Three Major U.S. Investment Projects

On October 1, 2026, the governments of Korea and the United States announced plans to advance three projects under the Memorandum of Understanding (MOU) on Korea–U.S. Strategic Investment: a gas-fired combined-cycle power plant in Texas (Project Star), a bilateral nuclear power framework (Project Power), and an Alaska LNG development (Project North). The announcement follows the July 2025 bilateral trade agreement and the Strategic Investment MOU signed in November 2025, and was made following the relevant procedures under the MOU and Korea’s legislation governing strategic investment in the United States.

 

Except for Project Star, final decisions on individual nuclear projects and the Alaska LNG project remain subject to commercial feasibility reviews and applicable domestic legal procedures. Specific project terms may change as negotiations and implementation progress. Drawing on releases from the Ministry of Trade, Industry and Resources (MOTIR) and the joint Korea–U.S. press release and fact sheet, this newsletter reviews the three projects from the perspective of foreign-invested companies in Korea and Korean businesses seeking to participate.

■ Projects at a Glance

Project locations: ① Encinal, Texas  ② Nuclear sites TBD  ③ Northern to southern Alaska

■ Overview: A $22.3 billion, 6,472 MW gas-fired combined-cycle power plant in Encinal, Texas, to supply AI data centers

The plant will supply electricity directly to nearby data centers. Related Companies, described as the world’s ninth-largest real estate developer, and NextEra Energy, the largest U.S. power generation operator, will lead the project. Lewis Energy Group, Texas’s fifth-largest natural gas supplier, plans to provide the site, natural gas, water and related infrastructure. The joint fact sheet identifies the location as Encinal in La Salle County, Texas, and the operator as a joint venture between Related Companies and NextEra Energy Resources.

■ Timeline and approvals: Phase 1 commercial operations targeted for 2029; full operation by 2032; Korean procedures completed

The Korean government assessed the project’s commercial reasonableness based on the partners’ capabilities, rising electricity demand from data center investment in Texas, and projected power prices. It has completed the required domestic procedures, including review and approval by the Project Management Committee and the Steering Committee, and reporting to the National Assembly. The project provides for broader Korean participation in equipment supply, engineering and construction, and long-term operations and maintenance. The United States has also expressed its intention to offer opportunities to supply Korean-made equipment, including turbines, to other similar U.S. projects.

RSM Korea View

Korean engineering, procurement and construction (EPC) contractors and equipment suppliers performing engineering, construction, or operations and maintenance services in the United States should assess their U.S. tax exposure under domestic law and whether their activities create a permanent establishment (PE) under the Korea–U.S. tax treaty. In particular, a building site or construction or installation project lasting more than six months may constitute a construction PE. Companies should also assess state tax and filing obligations separately from federal income tax. Transactions between a Korean headquarters and its U.S. subsidiary require arm’s-length transfer pricing policies and supporting documentation under the respective Korean and U.S. rules.

■ Overview: Up to $120 billion from the strategic investment fund for two APR1400 and six AP1000 units ($100 billion for construction and $20 billion in contingencies)

The projects fall under a nuclear power framework to be signed by the two governments, Westinghouse (WEC), Korea Electric Power Corporation (KEPCO), and Korea Hydro & Nuclear Power (KHNP). Construction is planned in three phases: two AP1000 units in Phase 1; two APR1400 and two AP1000 units in Phase 2; and two AP1000 units in Phase 3. The parties have agreed to use reasonable efforts to keep the interval between the Phase 1 and Phase 2 EPC contracts within six months. Although the existing Settlement Agreement (SA) between Korean and U.S. companies had restricted the Korean-designed APR1400’s access to the U.S. market, the framework now includes it among the reactor designs contemplated for U.S. construction. This is a significant step toward bringing Korean reactor technology to the U.S. market. Final decisions on individual projects, however, will depend on site selection, commercial reasonableness reviews and the required procedures.

Funding is capped at $30 billion per pair of reactors, comprising $25 billion in construction costs and $5 billion in contingencies. The contingency amounts count toward the $200 billion strategic investment commitment even if unused. If costs exceed $30 billion per pair, the strategic investment fund will bear no additional cost.

■ Status: Individual projects remain unconfirmed; final decisions will follow further work on sites, project structures and construction schedules

The framework sets the broad direction for bilateral nuclear cooperation. The two countries will develop the sites, project structures and construction schedules, then decide whether to proceed with each project after reviewing its commercial reasonableness and completing National Assembly and other required procedures. To secure equipment with lengthy manufacturing lead times, the parties discussed a $10 billion advance payment by year-end, subject to commercial reasonableness review, reporting to the National Assembly and other domestic legal requirements. Such long-lead items include reactor vessels, steam generators and reactor coolant pumps, whose accounting and tax treatment warrants review as advance payments and construction in progress. The joint press release refers to “$10 billion,” while MOTIR’s briefing refers to “up to $10 billion.” Korean companies will also pursue an equity investment in Westinghouse so that both countries share in the commercial benefits of AP1000 projects; specific terms will be negotiated between the companies.

RSM Korea View

Because advance payments are being considered before individual nuclear projects are finalized, participating companies should review payment and recovery terms, guarantees, settlement arrangements in the event of cancellation or delay, and contractual liability caps. Contract terms will determine whether an advance is initially recognized as an asset and subsequently reclassified to construction in progress or another appropriate asset category when equipment is delivered, and whether cancellation results in a refund or a loss. Companies should assess the accounting treatment together with the timing of any deduction for tax purposes.

■ Overview: A major pipeline to carry natural gas from northern to southern Alaska, together with an LNG export terminal

The two governments have agreed to begin reviewing the project. A decision on whether to proceed will be made if the commercial reasonableness requirements under the Strategic Investment MOU and applicable domestic legal conditions are met. The releases do not specify an investment amount, pipeline route or terminal site.

■ Status: Review initiated; any decision to proceed is conditional on commercial reasonableness and domestic legal requirements

If the project proceeds following the review, the United States has agreed to facilitate participation by Korean equipment manufacturers and suppliers. MOTIR’s briefing describes tariff reductions for steel and other relevant equipment and materials, long-term LNG offtake agreements on commercially viable terms, and preferential access for Korea. The joint press release and fact sheet, however, describe assurances relating to offtake agreements to the extent possible. The products covered by tariff reductions, applicable rates and effective dates, as well as LNG offtake terms, remain to be specified.

RSM Korea View

With both the investment decision and amount still undetermined, companies should focus their commercial assessments on pricing, supply and purchase commitments under long-term LNG offtake agreements, and the products and scope covered by potential equipment tariff reductions. The Alaska segment on the map is a schematic illustration of the releases’ description of gas transport from the north to an export terminal in the south; it does not identify an agreed route or terminal site.

The two countries plan to use an umbrella investment special purpose vehicle (I-SPV) and individual project special purpose vehicles (P-SPVs) to manage funding and distributions. A risk-pooling mechanism maintains a 50:50 distribution split between Korea and the United States until Korea has recovered its invested principal and interest across the portfolio. Distributions to Korea will be grossed up for U.S. taxes on income arising from its investment, preserving the agreed after-tax distribution split. Korea has also secured consent rights over key matters, including material changes to project scope, amendments to organizational documents that adversely affect Korea, and the issuance or transfer of equity interests.

As the Korean member firm of RSM International, Shinhan Accounting Corporation (RSM Korea) works with RSM US to provide Korean and U.S. tax and accounting advice to Korean and multinational companies participating in these U.S. investment projects.

■ Related Materials

▪ MOTIR briefing, October 1, 2026: Announcement of Plans to Advance Korea–U.S. Strategic Investment Projects

▪ Joint Korea–U.S. press release and fact sheet, October 1, 2026 (including unofficial Korean translations), attached to the MOTIR briefing

Prepared by the International Business Division of Shinhan Accounting Corporation (RSM Korea) for corporate tax professionals, this newsletter summarizes the October 1, 2026 MOTIR briefing and joint Korea–U.S. press release and fact sheet. Decisions to proceed and detailed project terms may change as domestic procedures and contract negotiations progress. Map locations are illustrative only. Please consult your tax advisor regarding the application of this material to your specific circumstances.