The recent clearance of several power projects worth Rs 1.83 lakh crore by the Indian government is expected to provide a fillip to the capacitor industry in the next couple of years.
The Indian power capacitor industry has been witnessing negative growth in the last few years. Several reasons, including stagnant demand, delays in project execution, stiff competition and fiscal difficulties faced by EPC contractors and utilities etc., contributed to the sluggish market. It was further accentuated by sharp price drops in the international market, and cut price imported capacitors entering the Indian market through legal and grey market channels. As such the power capacitors market comprising largely of low and medium voltage capacitors, is a small industry estimated to be less than Rs 1,000 crore, today.
´As per our estimate, the market size of low voltage capacitors is around Rs 500 crore and that of the medium voltage capacitors is close to Rs 400 crore,´ reveals Ajay Joshi, Vice President - Capacitors, Universal Cables Limited. He further adds: ´Five years back there was tremendous growth to the extent of 30 per cent. Presently average growth is rate is 5 to 7 per cent only.
´Several factors including project delays, reduction in incentives have played a role. For instance, in Odisha, the government reduced the incentives given to the power sector, resulting in consumers not bothering to install additional capacitors. ´We have taken up this issue with the government through Indian Electrical and Electronics Manufacturers Association (IEEMA)´ he adds.
Meanwhile, Abraham Varughese, General Manager- Power Quality Marketing, Schneider Electric India has a different view to offer. According to him, the capacitor industry was stagnating for the last few years. However, he says, ´We have seen some growth, about 8-10 per cent, in the last fiscal. This includes the medium voltage capacitor and low voltage capacitor market. In fact, the industry is almost coming to the level of double-digit growth.´
Other industry professionals too predict a turnaround for the industry, basic driving factor being the developments in the power sector.
The cumulative growth in the Indian power sector, and recent clearance of several projects valued at Rs 1.83 lakh crore by the Indian government are expected to provide a fillip to the capacitor industry. In addition, the massive rural electrification, increased use of electric pumps in irrigation and industrial purposes and increased focus on energy efficiency are also expected to boost demand. Power capacitors help to improve the overall power factor (PF) of the system and as such they form a very important part of energy-efficient systems.
Subhash Gupta, Chief Executive Officer, Standard Capacitors Pvt Ltd, lists out the other factors that are boosting demand: ´Maximum demand charges, energy charges, charge on the basis of apparent energy (kVAh), which is a vector sum of kWh and kVArh, power factor penalty or bonus rates, as levied by most utilities etc., will increase the demand for power capacitors. With the tremendous industrial growth, the demand for capacitors is going to be enormous in times to come.´
Many industry players are also resting their hopes on the new government´s progressive policy measures. ´With the new government´s pledge to focus on infrastructure and power sector, we expect that the much-needed thrust on energy conservation, transmission & distribution (T&D) loss reduction and power quality improvement would materialise. All of this will increase the demand for capacitors and power conditioning devices,´ avers Saurabh Kumar, Manager, Product Head - Pan India, Power Capacitor Division, Havells India Ltd.
Diverse focus on reactive power solutions with strict norms for harmonics through imposition of new reforms initiated by the government will, apart from reducing T&D losses and realising generation capacity, is also expected to boost the demand of capacitors and power quality solutions.
Renewable energy systems (wind power converters, SPV, hybrid systems), power transmission both conventional and emerging (HVDC, SVC, FACTS, smart grids), automotive (EV, HEV) applications are expected to be the next big markets for both power as well as power electronic capacitors.
The capacitor industry has an established manufacturing base, which has the potential to meet the current as well as future domestic and export demands. However, the industry has to counter several increasing challenges such as the presence of a large unorganised market, unavailability of indigenous raw materials and consequent high costs, lack of quality consciousness, poor implementation of advanced technology and archaic business practices of several State electricity boards.
´The sector has multiple suppliers, giving tremendous bargaining power to buyers. The smaller players constantly bring the prices down, resulting in lack of focus on product quality and promoting safety in electrical equipments. The larger, branded players will not enter the price war at the risk of compromising on quality,´ says Kumar. ´Proper legislation must be brought in to ensure basic minimum quality of product, irrespective of source. At the same time, it is also important to promote healthy competition and entrepreneurial initiatives,´ he emphasises.
The capacitor industry is largely dependent on imports of crucial raw materials, which is yet another challenge, says Joshi: ´Almost 80 per cent of the raw materials are imported. There is considerable variation in price rate because of the fluctuating exchange rates in the dollar and euro rate. Indigenous manufacturing for power capacitors is almost nil now, perhaps due to small size of the market, lack of technology and investment,´ states Joshi. Universal Cables, an MP Birla group company, has orders to the tune of Rs 40 crore on hand. Capacitors are not just energy storage devices, but are also used for signal filtering, processing and power conditioning (power factor correction, transient suppression & harmonic filtering). Hence, constant technical changes and innovations are vital to meet the requirements of product quality and efficiency.
With huge investments planned by the government for the improvement of the power sector, capacities will essentially have to expand. However, to ensure a steady and speedy growth several measures are required to be taken, aver industry professionals. Enhancing the level of quality and reliability of the products and services with cost competitive and innovative products, introducing necessary regulations to ensure basic minimum quality of product, technology up-gradation, educating consumers on the benefits of improving power quality, introduction of regulations to penalise utilities responsible for poor quality of power in the network and incentivising better performing utilities etc., are some of the major measures put forward.
No doubt, there is tremendous potential for the growth of the capacitors industry and there are new avenues for grow wth in the future.
´Reactive power compensation can increase energy efficiency´
What are the factors boosting demand for capacitors?
The following factors are boosting the demand for capacitors: Maximum Demand Charges, relating to maximum demand registered during the month/billing period and corresponding rate of utility; Energy Charges, relating to energy (kilowatt hours) consumed during the month/billing period and corresponding rates, often levied in slabs of use rates; Charge on the basis of apparent energy (kVAh), which is a vector sum of kWh and kVArh and Power factor penalty or bonus rates, as levied by most utilities, to contain reactive power drawn from the grid. The demand for capacitors is going to be enormous in times to come due to the tremendous industrial growth.
What are the challenges faced by capacitor manufacturers?
Due to the prospects of continuing moderate sales, economic slowdown in several key markets, and vendor reduction, capacitor manufacturers are striving to differentiate them¡selves within a small but highly competitive group of manufacturers. This requires increased service and a continual search for the right product mix, which is the greatest challenge.
Please share your views on reactive power management...
Reactive power consumes more energy and increases the CO2 emissions into the atmosphere and leads to higher electricity bills. Under the yellow rate, reactive power is taken into account on an all-inclusive basis in the apparent subscribed rating, which increases the cost of electricity. The aim of compensation is to improve the power factor of an installation. It consists of setting up capacitor banks which are a source of reactive energy. So the power capacitor banks reduce the quantity of reactive energy supplied by the source. It is an eco-efficient solution.
The conservation of natural resources and enhanced energy efficiency are the fundamental objectives of sustainable development and green building policies. Reactive power compensation can increase the energy efficiency of an installation. It is then possible to achieve a situation where only the active (useful) energy is carried, both on transport and distribution networks, and in customer networks. The use of reactive energy compensation equipments causes an immediate and significant reduction in energy consumption and CO2 emissions. The capacitor banks provide the reactive energy necessary for certain equipment to work (ballast, motors, etc.). and enable consumers to subscribe to a less expensive power supply contract with the utility supplier.
Low Voltage and High Voltage capacitor banks are designed to reduce load on transformers. These capacitors compensate the installation´s reactive energy while reducing energy bills. In effect, they reduce the apparent power required by the installation by around 20 per cent. This can prevent the replacement of a substation that has reached its power capacity or to settle for a subscription that is limited by technical conditions (many subscribers on a single transformer). Capacitors are used in industrial buildings and large commercial buildings. With the same subscription, they can eliminate the reactive energy bill, optimise the subscription and increase the installation yield. -Janaki Krishnamoorthi