[Edaily Marketin JI YEONG-EUI Reporter] "South Korea’s investment environment for artificial intelligence (AI) data centers is relatively underdeveloped (compared to other countries). Site permitting procedures also remain relatively cumbersome compared to other major economies."

Ali Izadi-Najafabadi, Head of Global Transition Analysis at BloombergNEF, made this assessment of South Korea’s artificial intelligence (AI) data center investment environment during his keynote speech at “BIXPO 2026,” held on the 5th at the Kim Dae-jung Convention Center in Gwangju. He pointed out that while global investment in AI data centers is surging, South Korea faces relatively unfavorable conditions for attracting investment due to challenges in securing power supply and obtaining site permits.

During his speech, Izadi explained the impact of the spread of AI on the global energy market and investment landscape, emphasizing the importance of a data center’s locational competitiveness.

“There is significant uncertainty regarding where to build data centers,” he said. “There are five key factors to consider, and among them, energy is the most important.” He went on to explain that land permits and taxes, access to fiber-optic networks, and the capabilities of the existing workforce are also major criteria for decision-making.

Earlier this year, BloombergNEF quantitatively assessed the attractiveness of data center development across 17 markets in the Americas, Europe, and the Middle East, and subsequently expanded its analysis to include the Asia-Pacific region.

Izadi said, “Virginia, which already has the highest data center density, received the highest rating despite facing significant challenges regarding grid connections for new data centers.”

In contrast, he noted that Indonesia received a relatively favorable evaluation in the Asia-Pacific region. “Indonesia still has relatively abundant power generation capacity, which is why it received a relatively high score,” he explained, adding, “The site permitting process is also at a relatively manageable level.”

Regarding South Korea, he called for improvements in power supply and permitting conditions. Director Izadi emphasized, “These areas require further policy measures.”

He also highlighted the growth rate of the global data center market as a key point.

Director Izadi explained, “Global data center capacity has already tripled over the past six years,” adding, “Not only has data center capacity increased, but the average size of data centers used for training AI models has also grown significantly.”

He said, “Annual spending on data center construction is expected to reach $1 trillion this year. Cumulative investment in data center construction will reach approximately $7 trillion by 2031,” adding, “When you compare annual spending on data centers to annual investment in solar or wind energy deployment or the electrification of road transportation, you can see that data centers are already attracting more investment.”

He predicted that the surging demand for electricity would also have a significant impact on the energy market.

“We have confirmed that by 2025, data centers will already be consuming more electricity than South Korea’s annual electricity consumption,” said Director Izadi. “By 2030, annual electricity consumption by data centers is projected to reach a level comparable to Japan’s electricity consumption last year.”

In the long term, he predicted that electricity demand would increase even more sharply. “By 2050, the annual electricity consumed by data centers alone will be on par with the total electricity consumption of the United States last year,” he emphasized, adding, “A substantial amount of electricity will be required.”

He predicted that the benefits to different power generation sources resulting from this increase in electricity demand would vary by region.

Director Izadi said, “In the United States, the surge in data centers is definitely having a positive impact on the natural gas power sector,” adding, “In contrast, we expect renewable energy and batteries to emerge as the winners in the rest of the world.”

However, he pointed out that the expansion of data centers could also lead to the extended operation of existing fossil fuel power plants. In fact, he explained that in Malaysia, efforts are underway to extend the operating life of coal-fired power plants to meet the growing demand for data centers.

Director Izadi also emphasized the government’s role in the competition within the AI industry. He argued that since U.S. and Chinese companies are currently leading the development of cutting-edge AI models, countries like South Korea need policy support to secure their own model development capabilities.

“If we rely solely on economic logic, there is a high likelihood that existing developers in China and the U.S. will monopolize the market,” he warned, adding, “Middle-income countries like South Korea will face the risk of being unable to develop their own cutting-edge models.”

He then highlighted the example of the Canadian government’s decision to make a direct equity investment in the Canadian AI company Coherent, drawing attention to South Korea’s AI development support policies as well.

Director Izadi emphasized, “While energy costs account for a very small portion of the total cost of developing frontier models, no AI model can exist without electricity.”

He added, “Resolving issues related to grid congestion and energy capacity will be crucial for the development of AI models.”