Just three weeks ago, CG, an Avantha Group company, announced that it has bagged a Rs 300 crore order from Power Grid, the largest transmission utility in India for supply, erection, testing and commissioning of power transformers at various substations across India. The orders include 765 kV transformers for the Chittorgarh and Ajmer substations, both part of the Green Energy Corridor, an initiative by the Government of India to facilitate evacuation of renewable energy into the national grid. It is one of the ironies that while the country battles power shortages on the one hand, on the other hand there is power generated by alternate renewable sources like wind and solar but evacuation is a problem thanks to lack of adequate planning and coordination among the plethora of agencies.

The electrical eco-system or infrastructure comprises of power generation, transmission and distribution facilities. Then there are the consumers - residential, commercial and industrial - that provide demand/load for electric power. These supply and demand elements comprise the electric power grid. While power generation is the most important activity of this value chain, transmission and distribution are equally important if not more. In fact the power situation in India would be a lot better if transmission and distribution were more effective, though admittedly there has been some improvement on this front in recent years. Historically, India has experienced shortages in energy and peak power requirements. The average energy deficit was 9.1 per cent and the average peak power deficit was 12.8 per cent between 2003 and 2011. However gap between demand and supply has decreased in FY14, due to huge capacity addition (Source: CEA, Power Scenario at a Glance).

This situation is not peculiar to India. Globally, the electric power and utilities sector is under tremendous pressure to modernise the infrastructure and logistics of power generation and distribution that is clearly ageing and is unable to adapt modern technologies and recent innovations. In short, to use clich? that is now wearing rather thin, 'transform' into a new, more complex, 'smart' grid. In India both generation and distribution has not kept pace with the growing demands of a country developing rapidly across all crucial parameters - population, development, industrialisation and urbanisation.

Whether for infrastructure systems, industry or households - transformers play a key role for a reliable power supply. These are basically two types of transformers that are essential in the power grid - Power and Distribution transformers. As for the basic difference, Power transformers are used in transmission network of higher voltages for step-up and step down application (400 kV, 200 kV, 110 kV, 66 kV, 33 kV) and are generally rated above 200 MVA; whereas distribution transformers are used for lower voltage distribution networks as a means to end user connectivity (11 kV, 6.6 kV, 3.3 kV, 440 V, 230 V) and are generally rated less than 200 MVA.

According to the World Resources Institute, the electricity transmission and distribution (T&D) losses in India at 27 per cent are the highest in the world. While a part of these losses is due to power transmission at low voltages and sparsely distributed loads over large rural areas and inadequate investment in distribution system, improper billing and high pilferage amount to a large proportion. While the government of India maintains that T&D losses are 23% of the total power generated, even this is a huge number considering that the global average is under 10% and for advanced economies like the US, it is as low as 6%.

So what exactly is required to stem these high T&D losses? According to InfraInsights, an independent business information and market analysis company, the answer is simple - strengthening the power distribution/supply infrastructure and 100% metering across the 4 echelons of power distribution, i.e., substation, feeders, distribution transformer and consumer. InfraInsights in its report on Transformer Market in India had estimated that over 400 GVA of transformer capacity out of the total installed capacity of 1040 GVA would require repair/retrofit/replacement (as of 2012) and the number is slated to increase to 1548 GVA by 2020 out of estimated installed base of 1548 GVA. Overall a major revamp in the power evacuation infrastructure is the need of the hour and this will drive the transformer industry in India over and above the new opportunity that will be required to support the increasing power generation capacity addition.

India has traditionally been strong in manufacturing of transformers, the bulk of the capacity is in lower voltage ranges (400 kV), whereas globally 800 kV and even 1200 kV is the norm. In recent years however, Indian transformer manufacturers have developed the capability for producing 1200 kV transformers, which are of world class. According to the Indian Transformers Manufacturers Association (ITMA), the apex body of transformer manufacturers established in 1979, India has always been an exporter of transformers, a position that will only strengthen in the coming years as there is sufficient installed capacity and more manufacturers including overseas companies attracted by the prospects in the sector. ITMA was promoted with the objective of promoting the interest of manufacturers of distribution and power transformers, auto transformers, furnace transformers, rectifiers transformers, instrument transformers including allied industries dealing in raw material of CRGO steel laminations, etc. According to Mr Anil Kumar Aggarwal, CMD, PME Power Solutions (India) Ltd and President, ITMA, around 15 per cent of India's production of power transformers is destined for international markets. And it is not only the developing African and Central Asian economies that are importing from India; India-made transformers are even finding their way in developed markets like USA, UK, Canada, South Africa, etc.

Among the top manufacturers of transformers in India are global companies like ABB India, Siemens India and Alstom T&D India. Among the domestic players are manufacturers like Transformers & Rectifiers India Ltd, Kirloskar Electric Company Limited and Gujarat Transformers Pvt Ltd. Apart from large companies, there are hundreds of SMEs also engaged in manufacturing of various types of transformers.

While the Indian power transformer market is set to grow at a CAGR of 14 per cent between 2013 and 2018, there are many challenges plaguing the sector. But one of the biggest constraints is the key input of CRGO or cold-rolled grain-oriented steel, used for the cores of power and distribution transformers. CRGO is usually supplied by the producing mills in coil form and has to be cut into "laminations", which are then used to form a transformer core, which is an integral part of any transformer. India still does not have the capability to manufacture CRGO grades required for transformers and a lot of sub-standard material finds it way into the chain despite government stipulations in favour of BIS standards.

Switchgear 

Switchgear is a combination of components such as switches and circuit breakers that are used for controlling and distributing electric current across end-users. The use of switchgear enables continuous transfer of electric current while protecting against current overload, short circuit, and insulation failure. It also provides safe isolation from current-driven parts and modifies the load-carrying system at each level of installation.

Switchgear is divided into three types based on its load-bearing capacity: Low-voltage (LV) switchgear, medium-voltage (MV) switchgear, and high-voltage (HV) switchgear. Switchgear is also classified based on construction, e.g., Gas Insulated Switchgear (GIS) system, Air Insulated Switchgear (AIS) system, Oil Insulated Switchgear (OIS) system and sometimes as single-phase or three-phase switchgear, etc. Switchgear is used across various sectors such as commercial, residential, infrastructure, T&D, power, and others.

According to a recent report published by Research and Markets, a leading global market research company, the LV and MV switchgear market in India is predicted to grow at a CAGR of 12.05 per cent over the period 2013-2018. One of the major trends in the market is the replacement of old switchgear with innovative switchgear across industries. Increased planned capacity addition in the power sector and improvement in technology along with government directives to replace old redundant machinery is creating a replacement demand in the switchgear segment. The market has witnessed the replacement of conventional air-insulated switchgear, where the individual components required complex individual installation space, with new and innovative switchgear.

Among the major players in the switchgear industry are Bharat Heavy Electricals Limited (BHEL), a Maharatna PSU that straddles the power generation and distribution industry like a colossus; Siemens, the German multinational with a connection with India that dates back to more than 100 years; ABB India Limited, the Indian arm of the Swiss MNC group; Havells India Limited, a nearly 50 year old Indian company that is growing rapidly via organic and inorganic routes; and Crompton Greaves, part of the Avantha Group and one of India's largest companies in the power sector. Besides these, there are many other large companies like Larsen & Turbo, GE, Schneider Electric, BCH Electric, C&S Electric, EON Electric Ltd, Easun Reyrolle, HPL Group, Jyothi, etc. Like all other industry segments, there is a large number of unorganised companies in the switchgear segment as well. Low voltage switchgear, which accounts for more than 55% of the total market, has a higher share of unorganised players.

According to Taiyou Research, the global market for switchgear is anticipated to do well in the coming years, as demand is likely to be driven by medium and high voltage types of switchgear. Revenues in the switchgear market are closely tied with the demand for transformers, therefore, any increase in demand for transformers will lead to a rise in demand for switchgears and vice versa. Also the market for switchgear will continue to evolve globally, led mainly by escalating demand for renewable sources of energy, growth in construction and industrial sectors especially in developing countries, and government efforts to upgrade and modernise electricity transmission and distribution systems.