High-voltage direct current (HVDC) is emerging as a cornerstone of modern power infrastructure, enabling low-loss electricity transmission across long distances and between asynchronous grids. From offshore wind hubs to cross-border interconnectors, the technology is expanding rapidly, with Siemens Energy, Hitachi, GE Vernova, and ABB among the key listed players. This article explains how HVDC works, the differences between LCC and VSC systems, and why the sector presents a compelling long-term investment theme.
Quick Summary
- HVDC (High Voltage Direct Current) enables efficient long-distance electricity transmission.
- Two main technologies: LCC (Line-Commutated Converter) and VSC (Voltage Source Converter).
- HVDC is vital for offshore wind, cross-border interconnectors, and grid stability.
- Publicly listed players: Siemens Energy (ETR: ENR), Hitachi (TYO: 6501), GE Vernova (NYSE: GE), ABB (SWX: ABBN).
What Is an HVDC System?
An HVDC system transmits electricity over long distances using direct current rather than alternating current. This reduces energy losses and allows for interconnection between grids that operate at different frequencies or standards.
Key Components of an HVDC System:
- Converter stations: Convert AC ↔ DC.
- Transmission lines or cables: Overhead or submarine.
- Control systems and software: Ensure stability and grid balancing.
Why Direct Current Transmission Lines Matter
- Lower losses: Over 600 km overhead or 50 km subsea, HVDC is more efficient than AC.
- Grid flexibility: Connects asynchronous grids (e.g., Europe–UK).
- Renewables integration: Offshore wind farms and remote solar projects.
- Stability: Controls power flows with precision.
LCC vs VSC: The Two HVDC Technologies
| Feature | LCC (Line-Commutated Converter) | VSC (Voltage Source Converter) |
|---|---|---|
| Technology | Thyristor-based | IGBT (transistor-based) |
| Best for | Bulk, point-to-point transfer | Offshore wind, multi-terminal |
| Black start capability | No | Yes |
| Footprint | Large | Smaller, modular |
| Typical projects | Itaipu (Brazil–Paraguay), Xiangjiaba–Shanghai (China) | NordLink, DolWin offshore hubs |
- LCC HVDC: Mature, cost-efficient, suited for very high power (3–6 GW).
- VSC HVDC: More flexible, enabling offshore wind and multi-terminal grids.
HVDC Systems: Investor-Relevant Companies
Siemens Energy (ETR: ENR)
- Leading supplier of VSC-based HVDC PLUS technology.
- Projects: Soo Green, Ultranet, North Sea Link.
Hitachi Energy (TYO: 6501)
- Dominant market share in both LCC and VSC.
- Projects: SunZia, ADNOC Offshore HVDC, Pugalur.
GE Vernova (NYSE: GE)
- Active in interconnectors and offshore wind HVDC systems.
- Example: IFA2 (UK–France).
ABB Ltd (SWX: ABBN)
- Historically a major HVDC pioneer, now focused on digital controls and components.
Prysmian (BIT: PRY), Nexans (EPA: NEX), NKT (CPH: NKT)
- Not converter suppliers, but provide cables critical to HVDC systems.
The Investor Angle
- Growth driver: Global HVDC orderbook is expanding with offshore wind and cross-border projects.
- Concentration: A few listed players dominate (Siemens Energy, Hitachi, GE, ABB).
- Opportunities: Transmission system upgrades, renewable integration, EU/US/Asia decarbonization goals.
- Risks: High capex, regulatory delays, competitive bidding pressure.
FAQ
Q: What is an HVDC system in simple terms?
An HVDC system transmits power using direct current instead of alternating current, reducing losses and improving long-distance efficiency.
Q: What is the difference between LCC and VSC HVDC?
LCC is older and suited for bulk transfer, while VSC is newer, smaller, and ideal for offshore wind and multi-terminal grids.
Q: Which companies make HVDC systems?
The main suppliers are Siemens Energy, Hitachi Energy, GE Vernova, and ABB. Cable providers like Prysmian, Nexans, and NKT are also key.
Q: Why should investors care about HVDC?
HVDC is critical for renewable integration, cross-border interconnectors, and grid modernization, making it a growth theme in infrastructure and energy stocks.