REWIRING INDIAN ELECTRICITY

Strategic mapping of Indian electrical equipment industry - Subhajit Roy, Group Editor

India is one of the fastest growing economies in the world and the power sector continues play the pivotal role to this growth. Overall installed power generation capacity on all India basis has increased by CAGR of 10 per cent i.e. from 159 GW as on March 31, 2010 to 344 GW as on March 31, 2018, mainly led by investments in the private sector in thermal segment during the 11th Plan period (2007-2012) and 12th Plan period (2012-2017).

Of late, the record capacity addition in the last couple of years raised the installed generation capacity to over 346 GW, including 50 GW from renewables. As of October 31, the country’s total installed production capacity was 3,46,048 MW. Out of that, thermal power comprising coal, gas and diesel accounted for 64%, hydropower 13% and renewables accounted for 20%.

However, the sector is experiencing turbulence of some sort or another on account of increased gap in the demandsupply position, underutilised capacity, inefficient coal linkages, financial stress to the generating companies, economic health of DISCOMs etc.

This report examines the recent performance of a few key elements of electrical equipment industry in India highlighting the growth drivers. Apart from having a discussion on how technology is defining businesses across the spectrum, the report delves deeper into the future of industry segments beyond 2019.

Transformer

Indian power sector has come a long way and undergone significant progress witnessing growth, upgrading technology and focusing on core issues of T&D (transmission & distribution) loss reduction, as well as increasing the generation through clean technologies.

Keeping pace with this growth, Indian electrical equipment industry has also shown an impressive growth of 12.8 per cent in FY17-18 with power transformers growing at 8 per cent CAGR and distribution sector at 3 per cent CAGR.

Various schemes of the government including UDAY, SAUBHAGYA, SHAKTI, and SAMADHAN are playing a major role in reducing the T&D losses as well as giving a boost to the DISCOMs in strengthening the distribution network.  This has certainly improved the demand of the distribution transformers by the DISCOMs, informs Dr. Katsutoshi Toda, Executive Chairman, Toshiba Transmission and Distribution Systems (India) Pvt. Ltd. (TTDI).

Growth in the renewables sector is also giving a fillip to the transformer industry especially for inverter duty transformers and power transformers, for power evacuation and transmission. This sector has seen many new technologies to deliver quality and reliable power to the grid.

However, Dr. Katsutoshi Toda admits, “Transformer industry is facing the biggest challenge on working capital due to irregular payment cycle of the utilities and contractors. Add to that the challenges on the margins arising from an increased gap in the demand-supply position where huge capacity is available and accordingly transformer industries are operating currently with plant loading between 65-70 per cent only. The demand of 765kV transformers and generator has declined in the transmission and generation sector due to slowdown in this segment. Most of the projects in the transmission sector are on the TBCB (tariff-based competitive bidding) route which adds to the price pressure.”

TTDI expects a growth of 10 per cent in the transformer industry in the coming future with the increase in the export base and substation expansion projects.

Transformer industry growthy drivers

Transformers’ demand is mainly driven by the investments in the generation, transmission and distribution sector. The current projected growth in the power sector backed with schemes like UDAY, SHAKTI, SAMADHAN are the major drivers towards the demand in the transformers.

According to Dr. Katsutoshi Toda, the thrust of the Government of India in initiatives such as ‘Make in India’ and other infrastructure projects like railway electrification, airports and the renewables sector will certainly contribute towards the growth in the transformer industry.

Tech trends defining the future of transformer business

TTDI has secured a leadership position in India’s distribution transformer segment and also made a global presence due to its continuous technology upgradation in its design, process and manufacturing and is widely accepted across the globe, Dr. Katsutoshi Toda claims.

In the energy sector, Toshiba has very wide experience in special transformers for the renewables sector like solar inverter duty, wind application transformers and is contributing significantly to this sector. With the space limitation for expansion of the substation in various utilities, there is a growing demand on the Gas Insulated Switchgear (GIS) and TTDI is already contributing to this demand from its fully operational state-of-the-art manufacturing facility, he informs.

In the infrastructure sector, with the supply of special transformers like Scott Connected Transformers, TTDI has been able to contribute to railways for its dedicated freight corridor projects.

Future of transformer industry beyond 2019

With the current focus on various schemes on the transmission and distribution sector, significant changes in the technology are expected in the products which will be deployed to improve supply reliability, quality and reduce losses. This will certainly have more focus on the research and development in product design, manufacturing and testing facilities, anticipates Dr. Katsutoshi Toda.

He added, “We are expecting very positive outcomes in the power sector and confident that electrical industry will continue to grow in the coming years backed with proper industrial and sectorspecific policy which will not only bring in investments in this sector but also transform it with latest technology and products.”

Wires & cables

The wires and cables market in India comprises nearly 40 per cent of the electrical industry and is growing at a CAGR of 15 per cent as a result of growth in the power and infra segments. Strong demand from several sectors like housing, telecom continue to drive the growth of this sector. Also, Arvind Agarwal, AVP, Havells, said, “The government’s Smart City programme is expected to propel large-scale growth in infrastructure, telecom, power generation, T&D, engineering and automotive sectors which augur well for the wire and cable industry, as growth of the industry has direct linkage with growth and developments happening in other sectors.”

Future of wires & cables sector

According to reports, the wires and cables industry in India is expected to double in size in the next 5 years. The government has taken steps to augment power generation and also strengthen power distribution. Also, large investments are being envisaged in rural electrification, upgrading and strengthening existing distribution networks, industrial capacity expansion, and construction. All these factors will fuel the demand for wires and cables in the country in the long run, asserts Mr Agarwal.

Switchgear

According to ‘India Switchgear (LV, MV, HV) Market Overview, 2018- 2023’ report, the Indian switchgear market is expected to grow with a CAGR of more than 7 per cent in the forecasted period of next five years from FY 2017-18 to FY 2022-23.

Demand has increased in this sector over a period due to the demand of new consumption centres and development of various renewable energy sources. “We are expecting further increase in the demand following the increased planned capacity addition in the power sector and improvement in technology along with government directives to replace old redundant machinery. Creation of infra structure for rural electrification is also expected to lead to the demand in switchgears. New construction in the urban space in terms of commercial and residential buildings has also contributed to growth,” said Sameer Saxena, Director – Marketing, Legrand (Group) India while talking about the recent performance of Indian switchgear industry.

Switchgear industry growth drivers

According to Mr Saxena, the key drivers for the India switchgear industry are:

• Increased electrification in rural and urban areas of India which has fuelled the growing demand for the LV and MV switchgear market.
• The increase in the demand of the installed capacity of transmission and distribution network in the power sector of India, China and other countries from Asia Pacific has also triggered the growth of LV and MV switchgear market.
• Government’s plan to reach the renewable energy capacity of 175 GW by 2022, according to NITI Aayog.
• Government directives to replace older redundant systems to achieve operational safety and security in industrial establishments.

“The Indian switchgear market is driving global growth in a market estimated to cross US$ 140 billion by 2024,” Mr Saxena said.

Redefining technology

Legrand invests heavily into R&D and 5 per cent of the company revenue is ploughed back into R&D every year. All our product segments are at the leading edge of technology, claims Mr Saxena.

In switchgears, Legrand has digital switchgear which combines the latest digital technologies. They enable easy integration to increase smart functionality such as power management, real-time diagnostics and remote monitoring. Already, Legrand India has a host of products which are high on digital integration. This includes both hardware aspect involving highend electronics as well as associated software solutions which help clients to optimise their energy consumption.

Switchgear industry beyond 2019

The switchgear industry is fast growing, and government schemes likes the Ujwal Discom Assurance Yojana (UDAY), the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and the Integrated Power Development Scheme (IPDS) will continue to create demand for the switchgears in beyond 2019.

According to the Central Electricity Authority’s draft National Electricity Plan (Transmission), 2016, a line length addition of over 100,000 circuit kilometre and a substation capacity addition of about 290,000 MVA is envisaged during 2017-22. This will create demand in the switchgear market and impact the significant renewable energy-based capacity in the next few years, Mr Saxena anticipates.

Automation

According to industry reports, the automation segment in India is projected to grow at a CAGR of around 12 per cent during 2015 – 2020. Growth in the market is anticipated on account of growing deployment of various factory automation systems in automotive, chemicals, and other manufacturing units, along with various government initiatives aimed at increasing domestic manufacturing as well as the focus on digitisation.

Talking about the recent performance of automation industry, Sudhir Dembi, General Manager (Plant Solutions) Schneider Automation, Schneider Electric, said, “The industry has been growing at a brisk pace over the last few years, given the growing need for reliable and costeffective methods of production that are efficient and lead to maximum cost optimisation. In addition to making the processes more controlled, consistent and streamlined, automation solutions provide better productivity compared to manual labour.”

Automation industry growth drivers

Since new technologies are disrupting the preceding versions, there will be a need for constant upgradations. For example, electric vehicle (EV) charging stations, with increasing uptake of EVs, can majorly disrupt electrical networks. To balance grids in these situations, smart grids become imperative. Hence, Mr Sudhir believes, automation might be the only way to tackle load management issues.

Experts anticipate that the ‘Make in India’ initiative is also going to play an important role in boosting the adoption of automation solutions in the country. “With major investments expected in the manufacturing sector in India in the upcoming years, the demand for factory automation solutions in the country is also anticipated to rise over the next five years,” Mr Sudhir predicts.

Besides availability of copious amount of data, it will also be a major player to drive automation in India. As more and more data are available, there is a need for better data processing (analytical) capabilities.

Tech trends defining the future of automation business

The current decade has seen a fair share of rapid transformations, brought in by innovation in the digital space. These include ever present wireless connectivity, analytics, smartphones, consumerdriven social media, etc. and, soon, self-driving cars on a larger scale. No sector has been left untouched by this digital revolution.

The energy management segment is on a similar, lifechanging, fast-paced trajectory. In all of these transformed areas, consumers stand at the centre of a disruptive convergence of digital technology advancements; consumer engagement; on-demand, tailored consumption; and a decentralised infrastructure with innovation at the heart of these changes.

The world is in the midst of the Fourth Industrial Revolution, which, according to the World Economic Forum, “builds on the digital revolution and combines multiple technologies that are leading to unprecedented paradigm shifts in the economy, business, society, and individually.” Therein lies incredible opportunity for industry, customers, and the broader society as we transform the electricity system. “Electrification, decentralisation and digitisation are the three game changing trends. These three trends act in a virtuous cycle: enabling, amplifying, and reinforcing innovative developments beyond what each trend can do on its own. The trend will only get accentuated as nations move towards building more renewable power resources,” Mr Sudhir opines.

Future of automation industry beyond 2019

India is amongst the most rapidly developing nation globally. With the objective of building the nation as the ‘Manufacturing hub’ of the world, the nation is now under the spotlight. In line with the massive disruption happening all around, the manufacturing and automation sector is one of the most significant contributors to the growth of the country’s GDP. This is further leveraged with the digitalisation trends occurring across industries. Therefore, it is critical for industries to adapt to the emerging technologies and utilise the potential to the fullest.

Automation is already a popular manufacturing process, but given the rapid advances in AI, Operator Augmentation tool, Virtual Reality, manufacturing has been further boosted through remote communication. This practice is likely to explode in the coming years, observes Mr Sudhir. He said, “Digitisation, data analytics and machine learning are the means to reach the next level of connectivity. This revolution will give the industrial automation sector the opportunity of moving from realtime process control to real-time business control.”

AI is going to make automation more widespread and even more reliable, based on the trajectory of current automation trends, here, in accordance with Mr Sudhir, what the future of manufacturing may look like:

More factories will become 100 per cent automated in the near future:  Artificial Intelligence, Machine Learning, Virtual Reality and Robotics could make it possible for manufacturing machines to understand far more complex goals than those which they currently execute. This will make it possible for operations to become 100 per cent automated at a given location with regular remote check-ins from a central hub. Already industry has started implementing remote command control centre.
Automation combined with AI could prevent recall and repair expenses: AI could not only alert a human overseer in the event of a manufacturing failure but possibly correct it as well. This means that more errors will be caught before they cost your business the expense of a recall.
Automation will make us question basic expenses that were once indispensable: Maybe machines can operate in different wavelengths of light than those that the human eye is suited. This can save money and help the environment by saving energy. The same theory applies to heat. While people may need a comfortable 24-degree-C, we don’t have to be held to that standard in an environment made purely for machines.

Keeping this in mind, today’s innovations are built on safety, reliability, efficiency, sustainability, and connectivity. “At Schneider Electric, we’re uniquely positioned to meet the demand for more efficient and connected energy enabled by the Internet of Things (IoT). Our next generation of active energy management and automation architecture, EcoStruxure delivers IoT-enabled solutions that seamlessly connect, collect, analyse, and act on data in real time,” explains Mr Sudhir.

EcoStruxure also facilitates enhanced safety, efficiency, reliability, and sustainability.  It is a comprehensive service portfolio designed to improve occupant comfort and asset value while reducing operating costs thereby making it future ready.


By Subhajit Roy, Group Editor