HD Hyundai, LS, Hyosung vie to secure upper hand in US electric transformer market

LS Electric's plant produces high-voltage transformers in Busan / Courtesy of LS Electric

By Kim Hyun-bin

Demand for industrial transformers in North America has surged, providing a boost for the Korean transformer equipment industry and triggering competition for clients among local electric equipment companies, according to industry officials, Friday.

According to a report by Korea Trade-Investment Promotion Agency (KOTRA), the North American market for voltage-boosting power transformers is projected to reach $6.44 billion by 2030, with an average annual growth rate of 6.4 percent. For voltage-reducing distribution transformers, an annual growth rate of 3.8 percent is expected until 2028.

Currently, over 33 percent of industrial transformers in the U.S. have been in use for more than 30 years. Considering their typical lifespan of 30 to 40 years, the replacement cycle is nearing.

The extensive infrastructure projects undertaken by the U.S. for economic stimulus are also driving the growth of the transformer market. Last year, the U.S. Department of Transportation approved three major power grid construction projects aimed at expanding the new power grid.

As demand for transformers in the U.S. continues to rise, Korean companies are witnessing increased orders. The U.S. relies on imports for over 80 percent of its transformer needs.

HD Hyundai Electric possesses differentiated technologies such as insulation oil applied in the 230 kilovolts environmentally-friendly transformer. They recently secured a power transformer supply contract worth $1.9 billion with Excel Energy, a U.S. energy specialist company. This marks the largest contract in terms of a single item since the company's establishment.

“Due to the expansion of investments in renewable energy generation and the increasing demand for replacing aging power facilities, the North American power transformer market is expected to experience significant demand in the foreseeable future,” an HD Hyundai official said. “We will strive to expand our orders by implementing thorough customer management, tailored sales strategies, and efforts focused on increasing orders, with local production facilities and sales subsidiaries in the U.S.”

LS Electric has designed its transformers to withstand damage caused by transportation shocks. They are also accelerating market expansion through local subsidiaries.

“Expanding the volume of transformer replacement in North America and establishing domestic production bases for local companies are expected to increase the demand for local power equipment such as transformers,” an LS Electric official said. “Efforts are being made to expand the market through localization strategies.”

Hyosung Heavy Industries manufactures various types of ultra-high voltage transformers, reaching a maximum voltage of 765 kilovolts and a maximum capacity of 1,500 megavolt-amperes. In 2019, Hyosung Heavy Industries acquired a high-voltage transformer factory in Tennessee, U.S., from Mitsubishi Electric of Japan for $46.5 million to secure local production capacity.