Discussing the significant trends in Indian transformer industry
Indian power and distribution transformer market is expected to witness significant growth buoyed by initiatives like smart cities, power for all etc. Under the government’s ongoing reform and financial restructuring drive in the energy sector, India now has surplus power, fiscal discipline in utilities, sufficient coal availability and an unprecedented growth in the green energy market.
With the advent of smart cities and India’s bullish push for green energy business projects and soaring power generation demand, the transformer market is expected to witness a huge increase in domestic demand as the energy sector will evolve to cater to the growing market.
Briefing about the most significant trend in Indian transformer market, Manas Kundu, Director – Energy Solutions, International Copper Association, India says, “The government aims to increase the renewable energy generation capacity to 175 GW by 2022 and to have renewable energy account for 40 per cent of installed capacity by 2040. India is currently ranked second, ahead of even the US, in this year’s ‘Renewable energy country attractiveness index’ by EY. In this scenario, solar transformers in particular are expected to see a sharp rise in demand.”
He adds, “Quality is fast gaining importance as the main criteria for buyers. Due to a price sensitive market, a significant downturn in the quality of transformers has occurred in earlier decades even though the technology and efficiency capabilities have significantly increased in the same period. This is reflected in the balance sheet of distribution companies who are taking efforts to improve their operational efficiency and cut losses, which in the retail distribution and supply business alone could account for up to 22-25 per cent in costs.”
The government also aims to achieve the goal of uninterrupted power for all by December 2018. This will directly increase the need to invest in transformer (distribution) assets to enhance loads. The launch of government schemes such as DDUGJY, IPDS and NEF for improving distribution sector have offered distribution companies some reprieve.
“Capitalisation in the form of introduction of new technology products and solutions, improvement in product quality and a rise in local manufacturing capabilities by localisation of procurement, design and manufacturing within India are expected as well,” he informs.
The market in for transformer consumer and/or manufacturers is majorly categorised as distribution transformer, power transformer and UHV / GT transformers; and this classification is not just on the type and purpose of the transformer; but the very approach of its designing, manufacturing, IT&C, and maintenance, says Divyansh Kohli, Executive Director, NDL Power Ltd. He adds, “Though, the standards and certain technical parameters rightfully vary; but as a industry – we are now moving toward equality in quality, designing and maintenance, but to a certain extent. However, what our experience and market feedback tells us; is we need to upgrade ourself significantly. Far from being the front runners, Indian transformer industry is still preaching the age old techniques and technologies. Weather it is on the front of equipment design, or composition materials, diagnostics tool, maintenance practices, etc. To address this concern specifically, NDL has been organising technical conferences and technical appraisal programs for our clients on pan India basis. We encourage our clients to connect with our team at NDL, if they wish to address and appraise their technical executives towards the reliable management techniques for transformers practices worldwide.”
Describing about the significant trend in the transformers market Dr. Harald Griem, Executive Vice President and Head – Energy Management Division, Siemens Ltd says, “In spite of the recent slowdown, we are confident that the Indian transformer industry will benefit from the strong demand expected from government programs and investments that support the growth of the T&D grids. Whereas manufacturing capacity is no longer an issue, we see market restraints such as high CRGO imports. The concerns of central regulatory bodies like CEA and Utilities like PGCIL have expressed various concerns. These pertain to quality and long-term performance of equipment, which indicate growing awareness of promoting and differentiating OEMs on the basis of actual quality and performance data. These criteria should also be embedded into bid evaluation processes.”
Gauge the opportunities
Buoyed by positive cues Indian transformer market is in an upswing. The target of adding 93,000 MW by the power ministry in the 13th Five Year Plan (2017-2022) appears to be on track promising a huge potential for the transformer market in India.
Kundu shares four key areas that offer a huge opportunity:
Quality: The Indian distribution transformer industry is currently dominated by unorganised and small scale sector. The capacity for supply is more than the market demand which has resulted in unethical competition and manufacturing practices. Addressing the quality concern could be a differentiating factor for manufacturers.
Phasing out older equipment: Transformers in the distribution system are critical and account for the highest volume in the power utility, supply and consumer chain. Regardless of the advancements made in the field of power generation, a distribution transformer is an irreplaceable asset. At present a majority of our power distribution system, including many HV consumer facilities and plants, are at the peaks of their asset ageing cycle. Many of the transformers installed are severely aged, even though aged doesn’t necessarily mean not reliable or unfit-for-operation; but they do need regular up keeping and maintenance. Operators today are well aware of this development and understand that a reactive approach cannot be entertained and are working towards the life-enhancement of these assets with asset management philosophy in place. Repairing, replacing and maintenance will be key to ensure a reasonable return on investment for the equipment.
Newer technology: Introduction of units with benefits such as lighter in weight, smaller in size, show a reduction in fluids, have improved safety, less flammable, with more capacity and lower energy losses are attractive for potential buyers, mostly power utility boards, industrial and railway markets. These next generations of transformers are more economical for power and distribution transformers and have increased capacity without compromising safety and reliability.
Ratings: Bigger brands in transformer manufacturing are mostly focused towards power transformer of over 220 KV class, and this has resulted in a barrage of distribution transformer from several OEMs in the lower capacity ranges. But since the Indian transformer market is predominantly operate on “Read Ocean strategy” with many small participants catering to the zonal distribution transformer markets there is a potentially under tapped market for the medium-sized companies to be successful with “Blue Ocean Strategy” catering to quality and reliability thus “Make in India” movement a success .
“However, manufacturers have been cautious due to the impact of demonetisation which caused a significant slowdown in corporate spending and the pegged the growth in the fourth quarter FY17 for the manufacturing sector at just 5.3 per cent. The government has approved budget of Rs. 110,000 crore for DDUGJY and IPDS schemes combined but most of the SEBs have still not seriously started release of orders to turnkey contractors. This is a setback to OEMs who tend to shy from public sector businesses, who are incidentally the largest buyers, due to delays in cash flow,” says Kundu.
At present a 2-3 months wait period or even more for procuring the dual BIS and BEE license for supply of distribution transformers causes significant delay and hampers the ease of doing business.
Informing on gauging opportunities Griem says, “The Indian transformer market has been growing steadily over the past few years. The growth is expected due to “Power for All” program; increasing demand of EHV transformers (up to 800kV) and distribution transformer (below 33kV). Further, with foreseen government plans to push infrastructure projects, we expect major addition of traction and locomotive transformers. Investments in the renewable energy sector will help us to grow in our newly-added portfolio of Cast Resin Transformer market. These technologies require stringent design processes and manufacturing controls, which only organisations like Siemens ensure.”