KEPCO Proposes Advance Electricity Payment to Samsung Electronics and SK hynix... 25 Trillion Won for Five Years

Lowering the Burden of KEPCO Bond Issuance and Expanding Power Grids for Advanced Industries
Details Under Negotiation

Korea Electric Power Corporation (KEPCO) has proposed the introduction of a "large-scale prepaid electricity billing system" to major power-consuming companies such as Samsung Electronics and SK hynix, whereby future electricity fees would be paid in advance. This initiative is aimed at securing the necessary funds for power grid investment to meet the soaring electricity demand from advanced industries such as semiconductor and artificial intelligence (AI) data centers, using a method other than the traditional approach of corporate bond issuance or electricity rate adjustments.

On September 3, KEPCO stated, "We have proposed prepayment of electricity fees to large-scale demand companies such as Samsung Electronics and SK hynix."

According to KEPCO’s proposal, large-scale power-consuming companies would make advance payments for a substantial portion of their future electricity bills, and these funds would then be invested in the construction of power grids at advanced industrial complexes. This concept expands the current electricity prepayment system, which was previously offered for customer convenience, to serve as a means to secure funds for large-scale power grid investment.

According to industry sources, KEPCO proposed a prepayment scale totalling 25 trillion won—20 trillion won from Samsung Electronics and 5 trillion won from SK hynix. Last year, Samsung Electronics and SK hynix paid approximately 4.1 trillion won and 900 billion won in electricity fees to KEPCO, respectively, totalling around 5 trillion won. Based on this, KEPCO reportedly calculated the total fees these companies would pay over the next five years, from 2027 to 2031, and presented a prepayment option of around 25 trillion won. However, KEPCO clarified that specifics such as the size of the prepayment, participation, interest rates, and the prepayment period have not yet been finalized.

KEPCO believes that, as demand for investment in power grids rapidly increases—centered on advanced industries such as semiconductors and AI data centers—new funding sources are necessary. Facing the need for massive capital to expand the power grid, the company sees this as a means to secure funding without relying solely on electricity rate adjustments or corporate bond issuance.

On September 2, at a National Assembly forum, KEPCO also outlined the direction and design principles for the large-scale prepaid electricity billing system. KEPCO explained, however, that the proposal introduced at that time represented only the basic direction for system adoption and is not a finalized policy.

According to KEPCO, if realized, the system could serve the interests of both KEPCO and participating companies. KEPCO would be able to secure upfront investment capital for large-scale transmission and substation grid construction, while semiconductor manufacturers and other firms could see a higher probability of timely grid infrastructure for new factories and potentially earn a certain return on their prepaid capital.

A KEPCO representative said, "We are considering ways to offer stable returns for these prepaid electricity fees, equivalent to those from risk-free assets," adding, "The specific interest rate and payment method will be decided through consultations with each company."

This content was produced with the assistance of AI translation services.