The share of transmission and distribution is expected to be higher with the share for conductors and substations to be further enhanced in the years to come, explains Manish Agarwal, Vice-President, Business Head- Power Transmission Products & Solutions, Sterlite Technologies Ltd.
Transmission and distribution are an integral component of an electrical system. Can you tell us about the opportunities in this industry? And how is the market shaping up?
The power transmission sector can no longer be viewed from the prism of generation but as an independent sector with a two-fold objective-setting up bulk transmission lines and improving the national grid. Currently, the thrust is high-capacity corridors comprising 400 kV & 765kV lines, HVDC power transmission system, increasing transformer capacity, integration of renewable energy, upgradation of aged infrastructure and fibre connectivity. This augurs well for integrated transmission companies offering equipment such as High Performance Conductors, Optical Ground Wire, etc., and end-to-end services of transmission system integration.
When do you expect new orders coming in your way as around 24,000 MW worth of projects will go on the floor, hopefully by FY15 end? And what will be the total requirement for such massive power addition projects?
As a thumb rule across the globe, every penny invested in generation has to be invested in transmission. Considering 24 GW of power addition, we will have an investment of at least Rs 120,000 crore (Rs 5 core per MW) invested in transmission. This investment will come in both new lines and re-conductoring projects that will augment and enhance the capacity of the transmission capability to deliver the power generated to the end user.
Within the overall India market, a surge in overhead T&D conductor demand is expected next year.
The annual demand for conductors is now expected to be approximately 4,00,000 million tonnes (mt) in the coming year, provided investments and projects happen in a timely fashion.
In terms of market share in India, of the entire power equipment market, what will be the share of the transmission and distribution market?
As I had mentioned earlier, in the power sector, 50 per cent of the investment is in generation and 50 per cent in transmission and distribution. A typical new transmission line has 40 per cent cost allocated to conductor and hardware, 30 per cent to towers, foundation and labour costs and 30 per cent to substation equipments. The re-conductoring segment will see an increase driven mostly by old lines coming for retrofit. The share of transmission and distribution is expected to be higher with the share for conductor and substation to be further enhanced in the years to come.
How was the growth of the industry in the last couple of years, and going forward, what will be the growth in the next two years?
The industry has experienced slow growth largely on account of prolonged bulge in Power Grid Corporation (PGCIL) conductor inventory, stalled transmission projects due to land issues, slow clearances, and inability to raise capital. Conductor contracts awards stalled in last two years.
With improved rate of commissioning at PGCIL, inventory draw-down has increased significantly. Upswing is also witnessed in other segments of markets, for e.g.: several announced projects under TBCB scheme, fast growing renewable energy market with policies and incentives attracting investment, etc. With the new contracts being rolled out, the market is expected to pick up in the next two years.
How about the demand-supply scenario, as power generation companies always blame power equipment players for untimely delivery? How equipped are you considering future flow of orders?
Presently in the context of power transmissions, the conductor industry is on an idle capacity mode. The conductor capacity in India is at least 2-3 times the foreseen annual demand.
Sterlite is pioneer of developing and delivering solutions for efficient power transmission with footprints in over 65 countries for our power transmission portfolio. We have the manufacturing capacity as well as the technology to cater to the growing electricity demand in the country and in turn, partner India´s progress through power.
What are the technological advanced products available in the Indian market?
The segment of technologically advanced conductors is called High Performance Conductors (HPC) which include HTLS and Low loss solutions.
The existing systems are ageing and many sections are getting overloaded and complicated by Right of Way (ROW) issues. Because of this, the market need is slowly but surely shifting to solutions that can utilise the existing towers or ROW enhancing the power capability of the line. This has led to the growth of HTLS (High Temperature Low Sag) conductor segment. The latest technology in the HTLS is the use of ACCC (Aluminium Conductor Composite core) which was introduced by Sterlite in 2010 and has grown ever since in the segment. The use of high technology materials such as carbon core allows the conductor to carry more than twice the power of an existing ACSR conductor using the existing towers. Apart from ACCC, Sterlite has also demonstrated excellence as an end-to-end solution provider in other HPC solutions like ACSS and Invar Conductors which have been deployed in India In addition to this, we envisage that the T&D sector will work towards reducing losses in transmission which till date has been focused towards commercial loss reduction leading to development of smart metering and other allied systems. It is now time to concentrate on the technical losses as well. This change will lead to use of conductors which specialise in reduction of losses by around 30 per cent. One such conductor, which is a patented product of Sterlite, is ECOTM.
Power transmission and distribution losses (Million kWh) in India were last measured at 222,412 million units in 2011, according to the World Bank.
To put in perspective, T&D Losses in 2011 cost the Indian economy approximately 1 per cent of GDP. Thus India at policy level and by new initiatives must plan for new lines and re-conductoring by utilizing new technologies like HPC that would help reduce T&D losses and in turn contribute to the GDP of the country at large, in times ahead.
What are the current trends in terms of offerings and utilization?
The current trends are development and deployment of new and existing technologies ranging from high performance conductors to power monitoring devices and automatic control systems that are gaining traction.
What is the manufacturing capacity and what kind of investment plans have you made for expansion purposes? Is it due to new power projects in the offing?
Sterlite has conductor manufacturing capacity of over 165,000 mt annually. Our technical expertise and culture of innovation creates strategic value for our customers. We plan to invest in research and development of high performance conductors and other new technologies to be prepared for the technological strides that India envisages to take in the near future.
Tell us about your current order book position. By what per cent do you feel your current order book in this space will go up by FY15 end? At the end of Q2, FY 2015, Sterlite has a very healthy order book of Rs 4,900 crore split fairly evenly between the power and telecom businesses.
- Rahul Kamat