Electricity infrastructure could struggle to keep pace with South Korea's artificial intelligence and semiconductor expansion plans, Wood Mackenzie said in a Thursday note.
Wood Mackenzie said South Korea's 4,700 trillion South Korean won ($3.1 trillion) AI and semiconductor initiative, including the planned 800 trillion South Korean won Honam cluster, risks running into electricity supply constraints under current development plans.
The report forecasts peak electricity demand in the Honam region will climb to 19.1 gigawatts after the project reaches full scale, from about 11.8 GW today.
Effective generating capacity, however, is expected to reach only 16.8 GW by 2030, leaving an estimated 2.3 GW supply gap.
"The challenge is less about whether enough generation can ultimately be built than whether the grid, market design and investment signals can evolve quickly enough to support AI infrastructure," said Yunsik Chung, research analyst at Wood Mackenzie.
Although Honam has South Korea's strongest renewable energy resources, transmission bottlenecks continue to restrict new projects.
Congestion along the Honam-Central corridor prevents many renewable energy developments, including solar projects, from securing grid connections despite abundant resource potential.
Closing the projected power gap with solar alone would require about 19.5 GW of new capacity within five years. Developers added only 679 MW in 2025, making that target unrealistic without significant battery deployment, the report said.
Wood Mackenzie said South Korea's current market design limits battery investment by restricting revenue opportunities. The report said broader market reforms or larger procurement volumes would accelerate deployment.
The report said dynamic line rating and transmission topology optimization could help relieve grid bottlenecks and accelerate renewable energy integration until larger transmission upgrades come online.
Wood Mackenzie said a 10-year extension of the Hanbit Nuclear Power Plant would preserve about 2 GW of capacity before roughly 3 GW of its 5.9 GW fleet reaches retirement by 2035.
Natural gas also remains a near-term option despite global gas turbine delivery times of five to six years. The report said prioritizing domestically manufactured turbines could accelerate new capacity under South Korea's upcoming 12th Basic Plan for Electricity Supply and Demand.
Wood Mackenzie said land originally reserved for Hanbit Units 7 and 8 could support brownfield nuclear development, reducing construction costs by about 10% to 15% and shortening project timelines.
Honam could draw on as much as 15.9 GW of surplus generating capacity from Yeongnam if the transmission corridor between the two regions is reinforced, Wood Mackenzie said.
The report said rising industrial electricity demand in Honam could reduce renewable power flows to northern regions, lowering the need for the proposed 8 GW West Coast high-voltage direct current transmission project.
"Near-term flexibility measures, firm generation and transmission upgrades all need to move in parallel," Yunsik Chung said. Otherwise, power infrastructure could constrain artificial intelligence and semiconductor investment before technology or capital does.