The proposal is now sitting with two of South Korea’s most valuable companies. Korea Electric Power Corp., the state-owned utility known as KEPCO, has asked Samsung Electronics to prepay 20 trillion won, about $15 billion, toward electricity costs and grid expansion through 2031, and has made a similar request of SK Hynix for 5 trillion won, according to an internal KEPCO document and a company statement. Together the requests total roughly 25 trillion won, about $18 billion.
The proposals were delivered to major power users including the two chipmakers, but the details are not finished: the participants, the interest rate, the payment amount and the payment schedule have not been finalized, the document and the statement show. What is clear is the purpose. The money would be used to build the transmission lines and substations that serve chip factories, and KEPCO would pay interest on the prepayments at a rate above the yield on two-year Korean government bonds.
Strip the structure to its shape and the arrangement is simple: an electricity bill converted into a loan. The customers pay now, the utility builds the wires, and the customers get their money back with interest over time, while continuing to pay for the power they actually use. For Samsung and SK Hynix, the payments land on capital expenditure. For KEPCO, they are financing that does not require raising tariffs.
The utility’s balance sheet explains the creativity. KEPCO piled up roughly 48 trillion won in operating losses between 2021 and 2023, when fuel costs soared and regulated tariffs lagged behind, and its debt grew beyond 200 trillion won before the recovery began. The company returned to profit in 2025, posting a record operating profit of about 13.5 trillion won, but roughly 36 trillion won of accumulated losses remains to be recovered, and it faces a grid investment bill of about 113 trillion won over the next decade under the government’s power plan. KEPCO has said it can invest more aggressively only after resolving the losses. Prepayments from the customers who need the grid most are one way to build now and settle later.
The demand behind the request is not hard to see. South Korea’s electricity consumption is climbing as chip factories and AI data centers multiply, and the two companies being asked for money are the same two building some of the world’s most advanced plants: Samsung at Pyeongtaek and SK Hynix at its expanding memory complex in Yongin, both feeding the artificial-intelligence boom with high-bandwidth memory and advanced foundry capacity. Industrial tariffs in Korea were already raised by 9.7 percent in October 2024 while household rates were left alone, a political compromise that pushed the cost of the grid onto businesses.
For the chipmakers, the proposal is a test of capital discipline. Samsung spends tens of trillions of won on facilities every year, and a 20 trillion won prepayment is a meaningful share of an annual capital budget even for a company with Samsung’s cash pile. The money earns interest above the government bond yield, but it is locked up for years while the grid is built, and the terms that matter, guarantees, interest and what happens if projects slip, are exactly the terms not yet settled.
The arrangement also shifts risk. Under a tariff system the utility bears the cost of building and recovers it from customers over decades; under a prepayment the customer funds construction and waits for the grid. If demand does not materialize, if power prices fall, or if KEPCO’s finances wobble, the companies’ money is already in the ground. Analysts will be watching whether the prepayments carry state guarantees strong enough to make them feel like bonds rather than bills.
KEPCO is not alone in looking for money this way. Electricity providers in the United States and Europe have begun asking data-center developers and large factories to pay for grid connections, substations and upgrades ahead of need, and co-investment deals between utilities and power-hungry customers have become common as the AI buildout collides with aging grids. Korea’s version is notable for its size and for the identity of the customers: the requests are aimed at the two companies that anchor the country’s export economy.
The precedent matters beyond the two chipmakers. If Samsung and SK Hynix accept prepayments, the template extends naturally to data-center operators, battery makers and every other large user with expansion plans, and KEPCO’s method for funding the grid becomes clear: ask the customers of the AI boom to pay for the wires before the power arrives. The utility has also framed the money as meeting the investment needs of semiconductors and AI data centers, an argument that is hard for the recipients to refuse without endangering their own expansion.
For the chipmakers, the calculation comes down to certainty. Memory and foundry customers are buying output years ahead, and a fab that cannot get power is a fab that cannot ship. Prepaying for the grid is a way to buy the one input that cannot be imported or stockpiled, and KEPCO knows it: the utility that cannot raise tariffs has found a way to make the country’s most profitable companies raise the money instead.
The bill for artificial intelligence’s electricity, in other words, is arriving in advance, and it is addressed to the chip industry. Samsung and SK Hynix are still negotiating, and the terms could shrink the numbers before anything is signed. But the direction is set: in the AI economy, the cost of power is moving from the utility’s income statement to the chipmaker’s balance sheet, and the wires are being paid for before they are strung.
