Insights

Electricity has become as essential as the air we breathe. And now the world is waging an infrastructure war to use it “more, cleaner, smarter.”

Samjong KPMG Economic Research Institute's report (Samjong INSIGHT Vol. 92) analyzes the drivers of surging electricity demand and the key issues across the power-industry value chain — generation, transmission, substations, distribution, consumption — and presents the business opportunities and strategies Korean companies must seize.

Global net electricity consumption up 3.6x — and accelerating with AI and electrification. Global net electricity consumption rose roughly 3.6x from 7,323 TWh in 1980 to 27,047 TWh in 2023. According to the IEA, electricity demand grew 4.3% in 2024 and is expected to grow at a 4% CAGR through 2027. Composite drivers — AI data centers, heat pumps (USD 90 billion in 2024 → an expected USD 157 billion in 2029, CAGR 11.8%), EVs, and industrial electrification — are accelerating demand growth. IRENA projects electricity's share of final energy demand to reach 52% by 2050 under a 1.5°C scenario.

The more renewables, the bigger the transmission and distribution shortfall. As of September 2024, queued global solar projects total 1,800 GW and wind 1,080 GW — waiting in line for grid connection. Per the IEA, the renewable generation and transmission/distribution investment needed to deliver the 2030 NZE scenario is USD 2.218 trillion — about 2x 2023's level. Of this, USD 730 billion is required for transmission and distribution alone — more than double the ~USD 300 billion that has been sustained over the past eight years.

Korea's three business opportunities: transformers, HVDC, and smart grid. The report classifies the business opportunities Korean companies should focus on as short-term (medium- and large-scale and distribution transformer exports), medium-to-long-term (HVDC, submarine cables), and future (next-generation DC distribution, smart grid). Korea's US transformer exports surged 56.4% year-on-year in 2024 to USD 400 million, while smart-grid investment in major markets — including the US “Grid 2030 Project” — is accelerating. The global smart-grid market is projected to grow from USD 4.97 billion in 2022 to USD 13.02 billion in 2028 (CAGR 17.4%).

What this means for M&A. The infrastructure investment wave of the electrification era suggests three M&A directions. First, as Korean firms with export competitiveness in medium-large and distribution transformers and HVDC cables seek global references and local production footprints, M&A involving overseas power-equipment companies or EPC partnerships is likely to be active. Second, digital-energy companies specialized in smart grid, AMI, and energy-prosumer platforms are emerging as bolt-on targets for traditional utilities and Big Tech. Third, as renewable generation surges and demand for ESS (energy storage systems) and grid-flexibility solutions explodes, cross-border investment flows into startups and mid-cap firms holding these technologies are expected to accelerate.