[Report] K-Power Equipment, What Rises After Transformers... Changwon Hyosung Heavy Industries Plant 1

Visited Changwon Hyosung Heavy Industries Factory
Surging Demand for Power Equipment like Transformers and Circuit Breakers
"K-Power Secured 4-5 Years of Orders"
Next Strong Contender: ESS PCS

On the 26th of last month, a Hyosung Heavy Industries official explained the PCS (Power Conversion System) products for ESS (Energy Storage System) scheduled for export earlier this year at the Hyosung Heavy Industries factory in Changwon, Gyeongnam. Photo by Jeong Donghoon

On the 26th of last month, at Hyosung Heavy Industries Plant 1 within the Changwon Industrial Complex in Gyeongnam, a continuous test was conducted where electricity was repeatedly turned on and off through PCS (Power Conversion System). This was the final inspection of equipment to be exported to Sri Lanka earlier this year.

While most factories in the industrial complex were quiet due to year-end holidays, this site was bustling with a full inspection of export equipment. PCS converts power energy stored in batteries from direct current (DC) to alternating current (AC) for output or vice versa for charging. It is a key device that ensures stable linkage between ESS (Energy Storage System) and the power grid. Even if batteries are produced by LG Energy Solution, Samsung SDI, or China's CATL, PCS must be included to combine a 20-foot (about 6m) container to form an ESS. ESS can be seen as the 'battery charger' for smartphones.

The domestic power equipment industry is gaining attention as a beacon of hope amid an unprecedented crisis in the Korean industrial sector. Due to the AI boom and the installation surge of AI data centers, global electricity demand is rapidly increasing, and power grid expansion plans are being announced worldwide. The power equipment market has entered a boom phase where supply cannot keep up with demand. Moreover, amid uncertain domestic and international economic conditions, the power equipment industry is considered a sector where China's influence, which dominates the global electric vehicle and battery markets, is relatively low. For this reason, major domestic power equipment manufacturers such as Hyosung Heavy Industries, HD Hyundai Electric, and LS Electric have already secured orders through 2030.

In particular, PCS is now regarded as entering a period of explosive demand growth. The power equipment industry typically cycles through devices handling high to low voltage, and this year is the turn for PCS. PCS facilitates smooth flow when charging electrical energy into ESS or outputting stored electricity. Hyosung Heavy Industries has independently developed PCS and PMS (Power Management System), securing the number one domestic ESS market share (22%) as of 2023.

The equipment observed on-site was a 4MW PCS unit. The total export scale to Sri Lanka is 38MW, which can control power for approximately 17,480 households. Over 60% of PCS products produced by Hyosung Heavy Industries are exported. Moon Seong-min, a team leader at Hyosung Heavy Industries who guided the site visit, said, "We conduct test runs of PCS to check power factor (the ratio of active power to reactive power) and PCS stop systems in case of sudden accidents. Since power equipment components such as transformers, circuit breakers, and wires are numerous and complex, we perform full inspections on all power equipment produced by Hyosung Heavy Industries."

Jaehoon Jeong, Executive Director in charge of Electrical Equipment at Hyosung Heavy Industries Power PU, explained the market situation of PCS (Power Conversion System) and electrical equipment at the Hyosung Heavy Industries factory in Changwon, Gyeongnam, on the 26th of last month. Photo by Donghoon Jeong

Jung Jae-hoon, Executive Director in charge of Power PU Electronics at Hyosung Heavy Industries, explained, "Along with the revival of Korea’s semiconductor, automobile, and petrochemical industries, power equipment companies have devoted themselves to developing technologies for power efficiency and have established global manufacturing competitiveness. Even after expanding factories by more than 40% for ultra-high voltage transformers, we have secured orders for 4 to 5 years."

Power equipment such as PCS also has high entry barriers. The wiring is complex, requiring advanced design and skilled manual labor, and only a few countries maintain such processes?mainly Korea, Germany, and Japan. Since it takes time to train skilled workers, expanding production capacity ('kepa') is not easy. This is why there is a saying, "If Korean power equipment disappears, the world's electricity stops." He added, "Along with transformers and circuit breakers, PCS, a core device within ESS that compensates for the intermittency of renewable energy, is expected to see a significant increase in demand." The domestic and international renewable energy industries, including wind and solar power, are increasing public-private projects aligned with the 'RE100 (100% renewable energy use)' initiative. The Korean government aims for a renewable energy ratio of 21.6% by 2030, up from about 12% in 2023, indicating a substantial increase in renewable energy supply in the future.

Executive Director Jung stated, "Since starting the ESS business in 2009, Hyosung Heavy Industries has installed over 250 sites domestically and globally, with a cumulative battery capacity exceeding 2.6GWh." Hyosung Heavy Industries has set a mid-to-long-term goal of achieving 1 trillion KRW in sales within 10 years in the ESS sector.