Power equipment companies are moving aggressively to invest in high-voltage direct current (HVDC). The government is pushing to expand the power grid with projects such as the Donghae–Seoul metropolitan transmission and distribution network and the West Coast energy expressway to prepare for the age of artificial intelligence (AI), and companies aim to secure an early lead in this market.
According to the power equipment industry on the 4th, LS ELECTRIC held a completion ceremony the same day for the expansion of its Busan extra-high-voltage transformer plant. Once the plant begins operations, production capacity for extra-high-voltage transformers is expected to increase by three to four times compared with current levels.
HVDC is a technology that converts AC (alternating current) power produced at power plants into high-voltage DC (direct current) for transmission and then converts it back to AC near demand centers for supply. LS ELECTRIC is also investing in technology in addition to expanding its plant. In July, it signed a business agreement with Vernova to localize conversion equipment for HVDC. Last year, working with Vernova, it carried out a 561 billion won HVDC-based transmission network project between the East Coast and the Seoul metropolitan area.
HD Hyundai Electric invested a total of 211.8 billion won early this year to expand its Ulsan extra-high-voltage transformer plant. When the expansion is completed in 2026, sales are expected to increase by about 200 billion won. In October, it signed a "business agreement for HVDC technology cooperation and localization" with Sweden's Hitachi Energy, the global No. 1 company in HVDC.
Hyosung Heavy Industries, which became more self-reliant by developing Korea's first voltage-source HVDC technology, is building a dedicated HVDC transformer production plant in Changwon, South Gyeongsang Province, with an investment of 330 billion won, aiming for completion in 2027. It is also developing 2 GW-class voltage-source HVDC technology. The three major companies are all increasing investment through plant expansions or agreements with global companies.
An industry official said, "The localized voltage-source HVDC technology is next-generation technology. Based on this, we plan to pursue orders for domestic power grid projects." Another industry official said, "We are partnering with major overseas companies and promoting technology localization, so around 2027–2028, we expect to build a track record in HVDC projects."
Unlike extra-high-voltage transformer AC power systems and data center power distribution systems that power equipment companies mainly export to the United States, HVDC has been slow to develop, making it difficult to win standalone orders. The global HVDC market is effectively monopolized by three companies: the United States' Vernova, Sweden's Hitachi Energy, and Germany's Siemens Energy.
They are increasing investment because the government is carrying out power grid expansion projects and has decided to support investment in new technologies. Power demand is expected to surge in the AI age, but Korea's infrastructure is lacking. Transmission networks to send electricity produced on the East Coast, as well as the South and West Seas, to the Seoul metropolitan area are severely insufficient.
At the economic ministers' meeting last month, the government selected HVDC as one of 15 super-innovation economic projects. It also announced plans to provide a package of support covering fiscal, tax, finance, talent training, and regulatory improvements. In addition, it plans to foster HVDC talent through an industry-academia-research joint program so that the West Coast energy expressway (Saemangeum–Seohwaseong) can be built as planned by 2030. For HVDC commercialization, 12 billion won has been allocated in the 2026 budget proposal.
Another attractive factor is that the global market is growing. According to global market research firms such as MarketsandMarkets, the global HVDC market (excluding converter stations, cables, etc.) amounts to about $12.2 billion (about 17.97 trillion won) as of 2024. It is expected to grow at an average annual rate of 8.1% over the next 10 years to about $26.4 billion (about 38.9 trillion won) by 2034.
Kim Gwang-sik, a senior researcher at Kyobo Securities, said, "Aside from the three global companies, there are virtually no players with a track record in HVDC," adding, "With the growth of renewable energy mixes and data centers, the need to transmit power over long distances will continue to increase."
He added, "In an environment where demand is bound to grow significantly, domestic companies that have signed business agreements with global companies are likely to build a track record in government-led projects such as the West Coast energy expressway and the East Coast transmission network."
Lee Dong-heon, Head of Team of the corporate analysis division at Shinhan Investment, said, "HVDC is a major trend," adding, "Given the conservative nature of the power business, it will take some time, but from a long-term perspective, domestic projects and investment are likely to keep expanding."