February 21, 2019 | 03:51 PM


30.08.2013Energy's Next Big Market: Transmission Technology

Think of these deals as the ultimate in smart grid plays.

Michael Kanellos, Forbes.com

Think of these deals as the ultimate in smart grid plays.

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Earlier this week, General Electric GE -0.39% announced a partnership with China’s XD Electric to develop and market high-voltage transmission and distribution technology worldwide. As part of the deal, GE completed a previously announced purchase of 15 percent of XD for $552.2 million.

A day later, Toshiba and Tokyo Electric Power announced they had formed a joint venture to sell advanced transmission and distribution products for markets outside of Japan.

Swiss giant ABB, meanwhile, has been steadily investing in R&D and manufacturing facilities for high-voltage Direct Current (HVDC) technology that can bring power in from offshore wind farms or remote solar facilities to urban centers.

Why the interest in the equivalent of energy freeways? It’s an interesting convergence of opportunity, barriers to competition and technological advances. Simply put, the world is going to need more transmission capabilities. The Energy Information Administration estimates that electricity demand will grow 93 percent over the next 27 years, rising from 20.2 trillion kilowatt hours in 2010 to 39 trillion kilowatt hours by 2040. Most of the growth will occur in emerging nations, where transmission and distribution networks are often inadequate, rickety and subject to failure.

While decentralized power delivered through microgrids and energy storage will likely play a fundamental role in meeting the demand for electricity in these countries, it’s a good bet that centralized power plants linking to long-distance transmission lines will be there too. You can’t live next door to an offshore wind farm, after all. In China, the areas of high solar radiation are located far away from manufacturing and urban centers, according to Frank Haugwitz, director of the Asia Europe Clean Energy Advisory Co.

The latest technology, meanwhile, provides distinct advantages. An HVDC transmission line carrying thousands of megawatts might lose 6 to 8 percent of its power over 1,000 miles. A similar AC line can lose 12 to 25 percent. DC lines can also better manage the variable output from renewable power plants. South Korea, China, Japan and the Scandinavian nations were early adopters of HVDC: the U.S. has projects underway as well.

And then there are the barriers of entries. VCs aren’t going to invest in transmission capabilities. Only large, established manufacturers with deep engineering teams, large labs and the patience to pursue projects that can take nearly a decade need apply. You could count the participants on your toes.

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