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Feature | January 2017

Leaps and Bounds

Buoyancy in fast tracking projects could take the transformer segment to the next level.
Transmission and distribution (T&D) losses, Aggregate Transmission and Commercial losses (AT&C), quality of power and fluctuation in power supply are some of the major challenges faced by Indian power utilities. This is despite not overlooking the fact that in the last decade, the country witnessed sizeable improvement in quality of power, especially in urban and semi-urban areas. The rural electrification project has also gained traction, as the otherwise slow village electrification projects getting fast tracked. This is thanks to the improvement and adaptation in technology, where the heros are advanced transformers, that have made it possible.

The last decade also witnessed high capacity transmission lines coming into existence; and more transmission utilities exploring the possibility of migrating from AC to DC transmission lines. India boasts of high voltage DC lines with 800 kV capacity. The other major shift which the country witnessed was from 765 kV to 1,200 kV AC power transmission. This, in turn, is fuelling the demand for EHV and UHV class power transformers.

In short, with the addition of these high capacity lines, the demand for transformers has increased many-fold. In the past few years, according to the various reports the transformer segment registered a double-digit growth, with some putting the number as high as 30 per cent in the last few years. However, others have estimated a range between 13 per cent and 17 per cent.

What determines the growth of transformers demand in the power transformers (PT) and distribution transformers (DT) segment depends upon the generation capacity addition in the country during the year. This is because, power transformers are used for stepping up or stepping down the electric current voltage from generators; while distribution transformers are used for changing the electric current voltage at various transmission stations and sub-stations. This includes all forms generation - conventional and renewable energy (RE).

The capacity addition in the country in the past decade has been in the range of 20,000-25,000 MW per year, including renewable sources. A visible increase happened in the past two years due to GoI´s push aimed at accelerating development of the T&D system, in order to realise ´Power for All´ and electrification of all the villages by 2019.

What triggered the growth for the high segment transmission in the past decade are setting up of large generation capacity power plants´ resulting in the bulk evacuation; strengthening of interstate evacuation lines; the integration of the national grid; and improving the quality of power. However, delays in capacity addition and dampened sentiments that prevail in the power sector have shadowed the transformer segment as well.

According to the Indian Transformer Manufactures Association (ITMA), PTs and DTs required the system to be manufactured in the ratio of 60 per cent for DTs and 40 per cent for PT, as per the generation capacity addition during the year, which in terms of transformation capacity is eight times MVA per MW of generation.

Furthermore, DTs both single and three phase having capacities 10 kVA to 2,500 kVA are manufactured for the distribution network. In so far as PTs are concerned the range varies from 10 MVA to 500 MVA at 66/132/220/400/ 765 kV levels.

The transformer segment in India is divided mainly into three categories based on voltage levels: 11 kV-220 kV, 220 kV-400 kV, and 400 kV and above. Manufacturing companies in India have invested heavily in technology, which is why India has well-matured technology backing its products up to the 800 kV levels. It is estimated that there are over 300 transformer manufacturers in India. Total manufacturing capacity is about 400,000 MVA, but estimated capacity utilisation last year touched only 66 per cent.

Says B Lal, Director General, ITMA, ´By and large DTs are manufactured by the unorganised sector, which falls under MSME; while the organised sector, which manufacture both DT and PT for domestic and export market, consists of hardly 10 per cent of the industry. The Department of Heavy Industries (DHI) under Ministry of Heavy Industries and Public Enterprises, has issued Quality Control Order 2015 on electrical transformers, effective from February 2016, with the objective of ensuring the manufacture and use of quality DTs in the power sector duly ISI marked.

Now, most DT manufacturers have got themselves registered with BIS and as result are bound to produce quality transformers with BIS/ISI marking. In so far as PTs are concerned, the DHI has yet to issue quality control orders, but following technical specifications is a must, especially for big players, as they otherwise risk ruining their reputation.´

To bring T&D losses under control, it appears that transmission companies in the past upgraded the grid voltages to 765 kV. In addition, the ministry along with the Bureau of Energy Efficiency (BEE), has been successful in driving the standardisation of transformers through star ratings.

However, the major market share is held by giants like the state-owned Bharat Heavy Electricals Limited (BHEL) and some of the global private companies like Areva T&D, GE, Siemens, etc. It was a win-win situation for the multi-nationals as they brought in the required technology.

PTs in MVA terms dominate the market with more than 70 per cent share, while balance 30 per cent is held by DTs. However, when we talk in terms of individual units, the shares could show a reverse trend.

Discoms and Schemes
Many discoms/utilities across the country, managed by state governments - barring a few run by private players - are debt ridden. The UDAY scheme, for the financial restructuring of these discoms had majority of the states signing up for the said programme. This has brought back confidence to the manufacturers of transformers, as improvement in the financial health of discoms would open up more opportunities. States Lal, ´The financial crunch is solely due to enormous system T&D losses because of the massive theft of electricity and free or very cheap electricity to the agriculture sector.´ He lists the reasons for consumer woes as increase of tariff, overloading, breakdown or supply shortage of power, load shedding affecting the quality of supply, which thereby impact the honest consumer who is burdened with the higher tariff to off-set the losses and the subsidies.

All such factors do adversely affect the demand for transformers, whereas the discoms are obliged to supply the power to the consumers as it is a basic necessity of life. Even otherwise adequate growth rate of power has to be maintained for boosting the country´s economy. For all such reasons, the requirement of transformers has to be met with even under adverse circumstances.

This is precisely why GoI has initiated UDAY for discoms, in order to make them viable. This is done as the main plank of forming UDAY is that the respective states are required to take over 75 per cent of the debt during the proceeding and current year in the ratio of 50 per cent and 25 per cent and shall issue necessary bonds while the Centre will help the state in the budgetary deficit.

´Most states have already joined this scheme and will begin yielding appreciable results in a couple of years, making themselves self-sufficient for the purchase of power in a bid to provide reliable and quality supply to the consumers,´ feels Lal.

Growth Forecast
The transformer manufacturing industry was going through rough weather and was stagnant around 280,000 MVA for the last two years.

A renewed vigour appears to be returning to the power sector with India launching projects such as Integrated Power Development Schemes (IPDS) for urban areas and Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) for rural areas. This is beside the 100 Smart Cities announced in 2016, that requires smart grids. Not to forget the Green Corridor initiative, which would also see the demand of PTs and DTs; and the feeding of renewable energy to the grid, which still remains a challenge. In other words, all this indicates the demand for a large number of DTs and PTs.

According to a report published by a research firm TechSciresearch, ´Projects like the Green Energy Corridor for transmission of power generated from renewable sources would further add to the overall PT and DT installations in the country.´

India has also entered into technological collaboration with Germany under which the latter would extend technical assistance for upgrading India´s existing power grid and facilitate the flow of renewable energy through the grid.

´Other initiatives like Restructured Accelerated Power Development and Reforms Programme (RAPDR) are aimed at providing basic power infrastructure to rural inhabitants and households in the country, thereby buoying the demand for power and distribution transformers in India,´ believes TechSciresearch.

Meanwhile, according to a research report published by TechNavio, the Indian transformer market is expected to grow at a CAGR of 13.29 per cent over the period 2014-2019.

Lack of skilled manpower and slow pace of reforms for the sector may pause major challenges to the transformer industry. In addition to this, lack of testing facility for the high voltage transformers may also be a challenge for some more time.

At present testing facilities in the country primarily cater to short circuit test on transformers up to 90 MVA 220 kV. The capacity of testing units is not adequate in comparison to the number of manufacturers in the country. That results in delays. Many of the domestic companies are already setting up their own testing facility to overcome the issue. Thus, the challenge of lack of testing facilities is a short term issue, as some testing facilities are in the pipeline.

Besides, this competition from China and Korea for their cheaper products, especially due to financial incentives and subsidies for export from their respective governments, is another issue.

Of late the Indian transformer industry took up this matter with the government and as a result, some measures have been imposed on the import of the electrical equipment in order to safeguard the interests of the Indian industry.

Consequently, new entrants from abroad have started establishing their manufacturing bases in India, e.g. Chinese company TBEA has set up a plant in Baroda, Gujarat, while Japanese company Toshiba has acquired Vijay Electrical at Hyderabad, and even more, are said to be finding their bearing in the Indian market. ´All such ventures shall be good for production of quality equipment with price competition and eventually help for export market of small, medium and higher voltage range of DTs and PTs,´ pointed out Lal.

To beat the price war in the domestic market, the manufacturing companies depend on exports to balance their financials. Smaller and medium size DT and PTs are being exported to almost all the countries by manufacturers who have established their credibility at the international level, by not compromising on the quality of transformers and adopting automation in the manufacturing process and strictly observing technical standards as laid by the BIS or country of export.

Besides, PTs of 220/400/765 kV range are manufactured in India by MNCs like ABB Ltd, Alstom T&D, Siemens etc, for both domestic market and export market. Adds Lal, ´Domestic and export demand for high-value transmission projects is also met by Indian companies such as BHEL, CGL, EMCO, BBL, Prime Maiden, PME Power solutions (India) Ltd and Kotsons Pvt. Ltd.´

Future Outlook
Technology has revolutionised the transformer segment in India. Diminishing land availability in the country has made state utilities look for Gas Insulated substations (GIS), which practically requires no maintenance. It brought down the space requirement by 50 times.

In many of the urban areas, conventional substations are being replaced by GIS. The use of instrument transformers which have polymer insulators and use SF6 gas in place of oil and paper is another technology up gradation which happened in the transformers. The danger of explosion of the old devices due to ageing is easily resolved with this technology.

Compact, easy to handle, fire proof, and low maintenance are the qualities that utilities look for in transformers. To achieve this, most manufacturers are investing heavily into their research and development wings.


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