Insights

In advanced-industry investment, electricity is emerging as the variable that determines siting. As power-intensive advanced industries—semiconductors, batteries, and data centers—expand, the drivers of investment decisions are shifting from tax incentives, subsidies, labor, and logistics toward the scale of power supply, the timing of that supply, long-term electricity tariffs, and the procurement of low-carbon power. The more power-intensive the industry, the more directly energy supply conditions bear on investment economics and production competitiveness.

Major economies are explicitly linking energy to industrial competitiveness. The United States is focused on securing grid-interconnection capacity and speed of supply to meet new industrial demand; the EU is designing policy to weigh the energy transition alongside the cost competitiveness of manufacturing; and Japan is pursuing a strategy that ties power-supply conditions to the siting of new industry. Energy policy is becoming part of industrial policy.

At the investment-review stage, companies must address four questions. First, "when" (grid interconnection and the realistic timing of supply); second, "how much" (the power required for initial operation and expansion); third, "at what price" (long-term tariffs and potential cost volatility); and fourth, "which power" (the reliable procurement of low-carbon electricity). In particular, delays in grid interconnection and the schedule for external infrastructure directly affect both the start of production and the timing of investment recovery.

Korean industry faces structural challenges. The industrial sector's energy exposure is high; large new demand is concentrated in specific industrial hubs; and recent tariff changes have reduced the predictability of long-term costs. Compounded by questions over the availability of low-carbon power, corporate investment decisions now require site-level verification of power-supply conditions, the reflection of supply delays and long-term costs in investment economics, and integrated management of the schedules for production facilities and external energy infrastructure.

M&A implications. As energy supply conditions become a precondition for advanced-industry investment, deal demand is likely to expand where energy and industry intersect. First, we expect companies seeking to secure procurement reliability to acquire renewable generation assets, energy storage (ESS), and grid-interconnection infrastructure, or to pursue equity investments coupled with long-term PPAs. Second, as low-carbon procurement becomes a valuation variable, strategic partnerships and joint ventures between generation-asset owners and large power consumers should gain momentum. Third, in industrial-hub development, assets that bundle land, power, and permitting will command scarcity value, and such integrated infrastructure assets are likely to become prime targets for cross-border deals and infrastructure funds.