The first question Korean companies ask when reviewing a U.S. factory site has changed. It used to be "how much does the land cost." Now there are two: "how much can we extract in incentives," and "when, at what price and under what terms do we get electricity." Yet the people holding the answers to both questions all change at once in the U.S. midterm elections on Nov. 3.
The midterms elect the entire House, part of the Senate and state governors — the officials with the greatest influence over Korean companies signing factory site deals in the United States. Governors matter most of all, because sites, incentives and electricity rates are set by individual states, not by the president or Congress. Of the 36 gubernatorial races, in slightly more than half the incumbent cannot run at all, because most states cap governors at two terms. Georgia, Alabama, Tennessee, South Carolina, Ohio — whoever wins, a new face arrives. As it happens, these are the very states where Korean factories are concentrated.
What changes when a new face arrives? The incentive contracts themselves stay the same. U.S. investment incentives are, in the end, contracts. Meet the hiring and investment targets by the deadline and taxes are cut; fall short and the clawback provisions that recover the money keep working exactly as written. What changes is who enforces and interprets those contracts — the head of the state economic development agency, the attorney general who handles clawbacks, and the utility commissioners who approve electricity rates. When a different person reads the same sentence, a different conclusion often follows.
The busiest of these bodies right now are the public utility commissions. As AI data centers draw enormous volumes of electricity, household power bills have risen and voters are angry. Ahead of the elections, states are rushing to rewrite rate rules so that heavy electricity users pay their own share first. As of July, 24 states had already approved such changes. The rules read as though they target data centers, but the thresholds tell a different story. The rate structure Virginia will implement next January applies from 25 megawatts. A single battery cell plant building consumes dozens of times that. Cross that line and the customer must pay for 85% of contracted transmission and distribution capacity and 60% of generation capacity even if it goes unused, with a contract term of at least 14 years and collateral attached. If a plant starts up later than planned or has to cut output, this single clause can upend total costs over 20 years.
Even where the direction is the same, the intensity varies by state. In North Carolina, the plan put forward by Duke Energy sets the minimum obligation at around 75%. On top of that, there is no gubernatorial election there this year, so companies will negotiate with the same counterpart through 2028. It is also the state that has held first or second place in CNBC's business climate rankings for six straight years. That is why, in the comparison tables being drawn up these days, its score keeps rising.
The key point is that these variables do not operate in isolation. The state with the most generous incentives may be the slowest to connect power, and the state with cheap electricity may be the most demanding on labor matters. It is common for the candidate site with the cheapest land to end up the most expensive in total 20-year costs. Only after the election calendar, the timing of power delivery, the rate design and the incentive terms are laid side by side on a single sheet do the rankings flip. This year that sheet needs one more column: with whom, and when, you sign. Less than two months remain until the election.
