South Korea selected a $22.3 billion gas-fired power plant in Encinal, Texas, on 22 September as the first project under its $200 billion US strategic investment programme, Korea JoongAng Daily reported.
Key points
- The plant is planned to reach about 6.3 gigawatts, beginning with a 1.4-gigawatt gas turbine facility.
- South Korea would provide all the financing. The government estimates $43.29 billion to $45.4 billion in revenue over 20 years.
- No power purchase agreement has been secured. Seoul aims to sign one in 2027.
Seoul’s $200 billion strategic allocation
Minister of Trade, Industry and Resources Kim Jung-kwan presented the selection to a National Assembly committee on 22 September. The government judged the project commercially viable, citing projected earnings of $43 billion to $45 billion over 20 years and expected demand from data centres and semiconductor plants in Texas.
The commitment to US investment forms part of a $350 billion package agreed alongside a tariff deal. It allocates $200 billion to strategic sectors and $150 billion to shipbuilding cooperation. US duties on South Korean goods fell from 25 percent to 15 percent under the deal, with strategic investments capped at $20 billion a year.
Seoul and Washington reached their initial investment agreement on 30 July 2025, finalised terms on 29 October and formalised them in a November memorandum of understanding, Anadolu Agency reported. The Encinal selection moves one project within the strategic allocation into a defined plant proposal.
South Korea would provide all financing for the plant. Washington is reportedly seeking a 50:50 equity split, according to Korea JoongAng Daily. Under the broader investment arrangement, the two countries would divide profits equally until the investment principal and interest were recovered. The US share would then rise to 90 percent.
Encinal’s 1.4-gigawatt first stage
The proposed combined-cycle plant would reach about 6.3 gigawatts. Construction would start with a 1.4-gigawatt gas turbine facility to test demand and economic feasibility, before a phased expansion to 4.9 gigawatts of combined-cycle capacity. That sequence puts the larger build-out after the initial test of the market.
Related Companies and NextEra Energy would lead the project. Lewis Energy Group would provide the land and the gas and water infrastructure. The project is intended to serve a Texas electricity market where demand is expected to nearly double by 2032 as AI data centres and semiconductor factories expand.
South Korea estimates that the facility could produce between $43.29 billion and $45.4 billion in revenue over 20 years, Anadolu Agency reported. That projection depends on electricity sales from a plant that would be built in stages, starting with the smaller turbine facility.
Texas power sales and the 2027 contract target
South Korea has yet to secure a power purchase agreement for the Texas project, KED Global reported. Seoul aims to sign a contract in 2027. Opposition lawmakers raised the absence of a buyer during the National Assembly discussion, questioning the plant’s profitability without a commitment to purchase its output.
Two other proposals under the US investment package remain in negotiations, with no final investment decision: construction of eight nuclear reactors and an Alaska liquefied natural gas development. The reactor discussions concern roughly $120 billion of construction, comprising six Westinghouse AP1000 units and two using South Korea’s APR1400 design.
Kim said the talks over Westinghouse now centre on a South Korean stake of 5 to 10 percent, after Seoul initially sought 20 percent and a board seat. Korea JoongAng Daily reported that voting rights for the proposed stake had not been disclosed.
The Encinal project targets the start of first-phase commercial operations in 2029 and full capacity by 2032.
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