How is the demand of aluminium growing in the (electric) power industry?
Affordable, reliable, and clean energy will be a key enabler in realization of India’s vision of a USD 5 trillion economy. According to the International Energy Agency, India is the world’s third-largest energy consuming country, due to rising population, rising incomes, and improving standards of living. From sustainably leveraging large-scale coal reserves for power generation, to ensuring energy access to all corners of the country, institutionalizing quality controls for energy efficient machines and consumer goods, and investing in and harnessing substantial solar or other forms of renewable energy, India’s post-COVID recovery phase is going to be a very dynamic period in its energy development.
High structural strength, light weight, good conductivity, high ductility, and non-magnetic properties have made aluminium and its alloys indispensable for the power industry. The major areas of application include cables, busbars, overhead transmission lines, motors, foil windings, electrolytic capacitors, heating elements, heat sinks, and many more. India is currently the largest consumer of aluminium based wires and cables, excluding China, with an annual consumption of 1.2 million tonnes of aluminium wire rods. India’s per capita consumption of aluminium in the electrical sector is at 0.9 kgs, while the world average is about 1.3 kgs. Vedanta’s Aluminium Business is the world’s largest producer of aluminium wire rods, ex-China, catering almost exclusively to the power industry.
What are the major causes behind such uptake?
The three pillars of economy, population, urbanization, and industrialization shall keep India at the heart of global energy system. Key factors that shall drive the electrical sector, and consequently the consumption of aluminium in the sector, are:
- Increased migration into cities and urbanization, which will require increased construction and infrastructure to ensure availability of essential utilities to people.
- Procurement of electrical appliances, air conditioning units and other white goods, as necessities of modern life.
- Between 2021-26, the Indian government has planned an investment of USD 2.15 billion to electrify rural households, bolstering the country’s power transmission network.
- The Government also plans to double the share of installed electricity generation capacity of renewable energy to 40% by 2030.
- The Electric Vehicle (EV) segment is to significantly drive demand for electricity (and consequently, electrical infrastructure) in the next 5-10 years, with declining cost of EV technology, tightening emission norms and the central government’s push for EV adoption.
- Upcoming large-scale industrial projects, like Vedanta’s proposed aluminium park at Jharsuguda in Odisha, and the government’s visionary projects like 100% electrification of Indian Railways and Smart Cities are also expected to boost the demand for electricity.
- With an opportunity to sell surplus power, international projects like Cross Border Grid Interconnection to link the national grids of neighbouring countries can also drive electricity demand.
Although aluminium is a cheaper and lighter option, how can the ‘conductivity’ aspect be compensated?
Aluminium is versatile, by virtue of its exceptional design flexibility as well as superb conductivity. Among base metals, only copper has a higher conductivity than aluminium. An aluminium wire will need ~1.5 times larger cross section to pass the same current, but it is two times lighter and non-corrosive in the face of weather elements, which is why aluminium wire rods are used for transmission lines. The light weight of aluminium wire rods lends itself very well to non-sagging of transmission lines, which is of vital importance while ensuring power distribution over long distances.
Vedanta produces High Strength Low Sag special grade wire rods from primary aluminium, with purity levels as high as 99.99% and an appreciable lifecycle. This enables us to deliver high quality products with superior conductivity over conventional electric grade conductors, for various applications in the power industry.
How can aluminium be used safely for long distance power transmission lines?
After conductivity, and its non-sag characteristic, weight is the second most important parameter for high-voltage power lines that transmit power over long distances. Aluminium wires reduce the load onto grid pylons and increases the distance of spans between them, thus reducing expenses and shortening construction time. Therefore, only aluminium wires are used in main overhead power lines. This is further bolstered by the fact that aluminium has good ductility and formability, and it easily sustains significant
Another special property of aluminium is that it is non-corrosive, which lends itself to significantly longer service life (almost 40 years) with low maintenance needs. So, on a cost-benefit analysis, aluminium ranks significantly high compared to traditional metals. And at the end of life, aluminium can be 100% recycled with barely any loss in properties to find usage across diverse sectors. In our quest for a circular economy, aluminium is the metal of the future for the electrical sector.
Then, what are Vedanta’s contributions to the power sector?
At Vedanta’s Aluminium Business, we are marrying sustainable and efficient manufacturing processes with our technology leadership, to produce a broad range of best-in-class value-added aluminium products. As India’s largest producer of aluminium, Vedanta has been catering to the raw material needs of the power sector with its superior quality wire rods, produced using global best technologies. In this regard, we are also a key enabler and proponent of indigenously developed products, domestic manufacturing, value-addition, and supply of quality products to the downstream industries.
Besides supplying electric grade wire rod to the domestic players, we have also focused on development of customized variants for niche applications. With our engineering prowess, deep R&D capabilities, a vibrant Innovation Cell, Centre of Quality Excellence and Customer Technical Service (CTS) function, we are well resourced to meet the current and evolving needs of the domestic and global customers.
Are you developing any exclusive grades of aluminium for the power industry?
We are developing application-centric customizations of our wire rods portfolio for the power industry, like power transmission in coastal belts, which have specific requirements due to their climactic conditions. We are also adding some more special and premium grades of conductors for the power industry.
What is the cost implication of replacement of copper with aluminium?
Aluminium wire conductors and cables can be produced to offer the same capabilities with negligible cost implication.
What is your recommendation to the decision makers of the Indian power industry?
Despite a production capacity of 4.1 MTPA, 60% of the domestic demand of 3.7 MTPA is being met through imports, majorly in the form of scrap. The absence of any quality standards and regulations for scrap has serious implications on the domestic industry, from manufacturing of sub-standard products (which bring in serious safety and health concerns) to India becoming the world’s dumping ground in an industry sector – where it has all of the natural advantages – from rich coal and bauxite reserves to skilled manpower, a strong primary and downstream processing capability and an evolved manufacturing base.
The power industry should ensure that it uses only high-quality primary aluminium for all kinds of cables and conductors to ensure the highest levels of quality and eliminate any electricity and conductivity losses which cost the nation’s economy very dearly when sub-standard materials are used.
To boost domestic manufacturing of cables and conductors supporting domestic power industries, Production Linked Incentive schemes (PLIs) may also be extended.
There is also the threat of subsidised imports of wire rods into India in the 7mm and above diameter segment that find usage in electrical industry. This is also impacting the competitiveness of the domestic producers. Hence, the domestic power industry should encourage preferential usage of domestically produced aluminium products for the self-reliance of the country.