As evidence emerges that the cause of a large wildfire in the Los Angeles (LA) area of California, United States, was sparks from a transmission tower, forecasts suggest that the power grid replacement project will accelerate. Currently, most of the power grid installed in the U.S. is far beyond its replacement timeframe. Corporations from South Korea in the wire and electrical equipment sectors are seeking to participate in the U.S. power grid replacement project.
According to the industry on the 18th, Taihan Cable & Solution, LS Cable & System, HD Hyundai Electric, and Hyosung Heavy Industries have entered the U.S. market as they expect a surge in demand related to the power grid infrastructure over the coming years. They are expanding their presence through investments in production facilities and acquisitions of local companies.
Demand for the power grid is increasing in the U.S. due to rising electricity usage and the expansion of renewable energy; however, the power grid infrastructure is struggling to keep up. Particularly, the aging of the power grid is severe. Most transmission power grids were installed in the 1950s to 1970s. The typical design lifespan for transmission networks is reported to be 50 years, while transformers are known to last about 25 to 30 years. The U.S. Department of Energy (DoE) reports that 60% of the power grid in the U.S. has been in place for over 40 years. In some areas, the aging power grid, storms, and heat waves contribute to frequent power outages.
As the replacement of transformers and transmission networks in the U.S. begins in earnest, South Korean corporations are advancing into the local market to secure contracts. Notably, Taihan Cable & Solution won a contract worth 720 billion won for transmission network projects in the U.S. last year. They are removing existing cables and supplying everything from 138 kV, 345 kV, and 230 kV cables to ultra-high-voltage power network materials. Last year, they secured a contract worth about 110 billion won for a power grid replacement project in Florida and signed a deal worth 190 billion won in the eastern region.
LS Cable & System is focusing on the submarine cable market. Last July, they signed a contract for submarine cable supply worth 100 billion won in the western U.S. They plan to invest approximately 1 trillion won to build the largest submarine cable factory in the U.S. LS Cable & System anticipates an increasing demand for submarine cables for power grid connections, floating offshore wind farms, and power supply to island regions.
Manufacturers of electrical equipment are also expanding their production capacities. HD Hyundai Electric is producing and selling transformers in Alabama, U.S. Transformers are considered key equipment that efficiently convert and distribute electricity, ensuring the stability of power systems. In 2011, HD Hyundai Electric became the first South Korean electrical equipment manufacturer to establish a subsidiary in the U.S. and has actively increased production capacity.
Hyosung Heavy Industries is also expanding its production base in the U.S. They secured a local production base by acquiring a high-voltage transformer production facility in Memphis, Tennessee. They are investing funds into their U.S. subsidiary, Hyosung HICO, to increase transformer production capacity. Once the expansion is completed in 2026, production capacity is expected to double compared to the current level.
LS ELECTRIC is establishing a production base in Texas and focusing on selling distribution systems to local companies. Initially, they entered the U.S. market to support the U.S. production facilities of South Korean companies like Samsung Electronics and LG Energy Solution, but as the pace of factory construction slowed, they shifted their strategy to sell to local firms.