HVDC Transmission Market Analysis

In-depth Analysis of HVDC Transmission Market Industry Landscape

A global shift toward renewable energy sources is underway as societies move away from traditional sources due to factors such as fossil fuel depletion and escalating greenhouse gas emissions contributing to global warming. According to the International Energy Agency (IEA), renewable energy utilization increased by 3% in 2020, contrasting with declines in all other fuel types. Remarkably, electricity generation from renewable sources witnessed a 7% growth in 2020, propelling the share of renewable energy to 29%, up from 27% in 2019. The US Energy Information Administration (EIA) anticipates this share to surge to 42% by 2050 in the United States. This profound transition presents an extensive growth opportunity for High Voltage Direct Current (HVDC) transmission applications, particularly owing to its seamless integration capabilities with renewable energy generation.

HVDC transmission, especially Voltage Source Converter (VSC) technology, emerges as an optimal solution for integrating renewable energy and facilitating passive network power supply. Notable advantages include no reactive power compensation, independent control of active and reactive elements, and a low risk of commutation failure. HVDC finds diverse applications in interconnecting existing power plants, integrating offshore wind energy plants, and establishing new solar plants. Globally, there is a surge in sanctioned projects for HVDC transmission of renewable energy, exemplified by TenneT (Netherlands) awarding the largest-ever renewable energy contract to McDermott International (US) in February 2022 for constructing a 980-MW HVDC for wind energy. Therefore, the increasing adoption of renewable energy represents a substantial growth opportunity for the HVDC transmission market.

The COVID-19 pandemic significantly impacted various markets worldwide, and the HVDC transmission market was not immune during the initial phases. Challenges such as workforce shortages, border closures, trade restrictions, and disrupted supply chains were observed. However, as electricity emerged as an essential commodity, power transmission quickly fell under the 'essential services' category in various nations. While the market faced a decline in electrification demand during the pandemic, the functioning of the HVDC market was not severely impacted. According to the IEA, global electricity demand dropped by 3%, marking the largest decline in demand in the last 30 years. Despite this, the HVDC market showcased resilience with the commissioning of nine new HVDC projects globally in 2020, including projects in India, China, Pakistan, and Europe. Hence, although the market experienced initial setbacks due to COVID-19, the overall impact was not severe, and the incorporation of new HVDC projects is anticipated to drive growth in the coming years.