As the demand for power for data centers and the need to replace aging power networks increase in Europe, domestic power equipment corporations are accelerating their entry into the European market. Concerns over power grid instability have grown in Europe, particularly following the recent blackouts in Spain and Portugal and the heat wave.
According to the power equipment industry on the 3rd, HD Hyundai Electric signed a supply agreement for power equipment for data centers with the Norwegian data and communications infrastructure corporation Bulk Infrastructure on the 29th of last month. HD Hyundai Electric will have priority participation in bidding for power equipment such as power transformers and high-voltage circuit breakers when Bulk Infrastructure constructs data centers.
Bulk Infrastructure operates five data centers in Norway and Denmark. Last June, HD Hyundai Electric also entered into a contract to supply two 400-kilovolt (kV) ultra-high voltage transformers to a data center operated by Bulk Infrastructure in Norway. The delivery is scheduled for the second half of next year. Europe, along with the United States and China, is one of the regions with the highest power consumption for data centers due to the development of the artificial intelligence (AI) industry.
HD Hyundai Electric is also increasing its participation in power grid modernization projects driven by the expansion of renewable energy in Europe. To increase the generation of renewable energy such as solar and wind, separate investments to enhance the stability of the power grid—such as expanding substations or building new transmission networks—are essential. Following a decision in May to supply four 400 kV ultra-high voltage transformers to the Scottish power company SP Energy Networks, HD Hyundai Electric also won a contract worth 40 billion won to supply 400 kV ultra-high voltage transformers to the Danish state power company Energinet in June.
Hyosung Heavy Industries is also expanding its contracting regions in Europe, including Germany, France, the United Kingdom, Norway, and Spain. In May, Hyosung Heavy Industries signed a contract worth 85 billion won to supply 400 kV ultra-high voltage transformers to the Scottish transmission company Scottish Power. This equipment is expected to be used for transmitting power generated from wind farms in Scotland to urban areas. Scotland has abundant wind resources, with one-third of the world's floating offshore wind farms concentrated there.
In the first quarter, Hyosung Heavy Industries also signed a contract to supply ultra-high voltage transformers and other power equipment to a German transmission company, becoming the first domestic power equipment corporation to do so. Western Europe is considered to have high entry barriers due to stringent certification standards and high quality requirements. After breaking into the French ultra-high voltage transformer market last year, Hyosung Heavy Industries has achieved successive contracting successes in Germany and Spain.
In Europe, in addition to energy supply instability caused by the Russia-Ukraine war, the large-scale blackout that occurred in Spain and Portugal in April has heightened awareness of power supply instability. One of the causes of the blackout is identified as insufficient investment to reinforce power infrastructure compared to the surge in renewable energy generation, such as wind and solar.
Kotra analyzed in a report published on the 9th that "Europe urgently needs to expand its power network, including transmission, substations, and distribution, to achieve renewable energy goals." It is expected that demand for replacing and modernizing aging facilities will increase, as 40% of the power grid in Europe has been in operation for over 40 years.