Power Today |
 
Advertise Here [728 W x 90 H pixels]
Feature | February 2016

Light at end of tunnel

Diesel engines and generator sets industry has started seeing the light at the end of the tunnel in terms of demand growth.

Diesel engines and generator sets (DG sets) industry, which had witnessed stagnation of growth over the last two years in India, has started seeing the light at the end of the tunnel in the wake of the government initiatives on economic front, expansion in infrastructure, revival in construction activity etc.

Diesel generating sets are used in places without connection to a power grid, or as emergency power-supply if the grid fails, as well as for more complex applications such as peak-lopping, grid support and export to the power grid.

¨The overall outlook of market growth for the DG business has been flat for the past two years. We feel that the worst is over and there are signs of revival. There are positive signals coming from the new government helping the economy to move forward, though these are early days,¨ said Sanjay Jadhav, president, Sterling and Wilson Powergen Pvt. Ltd.

During the two financial years beginning April 2013, the market volume of DG sets declined, especially after the introduction Central Pollution Control (CPCB) Norms-II and the prices of various diesel gensets rising by 10-15 per cent in the year 2014. However, the industry is hoping to see revival in their fortunes in the years to come. ¨In the next two years, however, the market is expected to recover and would register a 6 per cent year-on-year (Y-o-Y) growth on account of rising telecom infrastructures in tier-2 & -3 cities, expansion of public infrastructure, coming up of new malls, hotels and usage of diesel gensets in peak shaving applications,¨ said Rajat Kharbanda, Senior Consultant, 6Wresearch, a leading market research firm. Indian DG set manufactures cater to the entire range of genset demand in the country. They produce generating sets up to 6 MW and even higher. For larger capacities, multiple sets are installed in parallel. Moreover, manufacturers offer sets running on all available fuels - diesel, heavy fuel, natural gas, bio-mass etc. Vijay Varma, Chairman, Indian Diesel Engine Manufacturers Association (IDEMA) is expecting the demand to pick-up in line with the economic growth rate and capital expenditure in the economy. ¨Moreover, grid supply power availability has improved considerably, so gensets are installed as standby source of power, not as prime source of power as in the past. For projects, events, and other short term use, renting of gensets is increasing.¨ Solar energy is also helping the government reach power to remote areas which were earlier being catered to through DG sets.

Gas in focus
Meanwhile, gas genset market is experiencing a steady growth owing to electricity demand- supply gap, need to generate power from cleaner source of energy, infrastructure development and fast growth in industrialisation and commercialisation of sectors.

Varma of IDEMA said, ¨The demand for gas-fuelled gensets will go up significantly in the coming years as piped gas is available at several geographies and higher level of emission control is expected by authorities, society and user industry. This trend will be noticeable in metro cities.¨

According to 6Wresearch, Global Gas Genset Market is forecast to grow at a CAGR of 9.53 per cent during 2016-22, against 6 per cent annual growth projected for DG sets till 2020. ¨The increasing demand for power in developing regions such as Middle East and Africa, Asia-Pacific and Eastern Europe are spurring high demand for gas gensets, besides irregular power supply,¨ Avishrant Mani, Senior Research Analyst of 6Wresearch pointed out.

However, gas gensets contribute only fractionally in the global genset market, where diesel gensets have dominated the market revenue due to effective supply chain for diesel, low fuel cost, ease of storage and ease of installation.

Generation Slowdown
Though IDEMA denies that the slowdown in power generation sector because of debt-ridden discoms and entry of solar power and storage batteries had any impact on demand for DG sets, Jadhav of Sterling gensets has a different view. He said, ¨The slowdown in power generation has actually had a positive impact on DG sets in some of the power-starved states like Karnataka, Tamil Nadu and Andhra Pradesh. DG sets are predominantly used as stand-by power solutions as backup against main electricity board power failures, as such the solar power availability has not had any direct impact on the demand for DG sets, Jadhav added.

With the financials of many distribution companies in disarray, they are not in a position to fund deals to buy the available power to provide their consumers with in interrupted supply. This led to idling of a significant portion of the available generation capacity and low utilisation of plant load factor at 59 per cent. Power generated from solar energy is gaining momentum in the country due to the central government´s focus and incentive schemes provided by the state governments.

Standards
With the adoption of CPCB-II norms, Indian manufacturing standards are comparable to EU Stage-III-A and US-EPA-Tier-3 norms. However, in terms of gensets, we have no such alignment yet. ¨Indian emission regulations are generally aligned with EU regulations, but with some lag due to non-availability of low sulphur fuels. Our members have developed required technologies so that they can be produced once the compatible fuels are available,¨ said Varma. Required fuels of low sulphur content (10 ppm) are expected in 2020 or 2021. Thus, next level of emission improvement will be available to consumers after that.

The industry players have implemented these norms for diesel gensets up to 1000 kVA rating and are valid for both stationary and portable diesel gensets. The regulation is still lagging in gensets which are above 1000 kVA.

DG sets used in Information technology (IT), manufacturing and other services industries are already on par with international benchmarks in technologies, while we have a long way to go on the smaller range, particularly used in SME sectors and residential projects, says, Jadhav. With the implementation of CPCB-II norms in 2013 and certification of DG sets coming into vogue in the recent years, the industry has gone through a major transformation and the unorganized sector has slowly moved out of the market at 100 kVA rating or above. The unrated DG sets are used mostly in residential installations.

Trade
Adherence to global standards and benchmarks has made India a preferred origination point for exports to several countries. And the industry is exuding hope that the India manufactured DG sets should see better acceptability in the international markets in the days to come.

¨India is now becoming a hub for diesel generator exports with improved quality, cost and delivery. Our products are now well accepted in the Middle East, Africa, Asia, and Australia.

DG exports to these countries contribute to around 30 per cent of our overall revenues,¨ says Jadhav of Sterling.

IDEMA is expecting the exports to accelerate once the global economy is back on high growth path. Measures needed to boosting DG set exports are not different from those for increasing engineering exports in general. These are infrastructure improvements and improving ease of doing business with foreign customers.

Imports of DG sets into India have drastically come down. India is now self-sufficient on availability of engines and alternators, which are the two main components of DG sets, primarily due to increase in manufacturing capacities across the range. ¨Imports are mostly fuelled by project funding from abroad, which are rarely due to economic considerations or technology superiority,¨ says Varma.

India imports diesel gensets or its components primarily from China, Japan and Vietnam, where components are assembled at local facilities. Import of diesel gensets at lower power rating is affecting the domestic manufacturers.

Emerging technologies
¨DG sets industry is predominantly witnessing two major technical trends which generally attracts customer demand - fuel efficiency and emission controls,¨ says Jadhav. The availability of such products hence drives demand for far more superior to the alternatives.

New technology trends including usage of electronic control and monitoring of engines, fitment of after-treatment devices will become necessary, and concepts like hybrid gensets, variable speed gensets are finding favour with certain customers. ¨Monitoring and control of gensets though internet is already being done by a few customers,¨ said Varma.

¨At times Indian emission norms being more stringent than global norms, specific technologies are developed in India for global markets,¨ Varma added.

Post your comment
Name:  
Email:    
Comments:  
Verification Code:   Change Image

 

Posted Comment
1 .     Yogesh Says:
17 Oct 2016
I wish to start pvc / pp electric wire unit in Delhi. What kind of information I can get if I subscribe for your magazine

2 .     Sarfaraj Bilakhiya Says:
20 Sep 2016
Pls invite me all auction in gujarat

3 .     k.natarajan Says:
20 Jun 2016
we are doing business developing for solar power ,thermal power , customer supporting and we have 45 mw splar power on hand needs investors..... thanks lot pls call +910842559230 +919842753550


Advertise Here [728 W x 90 H pixels]