Hyundai Heavy Industries (HHI) Group is partnering up with Korea Electric Power Corporation (KEPCO) to develop technologies for direct current (DC) power distribution, a blue ocean market that is often dubbed “the next-generation power system.”

HHI Group said it signed on Friday, at KEPCO Art Center located in Seoul, a memorandum of understanding (MoU) with KEPCO regarding technical cooperation on DC power supply for the group’s soon-to-be built Global R&D Center (GRC).

Under the MoU, it was agreed that Hyundai Electric and KEPCO Research Institute will jointly work on the development of technologies and systems for a 1.5-megawatt DC power grid that will be installed in HHI Group’s GRC building to be constructed, which would be the largest capacity in the world for a single building.

This next-generation technology either converts alternating current (AC) into DC or directly supplies DC for DC distribution, reducing overall power losses by up to 15% by eliminating inefficiencies in the conventional method of power conversion.

A report from Navigant Research, a US market research firm that provides analysis of global technology markets, expects the global market for DC distribution networks to more than quadruple from USD 11 billion in 2018 to USD 48.4 billion in 2027, as renewable energy generation and wider use of energy storage systems (ESS) are driving up the demands for DC power distribution.

Hyundai Electric plans to complete by 2020 the development of essential power conversion devices required for DC distribution, such as AC/DC and DC/DC converters, and to apply them to GRC first as a pilot program before making a full-fledged advancement into the promising DC distribution market.

“The DC distribution market is rapidly emerging as the new blue ocean, as DC power offers benefits such as high energy efficiency and more advantages than AC power in terms of integrating solar and other renewable energy sources into power distribution networks,” said a source at Hyundai Electric. “We will actively pursue new technology initiatives to take the leadership position in this market.”

HHI Group is scheduled to break ground in the second half of this year and to complete the construction by 2021 of a 25-story building with a gross floor area of 165,289 square meters in Seongnam City in Gyeonggi Province, to house GRC which will serve as the control tower for the group’s technology management.