Siemens Energy has secured a €1.4bn ($1.52bn) contract from Energinet, the Danish state-owned grid operator, to enhance Denmark’s electricity infrastructure.

Under the agreement, Siemens Energy will deliver transformers and switchgears for around 50 new or upgraded 150kV high-voltage substations over the next eight years.

The initial four-year phase of the project is valued at up to €800m and is integral to Denmark’s energy transition strategy.

Siemens Energy executive board member Tim Holt said: “There is no energy transition without transmission, and that can only happen with the availability of switchgears and transformers. Grid investments are accelerating dramatically in Europe and worldwide, and customers are competing for manufacturing slots.

“This agreement enables Siemens Energy to plan its capacities, which will benefit both Danish and European energy infrastructure. We are excited to be trusted to deliver on the grid acceleration in Denmark.”

Denmark is on a path to achieve net-zero emissions by 2045, with a significant increase in renewable energy production from wind and solar power anticipated by 2030.

To support this shift, substantial investments are being made to expand and decarbonise the electricity grid, ensuring it can handle the future electrification needs of Danish society.

Energinet Electricity Transmission CEO Henrik Riis said: “We need external suppliers to ensure rapid and significant expansion of the electricity transmission grid.

“The task is enormous. In the coming years, several high-voltage substations on the ‘high-ways’ of the Danish electricity grid are needed to secure that renewable electricity can be connected to the grid and transported around the country.

“We are incredibly pleased that with Siemens Energy we get a long-term, strategic partnership, thus ensuring that we can keep up with the dramatic development in Denmark.”

The integration of renewable energy sources into the electricity mix necessitates a reconfiguration of the grid system.

Wind and solar power generation often occurs far from consumption points, requiring efficient, high-voltage transportation to minimise energy loss.

Siemens Energy’s power transformers are expected to play a vital role in facilitating such long-distance electricity transmission and in converting voltages for end-user consumption.

In February this year, Siemens Energy announced plans to produce transformers in the US from 2025 to keep up with rising electricity demand.

The company will invest $150m to expand its power manufacturing facility in Charlotte, North Carolina, and will develop its first transformer production facility there.