US Big Tech Visits Korean Plant... World Eyes Korea's DC Power Distribution Technology [Power Industry Transformation] ②

Korea's 'DC Distribution' on the Rise
Electricity Accounts for 60% of Data Center Operating Costs
Active Consideration of High-Efficiency DC Distribution
LS Electric Secures Over 800 Billion Won in North American Data Center Orders

Editor's NoteThe power industry is emerging as a leading sector in Korea, following automobiles and semiconductors. For a long time, electricity played only a supporting role in the industrial sector. However, with the explosive growth in demand driven by artificial intelligence (AI) data centers, electric vehicles, and the spread of renewable energy, power has now become a key player in the globally sought-after K-industry. The four major domestic power equipment companies, including LS Electric, have secured orders worth 33 trillion won. The industry has established itself as a growth engine contributing to exports and job creation. The main focus in the power sector is how to secure a virtuous cycle structure. Acquiring direct current (DC) technology for more efficient power transmission has become a core challenge. We examine the issues facing Korean companies as the power industry undergoes a major transformation.

In November last year, representatives from a major American big tech company visited the LS Electric Cheongju plant. They directly inspected key power distribution equipment such as switchgear, transformers, and circuit breakers produced by LS Electric. As demands for power efficiency in data centers have increased, interest in DC-based distribution technology has grown, prompting these representatives to review the technology of Korean power equipment firms and proceed with orders. The Cheongju plant is the largest of LS Electric's three factories.

The rapid shift in data center power structures toward high-capacity and high-efficiency operations is creating opportunities for Korean power equipment companies. While it has become difficult for the so-called global "Big Four" in power equipment-Eaton, Schneider, Siemens, and ABB-to meet soaring demand alone, Korean companies have also played a major role by proactively preparing for the transition to DC to improve distribution efficiency. LS Electric established DC-based switchgear and transformer production lines ahead of its competitors, making it a focal point for North American companies.

Bae Chaeyoon, Head of Advanced Technology Research at LS Electric, said, "There is a global competition to see who can secure facilities for data centers more quickly," and added, "Clients from various countries are also requesting priority supply."

Six Times the Size of Ultra-High Voltage Transformers... DC Demand Expands the North American Distribution Market

All key data center equipment-including semiconductors, servers, air conditioners, and HVAC systems-consume large amounts of power. According to a 2024 report by market research firm IDC, energy costs account for the largest portion of data center operating expenses. For enterprise data centers, electricity bills make up 46% of operating costs, while for service provider data centers, the figure rises to 60%. As power costs have surged, so too have demands for improved efficiency.

The drive for higher efficiency has accelerated the re-examination of technology. Especially as server and cooling system capacities rapidly increase, ensuring both stability and efficiency in power distribution has become a key challenge. In this process, DC-based distribution methods, which can reduce unnecessary losses, are being discussed as alternatives, and there are more cases where this is considered from the design stage.

Bae said, "Global data center operators are also actively considering adopting DC," and explained, "Compared to alternating current (AC), DC offers higher energy efficiency and, given the nature of data centers, can respond stably to large load fluctuations."

As the industry continues to restructure around power efficiency, LS Electric's key equipment-such as switchgear and transformers-is being ordered for North American data center projects. This month, the company signed a supply contract worth 76 million dollars (about 110 billion won) for an AI data center power infrastructure project in the United States. A week earlier, it signed a contract with a major North American tech company to supply high- and low-voltage switchgear and transformers worth 91.9 million dollars (about 132.9 billion won).

LS Electric's North American data center orders this year have exceeded 55 million dollars (about 80 billion won). Of its total 1 trillion won in data center-related orders, about 80% came from the United States. To strengthen its response in the US, the company established a dedicated "AI Data Center Task Force" at its headquarters and built a 46,000-square-meter (about 14,000 pyeong) sales and service facility (Tech Center) in Bastrop, Texas.

As power demand surges, demand for switchgear needed to supply and distribute electricity to data centers is also increasing. The distribution market is typically estimated to be two to three times the size of the transmission market. Some forecasts suggest that the North American distribution market could reach six times the size of the ultra-high voltage transformer market.

"Cut Data Center Electricity Costs"... DC Conversion Spreads

The trend toward efficiency-focused power equipment technology development is also strengthening in Korea. Since April, Korea Electric Power Corporation, together with Hanwha Construction Division and LG Electronics, has been building a "power-saving DC data center" that supplies direct current to certain sections of a new Hanwha data center under construction in Yeongdeungpo-gu, Seoul. Korea Electric Power Corporation expects that by sending electricity directly to switchgear using a low-voltage direct current (LVDC) system and reducing conversion steps, about 10% of energy can be saved.

The growing share of renewable energy is also supporting the discussion on DC conversion. Solar and wind power generate direct current and must be connected to the AC grid via inverters. For this structural reason, DC distribution is highly compatible with renewables, and demonstrations of microgrids-standalone power networks based on renewable energy-are expanding both domestically and internationally. Seogeochado in South Jeolla Province is home to the world's largest "DC Energy Island," built by LS Electric, which operates streetlights, home appliances, and electric carts using a DC distribution network powered by renewable energy, demonstrating the potential for DC-based power grids.