AI Boom and Electrification Push Spark Warnings Over Energy Cost Pressures (Image courtesy of Yonhap)
SEOUL, Nov. 12 (Korea Bizwire) — South Korea’s electricity demand is surging amid rapid industrial electrification and the spread of artificial intelligence (AI), raising concerns that rising power costs could weigh heavily on energy-intensive industries such as semiconductors and displays, a business report warned Tuesday.
According to a study released by the Korea Chamber of Commerce and Industry’s Sustainable Growth Initiative (SGI), industrial power expenses have risen sharply over the past five years due to steep electricity price hikes, eroding profitability and export competitiveness in advanced manufacturing sectors.
Electricity consumption in South Korea has grown by an annual average of 1.7 percent since 2010 and is projected to continue rising by around 2 percent a year through the 2030s, the report said.
If power supply capacity fails to keep pace, a 2 percent increase in demand could push electricity prices up by 0.8 percentage points above overall inflation and shave 0.01 percent off gross domestic product (GDP), the study found.
“Industries such as semiconductors and displays, which have a high proportion of power costs in their production and limited alternatives to electricity, may face serious profitability declines and output reductions,” said Park Kyung-won, a senior researcher at SGI.
The report urged structural reforms and innovation in the power sector to alleviate pressure on businesses and ensure stable supply. It estimated that a 1 percent improvement in productivity within the electricity industry could lower power prices by 0.6 percentage points and lift GDP by 0.03 percent.
SGI proposed several policy measures to enhance productivity, including establishing demand-based electricity trading systems, advancing innovation across the power industry’s value chain, and training specialized talent in energy–digital convergence.
“An efficient energy supply system is essential for sustaining AI-driven growth,” SGI President Park Yang-soo said. “Policymakers must act to reduce the burden of electricity costs on companies while maintaining the momentum of industrial innovation.”
Kevin Lee (kevinlee@koreabizwire.com)
