Electricity Shortage in the US Amid AI and Renewable Energy Boom... HD Hyundai, LS, and Hyosung Receive 'Love Calls'

Surge in Orders Over 3 Years Leads to Expansion
Copper Prices Soar... Transformer Market Booms

The North American market is becoming a stronghold for domestic power equipment companies such as HD Hyundai, LS, and Hyosung. The AI industry of major U.S. tech companies is booming, and opportunities to hit the 'jackpot' in orders are rapidly increasing due to the Biden administration's renewable energy power grid modernization policies. Copper prices, which can give an indication of transformer market trends, are also soaring.

HD Hyundai Electric Ulsan Plant Overview.
[Photo by HD Hyundai Electric]

HD Hyundai Electric has secured orders worth $2.8 billion (approximately 3.867 trillion KRW) in North American regions over the past two years. In January last year, it received an order for distribution pad transformers worth 106.2 billion KRW from American Electric Power (AEP), marking the largest single distribution transformer order in the company's history. In June last year, it also signed a supply contract worth 213.6 billion KRW for power transformers with U.S. utility Excel Energy.

Hyosung Heavy Industries supplies large transformers (LPT) of 100 MVA (Mega Volt Ampere) class that deliver 90% of the U.S. transmission and distribution power. Currently, 70% of the LPTs installed in the U.S. have reached their 25-year lifespan. The typical lifespan of LPTs is about 30 to 40 years. A company official stated, "We expect continuous demand for replacement of LPTs, which are our main products."

Transformer companies have already secured work orders through 2026. HD Hyundai Electric and LS Electric are reported to have backlogs through 2026. These companies are currently receiving orders for deliveries in 2027. An LS Electric official said, "We are working to increase production capacity, including expanding the Busan plant."

As transformer sales show strong performance, the price of copper, a key raw material, is also soaring. According to the Chicago Mercantile Exchange (CME), recent copper futures (July contract) closed at $5.106 per pound (approximately 7,035 KRW), marking an all-time high closing price. It is known that copper accounts for about 16% of the weight in a transformer. This means that a 1,000 kg transformer contains about 160 kg of copper.

With the backlog of orders, the three transformer companies are experiencing an unprecedented boom. HD Hyundai Electric recorded an operating profit of 128.8 billion KRW in the first quarter, a 178% increase from 46.3 billion KRW in the same period last year. Hyosung Heavy Industries' operating profit increased about fourfold to 56.2 billion KRW, and LS Electric's rose 15% to 93.7 billion KRW. The long-term outlook is also bright.

Kwon Deok-min, a researcher at Shin Young Securities, said, "When new power grid infrastructure is installed in the U.S., demand for new transformers and replacement of aging transformers will inevitably increase, and as demand rises, prices are likely to increase as well. The increase in power demand due to the global growth of AI and data center construction will also sustain transformer demand for a long time."

Companies plan to strengthen product lines beyond transformers. LS Electric is seeking business opportunities not only in existing substation equipment but also in energy storage systems (ESS) and flexible AC transmission systems (FACTS), which are equipment for renewable energy power generation. When large-capacity renewable energy generation facilities connect to the existing power grid, the entire system can become unstable, making ESS and FACTS necessary.

A company official said, "Since the IRA, global corporate investments have become active in the North American market, and we are consecutively securing projects across transmission, substation, and distribution. We have also achieved results in distribution system equipment and system fields related to eco-friendly renewable energy and distributed energy."

This content was produced with the assistance of AI translation services.