South Korea and the United States have reportedly agreed on a $22.3 billion investment for a natural gas power plant in Encinal, Texas, according to Korean media reports. The 6.3-gigawatt Encinal Texas power plant would thus be Seoul’s first significant U.S. energy investment under the two nations’ 2025 trade pact. But South Korea’s Ministry of Trade, Industry and Energy dismissed the news as false and said it is still in talks with Washington. Meanwhile, the Encinal Texas power plant would supply the vastly growing demand for electricity for AI data centers in the region.
The investment amount was disclosed on Monday by Korean outlet Edaily, relying on “unnamed officials and lawmakers with knowledge of the negotiations. In particular, the proposed Encinal Texas power plant would have a capacity of 6.3 gigawatts for the use of hyperscale AI data center operations. The investment is part of a larger trade deal that was signed in 2025, in which Seoul committed $350 billion in investments in the United States. The plant is thus an actual act of good faith towards that strategic promise.
It is also complimented with other LNG projects sprouting across the US such as the trans-Alaska natural gas pipeline despite setbacks. The Alaska Gasline Development Corp. plans to request $2.5 million from the Alaska State Legislature for a trans-Alaska natural gas pipeline investment program in 2027. So, AGDC will continue to seek the proposed $44 billion project following the rejection of a compromise tax-cut bill by the Alaska House.
Encinal Power Plant in Texas Addresses Regional Grid Capacity Constraints
The state of Texas has become a hotbed for AI infrastructure, as companies like Google and Nvidia are announcing investments of billions of dollars to build campuses in the Dallas and Austin areas. Also, Electric Reliability Council of Texas has had trouble meeting rising demand that has come from aggressive data center construction. Encinal Texas would significantly strengthen generation resources in the region during peak demand.
South Korea’s Energy Diplomacy Reflects U.S.-Asia Alliance Strengthening
Also, South Korea is considering additional U.S. energy investments, such as a massive nuclear energy plant and LNG plant, in Alaska, reports said. But the Ministry of Trade, Industry and Energy said it has not taken any decision on nuclear development and directly challenged the media reports indicating that it was considering the issue seriously.
South Korea’s investment in the potential plant is a sign of its diversification in its energy supply chain. In particular, large Korean corporations have been active in the United States in the fields of semiconductors, EVs, and battery production. In addition, such a large-scale investment in power generation by the government would be unprecedented in Seoul. Such spending still needs to be approved by Parliament, and South Korea’s lawmakers have imposed financial viability and environmental impact conditions on overseas energy investments in the past.
Project Overview
- Project Name: Encinal Power Plant in Texas
- Reported Investment Value: $22.3 Billion
- Location: Encinal, Texas
- Developer: South Korea (under 2025 U.S.-South Korea trade agreement)
- Capacity: 6.3 Gigawatts
- Status: Negotiations ongoing, not officially confirmed
Scope
- Natural gas-fueled power generation facility
- 6.3-gigawatt generation capacity
- AI data center power supply infrastructure
- Potential grid interconnection to ERCOT system
- Phased development and financing structure
Project Highlights
- First major South Korean energy investment under 2025 trade agreement
- Addresses Texas AI data center electricity demand surge
- Strengthens U.S.-South Korea alliance and supply chain diversification
- Supports Seoul’s $350 billion U.S. investment commitment
- Unprecedented scale for Korean government-led power project
Key Developments
- Encinal Texas power plant reported September 2026
- South Korea Ministry disputed reports as inaccurate
- Negotiations with U.S. Commerce Department ongoing
- Parliamentary approval required for final authorization
- Additional Korean U.S. energy projects under consideration
Key Challenges
- South Korean government denies finalized agreement status
- Parliamentary approval procedures still outstanding
- Financing structure between government and private partners unclear
- Environmental and financial viability assessment required
- Supply chain and tariff negotiations still in progress
Outlook
- Official announcement expected after U.S.-South Korea negotiations complete
- Parliamentary approval process to begin upon finalization
- Potential model for future allied energy investments
- May include related LNG Alaska project and nuclear considerations
- Timeline for Encinal Texas power plant construction undetermined
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