Transformer ‘changing the game’… Targeting the global market④ How long will the boom last? Everyone rushes to expand production lines > Press Release

Transformer ‘super cycle’ response… Transformer manufacturers, investing generously

US infrastructure investment↑, transformer demand explodes due to IRA influence

Exports to the US plummeted after 2010, but recently entered ‘good item/super cycle’

Export market boom expected for at least 5 years… “Factory expansion rush to continue”

Trends in transmission and distribution investment and U.S. transformer imports after the U.S. transition to renewable energy. [Provided by SK Securities]

In order to respond to the ‘super cycle’ of transformers, domestic transformer manufacturers are rushing to expand their factories. They are not sparing any bold investment in facilities as they expect an unprecedented boom for at least 5 years.

Last year, Iljin Electric decided to increase capital by 100 billion won to expand its production capacity and also invested in expanding its ultra-high voltage transformer factory located in Hongseong-gun, Chungcheongnam-do. HD Hyundai Electric also announced plans to expand its transformer factories in Ulsan and the United States.

In addition, domestic small and medium-sized transformer manufacturers are also working hard to strengthen their production lines.The first to jump into factory expansion was Elpowertech. In addition to the existing 5,000-pyeong factory 1, large-scale investments were made to build factories 2 and 3, totaling 6,000 pyeong, and each factory specialized in its products to enhance export competitiveness.

Sungjin General Electric also completed construction of a new 8,000-pyeong plant in Hwaseong, Gyeonggi Province, late last year, and is expecting a production capacity of up to 2,000 units per month. In addition, Kyungdong Heavy Electric plans to operate a new 4,000-pyeong transformer plant in the second half of this year, expand its production capacity by more than three times, and generate sales growth of up to KRW 100 billion.

However, leading companies that have currently expanded their plants are those that had already prepared production capacity expansion plans before entering the North American market.

Although it takes a lot of money and time to build or expand a new plant, companies are rushing to expand their production lines in anticipation of the long-term North American market. This movement is due to the assessment that the North American market will grow for at least five more years.

An industry official said, “It takes at least two years to build a new plant, so the number of plants in the industry will not increase rapidly right away,” but added, “It is expected that the North American boom will last at least five to ten years, so investment in plant expansion is likely to continue.” In fact, the demand for transformers is increasing due to increased infrastructure investment in the U.S., the Inflation Reduction Act (IRA), and the expansion of the renewable energy industry. According to the Annual Energy Outlook 2023 published by the EIA (U.S. Energy Information Administration), the demand for electricity is expected to increase due to electrification of energy sources and investment in new plants, and the U.S. power generation is expected to increase by 32% from 1,168 GW in 2023 to 1,543 GW in 2030.

In addition, the need for replacement is increasing due to the aging of large transformers, and investment in transmission and distribution networks is also becoming active. It is analyzed that the aging of the grid is increasing the financial burden of American power utility companies, and that investments in transformers will continue in the process of transmitting electricity produced from solar and wind power plants over long distances to demand sites.

Accordingly, as transformer exports emerge as a new source of revenue, plant expansion is positioning itself as a sure guarantee of success rather than an uncertain future.

#transformer #north america #usa