LSIS taking salient spot in smart grid world

CEO Koo upbeat about growth with clean energy consciousness

By Kim Yoo-chul

ANYANG, Gyeonggi Province ― LSIS, Korea’s leading manufacturer of electrical components, is becoming stronger in ``smart grids,’’ and is ready to expand globally.

CEO Koo Ja-kyun is upbeat about corporate sustainability, believing that smart grids will become the next big thing.

``For LSIS, smart grids aren’t wholly new because they have been around for a while,” Koo said. “What’s new is our strengthened consciousness to use energy efficiently and cleanly.”

Solar, transmission, radio frequency identification (RFID) and components for electric vehicles compose LSIS’ smart grid projects. The four categories are the right areas to help LSIS see a vertical integration of the company’s initiatives for smart grids.

Vertical integration refers to people bringing utility companies’ electricity delivery systems into the 21st century using computer-based remote control and automation.

A key feature of the smart grid is automation technology that lets the utility firms adjust and control each individual device or millions of devices from a central location.

The systems are made possible by ``two-way communication technology and computer processing’’ that has been used for decades in other industries. They are beginning to be used in electricity networks, from power plants and wind farms all the way to consumers of electricity in homes and businesses.

``Smart grid systems will surely bring many attractive benefits to utility firms and consumers, mostly seen in big improvements in energy efficiency on the electricity grid and in the energy users’ homes and offices,’’ Koo said.

LSIS’ advanced smart grid systems are helping it to strengthen its client base, which is seemingly an impressive signal for the Anyang-based outfit.

Steel giant POSCO ICT recently agreed with LSIS to boost a business partnership in various smart grid-related projects. The partnership calls for LSIS to share its smart grid technology with POSCO ICT, according to LSIS officials.

``We expect the collaboration will pave the way for both companies to expand smart grid businesses,’’ said Koo, stressing that the company is aiming to become a ``total solutions provider’’ in smart grids.

LSIS is aiming to create 4.5 trillion won in sales and 700 billion won in operating profit by 2015 and the target reflects increases of 300 percent and 630 percent hike from last year, respectively.

``The target looks quite conservative and for me LSIS will perform better thanks to rising investment in smart grid projects at home and aboard amid the scarcity of fossil fuels,’’ said Woori Investment, a leading local brokerage firm.

Solar and HVDC

Solar and high voltage direct current (HVDC) transmission systems are two sectors putting the firm’s smart grid systems on the right track.

LSIS’ involvement in the solar business dates back to 1986. The company developed its own inverters ― a critical part of solar power systems ― five years later. In 2007, it installed in-house solar power systems at Incheon International Airport, a first for a Korean company.

The systems don’t distract pilots as we’ve used our patented technology. LSIS reaped 60 billion won by selling 6,000 sets of its 4-kilowatt solar systems to be used in Japanese households, it said in a statement to The Korea Times.

The HVDC transmission system is another field that LSIS is steadily increasing its investment to form an ``integrated eco-system.’’

The electric transmission grid is a vital component of modern society and it’s much like the cornerstone of a building, according to market analysts. Transmission is the foundation that supports activity in virtually all areas of the energy sector.

Governments and industry executives are increasingly finding that to reap the full benefits of renewable energy and smart grid technologies the capacity and information-carrying ability of transmission systems must be expanded substantially.

Since 2010, the company has been operating a cutting-edge transmission plant in Korea’s southern port city of Busan and opened its first HVDC plant there.

``It’s crucial for LSIS to boost its capability for HVDC as having enhanced electricity systems is required to back up power-intensive smart grid projects,’’ said Koo.

More work could be needed for LSIS to better penetrate into the global HVDC market, currently dominated by ABB, Siemens of Germany and France’s Alstom. Overseas firms control 95 percent of the global demand on a combined basis.

``LSIS is aiming to create 1.75 trillion won in revenue from the HVDC business by the end of 2019 and that’s our mid- to long-term goal,’’ the LSIS CEO said.

Pike Research, a leading market research firm, forecasts that annual global investment in HVDC will increase by 44 percent over the next five years, rising from $8.4 billion in 2010 to $12.1 billion in 2015 because the researcher believes that grid operators are planning to boost transmission capacity.

``HVDC provides a favorable alternative to overhead alternating current (AC) transmission, requiring a smaller right-of-way and resulting in less line loss,’’ it said, adding much of the HVDC market growth will be driven by China, where it is the preferred technology for long-distance transmissions.

Koo said China is an area that LSIS shouldn’t lose out in and stressed the company is seeing business chances for wider and more effective penetration into the rising Chinese HVDC market.

Components for electric vehicles

Government initiatives for eco-friendly electric vehicles (EV) are giving additional momentum to the Korean company to lift LSIS’ ongoing smart grid initiatives as the firm is producing various green car solutions to top-tier automakers.

Power control units (PCU), EV relays, on-board chargers (OBC) and low DC-DC converters (LDC) are products LSIS is focusing on.

One example of LSIS’ prowess is in the production of EV relays. It is one of the few companies, along with Tyco from the United States and Panasonic of Japan, which guarantees product commitment, better pricing and on-time delivery to customers such as Kia Motors and several unnamed leading carmakers, which Koo declined to name citing the sensitivity of the issue.

The main function of EV relays is to stably supply and cut off battery power. They prevent instant short circuit failure of capacitors, motors or harnesses. They also protect against reverse regent currents when instant quick-stops occur.

LSIS, which is aiming for 1 trillion won in orders on a combined basis from what the company claims are green car solutions, is planning to go on-line with its latest EV relay line in Cheongju within the first half of this year, according to the company.

``The output capacity will be increased to 4 million per year by 2015 from the current some 100,000 and we are set to respond according to market situations,’’ said the CEO.

LSIS jumped into the electric vehicle field in 1993. Additionally, it’s been exporting more of its power distribution solutions to the countries in the Middle East such as Iraq, and according to Koo, ``we’re receiving more such orders.’’

Recently, the company has won a $92 million order to supply power distribution substations in Iraq. The deal calls for LSIS to construct 35 power distribution substations within the next 18 months.

The order is the third that the firm has won from Iraq, with which it signed a $115 million contract to supply power stations in November last year. In September 2011, LSIS won a $30 million bid to fit out the country’s power stations.

``I can say that much in the way that a smartphone these days means a phone with a computer in it, a smart grid means computerizing the electric utility grid. Benefits include enhanced cyber security, handling sources of electricity like wind and solar power and even integrating electric vehicles onto the grid. We’ve been doing well and we will do better,’’ said Koo.