Professor Emeritus Ye Jong-seok of Hanyang University, who has long been a source of warmth in our society, is conducting a series of relay interviews with prominent figures who have distinguished themselves in various fields of South Korean economy, society, and culture. By sharing the lessons learned from their experiences, we aim to provide readers with deep insights and inspiration. <EDITOR’s Note>

[Interview by Ye Jong-seok, Senior Correspondent (Professor Emeritus, Hanyang University); Compiled by ReporterLee Ji-hyun ] Regarding KoreaElectricPower Corporation (KEPCO)’s (formerly known as KUKJEON) recent proposal on SamsungElectronics(005930)and SK hynix(000660)to have customers prepay 25 trillion won in electricity bills covering five years, Cho Hwan-ik (76), Distinguished Professor at Hanyang University (and former President of KEPCO), stated, “It’s a workaround that could be used once under exceptional circumstances,” but emphasized, “This approach must never become the norm.”

Professor Cho noted that given KEPCO’s debt has exceeded 210 trillion won (as of the second quarter of this year), he could understand the consideration of a prepayment system. However, he stressed, “It is not sustainable for large corporations to survive by collecting several years’ worth of electricity bills in advance,” and emphasized the need to normalize the electricity pricing system while creating new revenue streams, such as overseas operations and data services.

His concerns extend beyond KEPCO’s financial issues to the overall power infrastructure in the age of artificial intelligence (AI). As AI, data centers, semiconductors, and robotics emerge as the core of industry, electricity is no longer merely a public good but has become a critical resource that determines national competitiveness and the success or failure of industries.

Professor Cho remarked, “Electricity is no longer just electricity; it has become ‘power’ in the sense of influence,” adding, “We are entering an era of urgent electrification, not merely accelerated electrification.” Given that constructing power plants and transmission grids takes a long time, he urged that we maximize the efficiency of existing facilities immediately while simultaneously establishing a long-term energy strategy that remains stable regardless of changes in administration.

Having served as Vice Minister of Commerce, Industry and Energy, as well as president of the Korea Export-Import Insurance Corporation and KOTRA, he served as president of KEPCO from 2012 to 2017, where he led the company’s recovery from deficits and resolved the conflict over the Miryang transmission towers. He subsequently became directly involved in the management of a wind power company, gaining experience in both policy and on-the-ground operations.

- KEPCO has proposed that SamsungElectronics and SK hynix pay 25 trillion won in electricity bills—equivalent to five years’ worth—in advance.
△In principle, this is not a desirable approach. Frankly, it could be a blow to the pride of KEPCO employees. We must absolutely avoid a situation where it becomes standard practice to resolve financial problems by collecting several years’ worth of electricity bills in advance from large corporations. However, KEPCO’s debt burden is currently enormous, and the government finds it difficult to raise electricity rates easily. There is also the issue of needing to lower rates through measures such as regional rate differentials. Given these exceptional circumstances, I believe this approach could be utilized just once. If SamsungElectronics and SK hynix pay their electricity bills in advance and KEPCO offers corresponding conditions, it could have the effect of deferring the immediate financial burden. However, this must remain a temporary stopgap measure used only for a limited time.

-Does this mean that advance payment of electricity bills by large corporations cannot solve KEPCO’s financial problems?
△Yes. It is not a sustainable solution. Financial problems should not be addressed this way on an ongoing basis. Fundamentally, the structure should be such that those who use electricity bear the costs, and KEPCO operates based on those usage fees. KEPCO also needs to create new sources of revenue. It must diversify its business—such as through overseas operations or data services—to secure a second revenue stream. The practice of KEPCO surviving by collecting several years’ worth of electricity bills in advance from large corporations must not be repeated.

-What is your view on the 25 trillion won in advance payments?
△Whether the scale is appropriate is a separate matter that needs to be examined. KEPCO’s current debt exceeds 210 trillion won, and daily interest expenses alone amount to over 10 billion won. If left unaddressed, the interest burden could grow even larger. From that perspective, I can understand the rationale behind considering a plan of this scale to alleviate the immediate financial burden. However, just because the scale is large does not mean this approach constitutes a fundamental solution.

-How do you assess South Korea’s power situation in the age of AI?
△South Korea has historically been a leader in the power sector. We introduced nuclear power early on, successfully commercialized it, and even exported it. KEPCO has also managed the power grid and supply chain effectively. We are not currently facing an immediate electricity shortage. However, whereas in the past we only had to worry about the height of summer, we now must monitor supply and demand year-round. This is because the influx of renewable energy has increased volatility depending on the season and time of day. More importantly, the situation has changed completely this year—due to AI. It is no longer a matter of “accelerated electrification” but of “urgent electrification.” As AI and data centers are introduced, the scale of power required will grow to a level incomparable to the past.

-How much will AI change electricity demand?
△ The amount of power required by AI data centers is enormous. If the current summer peak is around 100 GW, we may need to anticipate levels exceeding 130 GW in the future. Added to this is the issue of energy security. The very routes through which energy is imported—such as the Strait of Hormuz, the Strait of Malacca, and the Taiwan Strait—are exposed to geopolitical risks. Ultimately, electricity is no longer merely a means but power itself. Without power, neither the nation nor its industries can function.

-You mentioned that we need to move toward an “Electro-state.”
△We must change the nation’s operating system—the OS itself, so to speak. We must transition to an “Electro-state.” There is a “golden window” for AI. If we fall behind by even five years, it will be difficult to catch up. Data centers, semiconductors, and robots all ultimately rely on electricity. We must secure a power supply quickly.

-To increase power supply, do we ultimately need to pursue both nuclear power and renewable energy?
△Yes. Since we must reduce our reliance on fossil fuels, we have no choice but to pursue both nuclear power and renewable energy. We must make efforts to increase the share of nuclear power to up to about 40%. The problem is that building new nuclear power plants takes a long time. I estimate it will take about 13 years, from public consultation and permitting to construction. That’s why we shouldn’t frame the power issue as a mere “race against time” or “blitzkrieg.”

-So how are we supposed to hold out for the next 4–5 years?
△We really need to “squeeze every last drop” out of what we have now. Building new power plants takes time. Even to build a single new nuclear power plant, it takes about five years for public consultation and permitting, and another seven to eight years for construction. We cannot meet the electricity demand for the next four to five years with new power plants alone. Ultimately, we must maximize the supply capacity of our existing power generation facilities and transmission grid.

- Are there ways to secure more power from existing power generation facilities?
△First, there is room to increase the capacity factor of nuclear power plants, provided safety is ensured. We need to examine whether we can secure more power from existing facilities by managing maintenance methods and schedules more efficiently. Regarding renewable energy, rather than simply expanding the land area to install more panels, we must improve the generation efficiency itself. This involves using next-generation technologies, such as tandem cells, to produce more electricity from the same area. We also cannot eliminate all coal or LNG power generation immediately. During the transition to carbon neutrality, we must consider strategies that utilize existing power sources for a certain period while incorporating technologies like CCUS to reduce carbon emissions.

- Doesn’t it take longer to build a new power transmission grid?
△That’s why, for now, we shouldn’t just focus on building new transmission lines; we also need to find ways to use the existing grid more efficiently. We’ve operated the transmission grid with a significant margin to prepare for power outages or malfunctions. This means there’s actually some unused capacity—even though we could transmit more power. These days, technology for monitoring and regulating power flow in real time has improved significantly. We can reassess how much more electricity can be transmitted through each section and, if necessary, reduce the burden on the transmission grid by utilizing facilities such as large-scale energy storage systems (ESG), which store electricity and release it when needed. Building new transmission lines is absolutely necessary in the long term. However, for the next four to five years, we must identify and maximize the remaining capacity of the existing transmission grid.

-The power grid issue is quite serious. Even if we build power plants, won’t we be unable to transmit electricity if there’s no transmission grid?
△It’s not enough to simply increase power generation. We must expand generation, transmission, and distribution all at once. Currently, there’s a problem where electricity generated on the east coast cannot be properly transmitted to the Seoul metropolitan area. We need to send electricity to places like Yongin or the semiconductor cluster, but because the transmission grid is congested, there are ultimately calls to build LNG power plants nearby. There are a great many bottlenecks like this.

- Is public acceptance the biggest cause of delays in transmission grid construction?
△As things stand, yes. During the Miryang transmission tower controversy, I visited the site over 40 times. When you go to the scene of a conflict, you find compensation issues, as well as people who ideologically oppose the project outright. It’s all so intricately intertwined. You can’t resolve these conflicts from behind a desk.

-How should this be resolved?
△First is sincerity. The head of the agency must go there personally and practically live on-site. Second is honesty. We must explain why it’s necessary without hiding anything. Third is offering generous compensation. We must acknowledge the fear and sense of alienation felt by residents. We also need immunity measures for public officials or public enterprise employees who actively step forward to resolve conflicts. If they face audits or legal action later, no one will ever step forward again.

-Can small modular reactors (SMRs) serve as an alternative power source for data centers?
△Yes, they can. A single data center typically consumes about 100 to 150 MW, while an SMR has a capacity of around 300 MW. They could be a good match. The problem is that, despite starting early, we’ve been slow to move toward demonstration and commercialization. We must quickly complete the demonstration process for the Korean-designed SMR to establish our own technology and supply chain. Only then can we use them domestically and sell them overseas.

-Will the structure of the electricity market change significantly?
△In the past, power generation companies produced electricity, KEPCO purchased it, and then supplied it to consumers. Consumers were merely passive users of electricity. Now, people with solar panels can become suppliers, and electric vehicles can store electricity and feed it back into the grid. In the future, there will be countless suppliers and consumers, and electricity rates will vary by region, time of day, and usage type.

-Is that what you mean by the “industrialization” of electricity?
△Yes. In the future, electricity will no longer simply be generated at power plants and transmitted via power lines. Data will be used to determine in real time when, where, and how much electricity is needed, and AI will predict future consumption. Solar panels and large-scale batteries scattered throughout homes and factories can be integrated and operated as if they were a single power plant. Not only will businesses that generate and sell electricity grow, but so will those offering technologies and services that help reduce electricity consumption. Electricity itself is becoming a new industry.

-Do you think the power industry can become a new growth engine?
△I see it as a very significant opportunity. Companies like HYOSUNG HEAVY INDUSTRIES, HD HYUNDAI ELECTRIC, and LS ELECTRIC have already secured orders for several years’ worth of production. The U.S. and Europe need to replace their aging power grids on a massive scale. In particular, the U.S. market is becoming increasingly wary of Chinese-made equipment, which could create more opportunities for Korean companies to enter the market. I believe the supercycle in the power equipment market could last at least 15 years.

-What is needed to foster the power industry?
△Price signals must function properly. Even if operators create new services, the industry cannot thrive if they cannot recoup their costs. That said, this does not mean we should raise rates across the board for all operators. Electricity serves a public purpose. We must strike the right balance between market forces and the public interest.

-During your tenure as KEPCO president, you spoke of “a KEPCO that doesn’t sell electricity.”
△When I took office, I said, “I want to turn this into a company that doesn’t just sell electricity.” This stemmed from the belief that relying solely on electricity sales would lead to a perpetual cycle of losses. The idea is to develop solutions that help reduce electricity consumption and sell them overseas. Which is better: building a power plant in Vietnam, or selling technology that reduces electricity demand enough to make building that plant unnecessary? We need to think outside the box.

- Within just one year of your appointment, KEPCO turned a deficit into a surplus. How was that possible?
△It wasn’t just because of my efforts. There were also external factors, such as the drop in oil prices. Still, the most significant factor was electricity rates. I raised them twice early in my tenure. I was first approached to become KEPCO’s president toward the end of the Lee Myung-bak administration. When I accepted, I made raising electricity rates a condition of my appointment. After the Park Geun-hye administration took office and the Miryang power line tower issue came to a head, I was asked to stay on, and at that time, I was also asked to raise electricity rates one more time. I said I would take all the heat for raising the rates. I personally persuaded the media and the business community as well.

-You also got directly involved in managing a wind power company. How did that go?
△At first, I even thought about developing domestically produced wind turbines and turning the company into a 1 trillion won enterprise. However, for two years, there were almost no public wind power contracts. Even if we built a 10 MW-class domestic wind turbine, there was no one to use it. They asked us to provide a guarantee that our first-ever product wouldn’t break down—how were we supposed to prove that? That’s why I tell Saramins around me not to approach business with such romantic ideals. Having run a business myself, I realized that simply supporting technology development isn’t enough to build an industry. It requires securing the first purchase, financing, and guarantees. Ultimately, an industry is an ecosystem.

- What is needed to expand overseas?
△The power business cannot be handled by a single company. Overseas, when we build a power plant, they expect us to secure the financing as well. We need export financing and government guarantees, and we must also take responsibility for long-term operation. We need a “One Team Korea” approach where companies, financial institutions, public enterprises, and the government work together. If we accumulate such success stories, we can certainly establish a “K-Power” brand.

-What is the most urgent recommendation you would like to make to the current administration?
△I understand the situation is urgent, but we must not rush. We need to set aside political biases and bring together people who truly understand this field. The most important thing is a roadmap. The Basic Plan for Power Supply and Demand alone is insufficient. We need an energy roadmap that looks 100 years into the future. We must establish a broad framework for how much nuclear power we will retain, how much renewable energy we will expand, how long we will continue to use fossil fuels, and how we will utilize hydrogen, nuclear fusion, and Carbon Capture, Utilization, and Storage (CCUS). Ideally, this should be enshrined in law. We need “South Korea’s Long-Term Energy Principles” that won’t be overturned every time the administration changes.

-So, are you saying that in the age of AI, electricity will ultimately determine a nation’s competitiveness?
△Yes. In the past, we thought of power outages as merely causing traffic lights to go out and food in the refrigerator to spoil. Now it’s different. Data centers are affected by power outages lasting just milliseconds, and if a semiconductor factory stops, the losses are enormous. Electricity has become the foundation of industry, not just a source of energy. We have nuclear power plants, experience operating power grids, and companies that manufacture power equipment. It’s not all about crises. If we prepare properly, the power industry could become the next major growth engine after semiconductors. What we need to do now is not just focus on how cheaply we can supply electricity. We must consider how to turn electricity into a source of national strength. Electricity is now power.

■About Professor Cho Hwan-ik…
△Born in Seoul in 1950 △Joongang High School △B.A. in Political Science, Seoul National University △M.B.A., New York University (NYU) △Ph.D. in Business Administration, Hanyang University △Passed the 14th National Civil Service Examination △Director General of the Industrial Policy Bureau, Director General of the Trade and Investment Bureau, Deputy Minister, and Vice Minister at the Ministry of Commerce, Industry and Energy △President of the Korea Export-Import Insurance Corporation △President of the Korea Trade-Investment Promotion Agency (KOTRA) △President of the KoreaElectricPower Corporation (KEPCO) △Chairman of UNISON CO., LTD. △(Current) Distinguished and Specially Appointed Professor at Hanyang University