LS Electric Co., a South Korean industrial energy facility and systems supplier, is expected to sign a 500 billion won ($358 million) deal with a GE-KEPCO joint venture to build a high voltage direct current (HVDC) converter transformer system in what would be its biggest HVDC transformer deal.
According to sources in the Korean energy system industry on Sunday, LS Electric will sign a contract worth 500 billion won with KAPES Inc., a JV formed by General Electric Co. (GE) and Korea’s utility giant Korea Electric Power Corp. (KEPCO), this week to build an HVDC transformer system.
LS Electric’s HVDC transformer system will be used in a KAPES project to build HVDC transmission lines from Korea’s metropolitan areas to the east coast.
The deal accounts for 11.8% of LS Electric’s total sales of 4.23 trillion won for 2023, marking the company’s biggest HVDC transformer deal.
LS Electric stock, which newly joined the Morgan Stanley Capital International (MSCI) Korea Index in the second half of this year, rose 5.9% to 139,500 won in the morning on Monday.
KOREA’S SOLE HVDC TRANSFORMER SUPPLIER
LS Electric is Korea’s sole supplier of HVDC high-voltage transformers.
The company built an HVDC transformer factory in Busan, the first of its kind in Korea, in 2011.
It made a big bet on the HVDC transformer market in anticipation of rising demand for highly efficient energy grid systems across the world.
HVDC technology is used to convert alternating current (AC) into direct current (DC) or vice versa, and it enables power transmissions over long distances with a higher power efficiency of 10% compared to the AC system.
DC line construction costs more than AC line building, making the power industry hesitant to use the technology, but the global artificial intelligence boom has recently elevated the demand for HVDC systems for their higher energy efficiency rates.
Reflecting such high demand, the HVDC transformer market is forecast to grow to $17.8 billion in 2030 from $11.3 billion in 2023 at a compound annual growth rate of 6.7%, according to global market research firm Verified Market Research.
To meet the growing demand for HVDC transmission systems, LS Electric plans to speed up its foray into North America, the world’s biggest energy market.
In the US, the demand for HVDC high-voltage transformers is rapidly rising, driven by growing state projects to replace national energy grid strategic infrastructure.
LS Electric has recently invested 160 billion won to expand its HVDC transformer plant in Busan.
Korea’s state-run utility monopoly KEPCO has also pledged massive investments in expanding DC grids and related technology development.
By Chae-Yeon Kim and Yeong-Hyo Jeong
why29@hankyung.com
Sookyung Seo edited this article.
