Korea and Japan put their US investment pledges into power plants beside data centers
South Korea's first agreed US investment project is a $23.3 billion gas-fired power plant in Encinal, Texas. Japan's March batch has the same tilt, putting allied money into US generation next to data-center clusters that are short of power.
The Investor · Invest desk
What happened
- Related Companies and NextEra Energy lead the Encinal project, and Lewis Energy Group supplies the site, natural gas and water.
- The Texas plant's first phase is due to start commercial operation in 2029, and the full facility comes online in stages by 2032.
- Seoul and Washington also agreed on a framework for eight large US reactors, at least two of them Korean APR1400s, funded with $120 billion from the investment fund.
- Japan's March batch puts $17 billion into a 4.3-gigawatt gas plant in Pennsylvania, the state where Amazon pledged at least $20 billion for an AI and cloud campus.
Why it matters
- What it costs cost Under the nuclear framework, each of the eight reactors gets $12.5 billion for construction plus $2.5 billion of contingency, so a 20% overrun cushion is part of the funding from the start.
- What it limits constraint None of this electricity can lower anyone's bill before next month's midterms. Until the vote, the deals offer only the message that foreign money will fix US power, at a time when anger at data centers raising bills is spreading.
- Who has to decide decision The Energy Department's $5.25 billion for 31 grid projects is about 22.5% of the cost of one Korean-backed gas plant, so Washington pays for wires itself and leaves new generation to allied capital.
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Japan's Pennsylvania plant is the only deal in this group with both a price and a size on the record: $17 billion for 4.3 gigawatts [11], or about $3.95 billion per gigawatt [19]. The Seoul Economic Daily reported Encinal's total cost of $23.3 billion [23] but did not report its capacity. At Pennsylvania's rate, that sum would buy about 5.9 gigawatts [24]. Treat that as an estimate until the developers publish a figure.
The strongest evidence that Washington is steering the money is where the plants are going. According to the paper, most of the selected sites are places where data centers are already clustered or planned [8]. Texas, which the paper called the world's most closely watched data-center hub, gets gas plants from both Korea and Japan [7]. GE Vernova Hitachi will lead small modular reactor projects in Tennessee and Alabama, two states that already host large data centers run by SpaceX, Google and Meta [6]. Citing analysts it did not name, the paper concluded that the US is using allied investment as leverage to ease its power bottleneck [9].
A plant built next to its customer also needs less transmission. By the paper's account, the US grid has a long way to go to catch China's [16]. Citadel Securities expects the US to struggle with grid interconnection, permitting and local opposition to data centers [13]. China had 370 gigawatts of inter-provincial and inter-regional transmission capacity last year, according to its National Energy Administration [14]. The Department of Energy is aiming for a 16% increase in long-distance transmission capacity by 2030 [15]. I'd expect allied money to keep going to plants sited next to their customers for as long as that gap holds.
On scale, the deals look small. Our World in Data put US generation last year at 4,520 terawatt-hours against China's 10,583 [12], so the US produced 42.7% as much [21]. Citadel expects China to add nearly six times as much capacity as the US over the next five years [13]. If the Pennsylvania plant ran every hour of the year, it would produce about 37.7 terawatt-hours, or 0.83% of last year's US total [22].
The Texas plant can go one of three ways. Its output can be contracted to data-center tenants near Encinal, which is what the steering argument assumes. It can sell into the wider Texas market, in which case it is a power plant that happens to sit in a data-center region. Or data-center demand can arrive after the plant does, and the Korean money pays for capacity before its customers exist. The paper did not report who buys Encinal's power or what the investment fund earns on it. In my view the siting supports the steering thesis, but the contracts have not tested it yet. Two things would count against it: a purchase agreement with the general Texas market, or a first phase that slips past its 2029 date [4].
What to watch
- Whether Encinal's capacity and power buyers are disclosed, and whether its output goes to nearby data centers under contract or into the wider Texas market.
- Whether the Encinal first phase keeps its 2029 commercial-operation date.
- Whether later Korea and Japan project batches stay concentrated in power plants or move into other sectors.
Information, not investment advice. This story is general information about companies and markets, drawn from cited reporting. It is not a recommendation to buy, sell or hold any security; check the cited sources before acting.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence55
- Adoption15
- Hype gap+30
- Incentives70
- Confidence60
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
Korea and the US agreed a Korea-U.S. nuclear framework for eight large nuclear reactors in the US, at least two using the Korean-designed APR1400; the US investment fund will provide $120 billion in total, including $100 billion in construction costs and $20 billion in contingency funds.
- [2]
The signatories to the nuclear framework are the two governments, Westinghouse, KEPCO and Korea Hydro & Nuclear Power.
- [3]
With midterm elections next month, the administration is sending voters the message that large foreign investment will improve the US power situation, amid spreading resentment that data centers are pushing up electricity bills.
- [4]
The Encinal plan calls for commercial operation of the first phase to start in 2029, with the full facility going online in stages by 2032.
- [5]
Amazon said last year it would invest at least $20 billion to build an AI and cloud data center campus in Pennsylvania.
- [6]
Tennessee and Alabama, where small modular reactors will be built under the lead of GE Vernova Hitachi, already host large data centers operated by firms including SpaceX, Google and Meta.
- [7]
Texas, where both South Korea and Japan will build gas-fired plants, is described as the world's most closely watched data center hub.
- [8]
The US investment projects Korea and Japan finalized are concentrated in power plant construction, and most selected sites are places where data centers are already clustered or slated to be built.
- [9]
Analysts cited by the Seoul Economic Daily say the US is using allied investment as leverage to ease the power bottleneck in advanced industries.
- [10]
Related Companies and NextEra Energy, the largest US power plant operator, are leading the Encinal project, with Lewis Energy Group providing infrastructure including the site, natural gas and water.
- [11]
The second batch of US investment projects agreed by Washington and Tokyo in March is dominated by power plants, including $17 billion for a 4.3-gigawatt natural gas plant in Pennsylvania.
- [12]
According to Our World in Data, US power generation last year was 4,520 terawatt-hours, less than half of China's 10,583 TWh.
- [13]
Citadel Securities said in a recent report that China will add nearly six times more generation capacity than the US over the next five years, while the US will struggle with grid interconnection, permitting procedures and local opposition to data centers.
- [14]
China's inter-provincial and inter-regional transmission capacity stood at 370 GW last year, according to the National Energy Administration.
- [15]
The US Department of Energy plans to expand long-distance transmission capacity by 16% from current levels by 2030.
- [16]
The US has moved to expand its grid but still has a long way to go compared with China; the Department of Energy has acknowledged additional transmission infrastructure is urgently needed.
- [17]
Last month the Department of Energy announced a project providing a combined $5.25 billion to 31 grid projects across 26 states.
- [18]
The Energy Department's $5.25 billion grid award is about 22.5% of the Encinal plant's cost, or about $169 million per project.
- [19]
Japan's Pennsylvania gas plant costs about $3.95 billion per gigawatt (roughly $3,950 per kilowatt).
- [20]
The nuclear framework works out to $12.5 billion of construction and $2.5 billion of contingency per reactor ($15 billion all-in); contingency is 20% of construction cost.
- [21]
US power generation last year was 42.7% of China's.
- [22]
A 4.3 GW plant running every hour of the year would produce about 37.7 TWh, about 0.83% of last year's US generation.
- [23]
The first US investment project agreed by Seoul and Washington on the 1st is a gas-fired combined-cycle power plant to be built in Encinal, Texas, at a total cost of $23.3 billion.
- [24]
At Pennsylvania's cost per gigawatt, Encinal's $23.3 billion would correspond to about 5.9 GW (illustrative; capacity not reported).
Sources
2 independent publishers whose own reporting we read for this story.
- en.sedaily.comTrump Puts Alaska LNG at Front of Korea's U.S. Investment Package
14 articles · October 3, 2026
- scmp.comTrump touts US$200 billion South Korean energy deal ahead of US midterms
2 articles · October 1, 2026
Topics and entities
Topics
- Gas-Fired Power Generation
- Nuclear Power Plant Construction
- Korea-U.S. Strategic Investment
- Electric grid transmission
- AI Data Center Power Supply
Entities
- Korea Hydro & Nuclear Power
- Lewis Energy Group
- Howard Lutnick
- Donald Trump
- Citadel Securities
- Korea Electric Power Corp
- Doosan Enerbility
- Related Companies
- APR1400
- AP1000
- Westinghouse
- Alaska LNG
- Lee Jae-myung
- Kim Jung-kwan
- US Department of Energy
- NextEra Energy
- GE Vernova Hitachi Nuclear Energy