentary procedures are accomplished.
Nonetheless, Trump stated constructing “eight new large-scale nuclear energy crops” is already included within the funding package deal, whereas Secretary of Commerce Howard Lutnick additionally stated, “It’s $100 billion plus a $20 billion contingency to construct eight gigantic nuclear energy crops,” including that the crops can be in-built Ohio, Tennessee, South Carolina and different areas.
An outline of the Alaska LNG venture / Courtesy of Glenfarne Group
The Alaska LNG venture, or Challenge North, will first bear a assessment of its industrial reasonableness and authorized necessities, in response to the trade ministry. Seoul stated it is going to resolve whether or not to proceed solely after these situations are met.
The venture entails a 1,300-kilometer pipeline to move North Slope pure gasoline and constructing an LNG export terminal.
Kim stated the federal government acknowledged that the venture’s industrial reasonableness stays a priority however stated its potential strategic worth warranted additional assessment.
“It’s true that the venture’s industrial reasonableness is low, and we have to assessment it. However we consider we additionally want to think about its strategic facets,” he stated. “The U.S. additionally is aware of that its industrial reasonableness is low and is conscious of why the venture has been delayed.”
He stated the venture faces a variety of challenges, together with delays in allowing, labor shortages, climate situations and technical points. The federal government plans to look at the problems individually, and allowing and securing a ample workforce is more likely to be among the many greatest hurdles.
“Even when the venture has strategic advantages, we now have agreed with the U.S. aspect to not proceed if it isn’t commercially affordable,” Kim stated.
Nonetheless, Trump and Lutnick each stated Korea will take part within the Alaska LNG venture, with the secretary saying “simply over $50 billion invested in Alaska for the Alaska LNG venture.”
Kim stated Seoul can be searching for measures from Washington to enhance the venture’s industrial reasonableness, together with tariff reduction for metal and different gear, addressing state and native tax points and securing long-term LNG offtake preparations and preferential entry to pure gasoline for Korea.
He stated he had repeatedly raised the difficulty of metal tariffs with U.S. Commerce Secretary Howard Lutnick and had obtained a response that the U.S. aspect would supply reduction.
All three tasks can be managed by way of an umbrella funding particular objective car (I-SPV) and separate project-specific P-SPVs. The I-SPV will deal with general funding and income distribution, whereas every P-SPV will handle a person venture.
Beneath the construction, the Korea-U.S. profit-sharing ratio will stay at 5:5 till Korea recovers the principal and curiosity on its general funding. The 1:9 break up — 1 for Korea and 9 for the U.S. — won’t take impact till the tasks have recovered their mixed principal and curiosity.
“Whereas the (earlier) memorandum of understanding was obscure about threat pooling, we specified it this time,” Kim stated. “Even when one venture doesn’t work out, the opposite tasks will proceed with a 5:5 distribution for principal and curiosity restoration, and the shift to 1:9 won’t occur till the general quantity is recovered.”
The funding settlement additionally units a authorized ceiling of $20 billion per yr and $200 billion in whole.
