The power factor

This article highlights the current trends, challenges and future outlook of transformer industry in India
Power for futureAccording to the Indian Electrical and Electronics Manufacturers’ Association (IEEMA), to achieve the targeted annual GDP growth rate of around 8-9 per cent, India needs to increase its electricity generation capacity by around five times by 2032, along with commensurate increase in the transmission and distribution network. It is also envisaged that there will be a rapid growth in metros, airports and other infrastructure projects.
“With the electricity sector being a sunrise sector across the entire developing world, there exists significant potential for India to tap the export markets. All this is expected to generate huge demand for electrical equipment manufactured in India,” IEEMA observes.
Today, India’s Rs 1.30 lakh crore electrical equipment industry has become matured enough to meet these challenges.
Growth transformerWith developing economy, India is on the brink of becoming an emerging power nation and for a reliable power supply whether for infrastructure systems, industry or households – transformers play a key role. Power transformer is an indispensable and all-important link in the power chain. Their availability and longevity have a major impact on grid reliability and profitability.
Power transformers are most important components in power networks and India’s cherished power sector ambitions depend squarely on the capability of the transformer industry. The Indian transformer industry has for long been traditional but is now seen maturing rapidly. The Indian power transformer industry is more than five decades old. Domestic manufacturers have developed capabilities to manufacture all types of equipment to meet the country’s demand for transformers up to 800 kV and going up to 1,200 kV.
In comparison to past few years, India’s power generation capacity has undoubtedly been rising. The industry enjoys a good status in terms of quality, price, and delivery in the domestic as well as overseas markets.
Growth scenarioGrowing urbanisation in developing country like India leads to increase in demand for power generation and transmission which is in turn driving the power transformers market.
The electrical equipment industry has witnessed a growth of 9.8 per cent in the production during the second quarter which led to a moderate growth in first half of FY’13-14 as compared to the corresponding period of the previous fiscal. The industry has achieved a six per cent growth in the first six months of 2013-14. IEEMA attributed this rise to domestic demand.
The transformer industry, both power and distribution transformers, has seen a turnaround in growth from -4.5 per cent in first quarter to 18.76 per cent reported in second quarter of current fiscal, IEEMA reports.
An additional aspect that provided increasing business for power transformer manufacturers is the adoption of energy-efficiency standards in the developed markets. The new standards made it compulsory for customers across all end-use sectors to use only energy-efficient products.
The critical factorsForeseeing the massive domestic and foreign demand, the transformer industry in India has more than doubled its manufacturing capacity over the last five years. With capacity utilisation rates balanced around 60-70 per cent on an average, transformer manufacturing capacity stands at around 370 GVA for past five years in India. Transformer over-capacity in the Indian market has led to massive pricing pressure scenario strictly impacting the profitability of the market players.
The industry has graduated in manufacturing transformer up to 400-KV class for the last two decades. However, players like BHEL, ABB, Crompton Greaves, EMCO, Alstom, Prime Electric and Siemens are enhancing their capacities with new technologies to cater to the requirement of handling bulk load for interstate disbursal of power in the 765-KV category. This is going to increase competitiveness within domestic industry.
Also, availability of transformer core material Cold Rolled Grain Oriented (CRGO) steel is the biggest challenge faced by transformer manufacturers in the country. CRGO is still not manufactured in India and the industry is totally dependent on import. Experts feels, if this material is produced in India, it will be a great help in reducing the cost of transformers as CRGO cost is 40 per cent of the total value of the unit.
Future outlookThe Government of India attempts to attain100 per cent electrification across the country by 2017 which would boost the demand for power transformers. Indian power transformers industry revenues are expected to produce 14 per cent of CAGR by 2018. The Indian government plans to expand the grid to provide better access and availability of electricity to all parts of the country.
Under the 12th Five-Year Plan (2012-17), the government plans to achieve an installation of 100 Gigawatt of additional capacity and will spend $ 200 Billion on developing and strengthening power infrastructure in India. This will call for extensive investment in the transmission network, which will drive the power transformer market.
The continuous support from the government and huge investments proposed across power sector will enhance the power transformer industry in India. The excess capacity in the Transformer industry in India, and entry of new players is further expected to increase market competitiveness. These factors will give a positive push to the power industry to grow over the coming years.

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