LS Electric to double production of high-voltage transformers

LS Electric has decided to double the production capacity of ultra-high voltage transformers at its Busan plant. It plans to target the global market by strengthening the transmission sector as well as the power distribution sector, which has shown strength.

LS Electric announced on the 21st that it will invest 80.3 billion won to expand its ultra-high-voltage power equipment production plant at its Busan plant. LS Electric plans to build a factory on a 13,223㎡ (about 4,000 pyeong) idle land next to the ultra-high-pressure production building at its Busan site. It also plans to expand two vacuum drying furnaces (VPDs) at the same time and have a pre-production process for ultra-high-voltage transformers such as assembly, test rooms, and welding sites. VPD is a vacuum drying facility that removes moisture by maintaining the inside of an ultra-high-pressure transformer at 120 degrees Celsius for more than 72 hours under a high vacuum. Vacuum drying can maximize the insulation performance and minimize the possibility of a transformer failure.

LS Electric's Busan plant has been responding to domestic and international markets with an annual capacity of about 200 billion won to produce ultra-high-voltage transformers. It will complete the plant expansion by September next year and expand its production capacity to 400 billion won per year from October.

The reason why LS Electric decided to expand the production is because the demand for overseas ultra-high voltage transformers is expanding mainly in the North American market. In the U.S., demand for ultra-high-voltage transformers is increasing as the supply of new and renewable energy such as wind and solar power increases. An ultra-high voltage transformer is needed to send electricity generated by the power plant. In addition, the replacement cycle of existing transformers that return every 30 to 40 years in North America also coincided.

LS Electric has completed orders for ultra-high voltage transformers by 2026. The Busan plant, which produces ultra-high voltage transformers and ultra-high voltage direct current transmission (HVDC) valves, recorded an average utilization rate of 95.6% in the first quarter of this year.

Earlier, LS Electric Chairman Koo Ja-kyun said at a regular shareholders' meeting in March, "We are responding by predicting a boom in global demand for ultra-high-voltage transformers that have returned for the first time in 30 years," adding, "We expect greater opportunities for the company as the distribution solution business grows rapidly after the ultra-high pressure."

Through this expansion, LS Electric plans to strengthen its power-related portfolio by encompassing transmission, substation, and distribution. LS Electric has been considered to be weak in the ultra-high pressure market, although its medium and low pressure businesses are strong. This is because HD Hyundai Electric and Hyosung Heavy Industries were divided into the domestic ultra-high-pressure market in accordance with the industrial rationalization policy in the 1980s, and LS Electric focused on medium and low-pressure transformers. LS Electric announced its entry into the ultra-high voltage transformer business in 2008, but its production was less than that of its competitors.

An official from LS Electric said, "It is an investment for sustainable future growth, not just targeting short-term profits depending on the boom," adding, "We will continue to expand our power infrastructure business through mergers and acquisitions (M&A) and joint ventures at home and abroad."

* source : https://www.mk.co.kr/en/business/11021080