Trends in the "Power System Impact Assessment" Under the Special Act on the Promotion of Distributed Energy

The Grid Impact Assessment is a regulatory measure introduced by the Ministry of Trade, Industry, and Energy (MOTIE) under the Special Act on Distributed Energy Promotion, which took effect in June last year. This initiative aims to mitigate power supply imbalances between metropolitan and regional areas. Under the policy, any entity applying for 10MW or more of electricity must undergo this assessment. Given their high power consumption, data centers are a primary focus of this regulation.
However, industry stakeholders argue that the system lacks feasibility, as no new grid connection approvals for data centers have been granted since its implementation. Despite the law being enacted last June, the assessment framework has yet to be finalized. In response, MOTIE recently announced revisions and plans to extend the pilot program until July 2025. The ministry also intends to collect industry feedback on assessment criteria, geographical scope, and application procedures to refine the policy.
Since these regulatory uncertainties are causing delays in new data center developments, a workable compromise is needed. Daou Data Center will continue to monitor the situation and provide updates accordingly.

Request to Amend the Enforcement Decree of the Restriction of Special Taxation Act for Data Center Tax Credits in the Seoul Metropolitan Area

The global tech industry has been shaken by the DeepSeek shock, sparking discussions on the urgent need for designating AI as a national strategic technology to ensure South Korea remains competitive in the AI race. In response, the Tax Restriction Adjustment Act (TRAA) amendment, which includes AI in the National Strategic Technology category, is expected to be tabled for discussion during the provisional National Assembly session in February.
In line with this, 37 IT industry associations, including KTOA (Korea Telecommunications Operators Association) and K-Internet, recently submitted a request to the Ministry of Economy and Finance to revise the TRAA Enforcement Decree to include tax benefits for data centers in the Seoul metropolitan area. Currently, AI and cloud services designated as core emerging technologies under the TRAA qualify for tax credits of 20-30% on R&D personnel expenses and 3-12% on facility investments. However, businesses located in the Seoul metropolitan area, including Seoul and Gyeonggi Province, are excluded from these tax benefits, as part of the government’s strategy to decentralize key infrastructure.
Despite this restriction, certain fixed assets, including broadcasting equipment, switching facilities, transmission facilities, and data processing facilities, are still eligible for tax deductions, even if they are based in the Seoul metropolitan area. With approximately 70% of all data centers in South Korea concentrated in the metropolitan region, industry stakeholders are pushing for a more realistic policy revision.
As an executive board member of the Korea Data Center Energy Efficiency Association (KDEA), officially recognized by the Ministry of Trade, Industry, and Energy, Daou Technology has actively voiced its stance and recently submitted an official opinion to the association. Daou Data Center will continue to monitor policy developments and actively advocate for industry interests through various channels.
Following the formal submission of industry opinions to the government, the proposed revision will undergo legislative review, coordination, and approval procedures. The finalized amendment will be determined through public hearings and feedback collection. We encourage you to stay tuned for further updates on this issue through Daou Data Center News.

[Image: Ministry of Trade, Industry and Energy (MOTIE)]

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