As old, aging power grids around the world reach a level that threatens national security, an analysis projected that replacement investment totaling 900 trillion won will be made over the next 10 years. With electricity demand surging due to the spread of artificial intelligence (AI), bottlenecks have formed in the expansion of advanced industries such as data centers, accelerating global investment in power grids. The domestic power equipment industry expects a prolonged boom through 2030 and is building an unprecedented track record of orders.
◇Aging power grids bottlenecked by surging AI demand
According to the power equipment industry on the 5th, global investment bank (IB) JPMorgan recently labeled aging power grids that have been neglected for decades as a "national security risk" in a report and issued this outlook. It said power grid investment has become an essential task for each country as electricity demand has surged with the growth of the AI industry and reindustrialization in advanced economies, coupled with demand for energy self-sufficiency amid geopolitical crises. It warned that if the energy supply disruption from the Iran war is prolonged, grid overload could worsen uncontrollably.
Insufficient grid capacity is already cited as a key reason slowing the pace of data center development in the United States, where big tech corporations are concentrated. The U.S. power grid is fragmented by state and city rather than being a single, unified national grid. The industry sees large-scale investment as inevitable to resolve regional power bottlenecks. Iljin Electric said in a business report last month, "More than 70% of large transformers installed in the United States are aging facilities over 25 years old."
According to BloombergNEF, an energy and technology research institute, global power grid expenditure rose 60% in five years from $300 billion (about 450 trillion won) in 2020 to $480 billion (about 720 trillion won) last year. On top of that, JPMorgan projected that $5.8 trillion (about 8,740 trillion won) will be invested in global power grids over the 10 years to 2035. By region, it forecast $1 trillion (about 1,500 trillion won) in the United States, $1.1 trillion (about 1,500 trillion won) in Europe, and $2.6 trillion (about 3,900 trillion won) in the Asia-Pacific region centered on China.
◇Domestic power equipment races to win orders, breaking into U.S. utilities
The astronomical investment to replace infrastructure is translating directly into a boom in orders for the domestic power equipment industry. Just a few years ago, core power grid projects in countries such as the United States were a stage that Korean corporations found hard to break into due to the conservative nature of the infrastructure sector. But as AI spread, demand for ultra-high-voltage transformers surged, pushing the production capacity of leading European power equipment companies that had dominated the market to its limits. As delivery timelines were delayed by years, large orders flowed to Korean corporations with mass-production systems and delivery competitiveness, reshaping the market landscape.
Riding the tailwind, overseas sales and order backlogs at domestic power equipment companies are repeatedly hitting record highs. HD Hyundai Electric, Korea's No. 1 ultra-high-voltage transformer maker, posted a 77% export share on a consolidation basis last year. It secured major U.S. utility corporations such as Xcel Energy and NextEra Energy as key customers, and last year's North American sales jumped 61% from a year earlier to 1.612 trillion won. The order backlog stood at 9.4234 trillion won as of the end of last year.
Hyosung Heavy Industries, which counts U.S. private power companies as major clients, saw sales in North and Central America rise to 1.1123 trillion won, up 52% from a year earlier. The total order backlog for power equipment increased 43% year over year to 15.3402 trillion won.
LS Electric's North American sales last year were 1.8791 trillion won, up 45% in a year, and its power equipment order backlog swelled 50% to 4.8902 trillion won. Iljin Electric's power equipment exports last year surged 88% from a year earlier to 274.2 billion won, and its order backlog reached $1.0679 billion (about 1.6 trillion won).
◇"Boom to continue through 2030"
The domestic industry expects the order boom to continue for a long period. Hyosung Heavy Industries said in a business report, "In North America, the timing to replace power grids built 40 to 50 years ago and demand for electrifying data centers will coincide, so the boom will continue through 2030."
However, U.S. tariffs under Trump are cited as a variable. For now, U.S. buyers are covering tariffs of up to 20% due to the shortage of power equipment, but if tariff barriers rise further, price competitiveness could be hit.
LS Electric expressed concern that "the strengthening of U.S. protectionism to protect domestic industry and the pressure of reciprocal tariffs could negatively affect the export environment." Hyosung Heavy Industries also cited the rise in raw material expense due to U.S. copper tariffs as a key variable.