According to reports, while weak macro-economic situations hamper India’s power infrastructure sector, multinational power products makers, ABB Ltd have evolved a flexible business model to sail through the weakness in domestic market.
In an interaction with Rutam Vora, during the opening of its new transformers factory at Savli, ABB Ltd’s global head of power products division, Bernhard Jucker explains how the company uses India factories as feeder units for its global factories to survive domestic slackness and what the future prospects are in the renewable segment for the company in India. Edited excerpts:
Considering the present power infrastructure scenario in India, what do you think about government policies for power infrastructure sector’s growth?
There are plans and strategies in place for stronger and smarter transmission grids. But it is also important that investments follow the said plans. So, what is needed is known, the technology to do it is also there, it is the implementation and the speed of implementation that is to be looked at now.
It is up to the utilities, which are in-charge of executing those plans to ensure that the transmission corridors are set up and losses are reduced. These elements will help fuel growth of the sector.
When do you see things getting favourable for power infrastructure companies? In the present scenario, how will you plan your investments for India operations?
Can’t say anything about future as the country goes to elections in coming months. A lot depends on elections and the new government. But broadly, in a growing market like India, the key fundamental drivers for power sector’s growth are there. We see new infrastructure capacities coming up, and there is opportunity to built state of the art facilities, reduce T&D losses, and plug the demand-supply gap.
For ABB’s power products, India is one of our biggest manufacturing hubs in the world. We invest in those products which have varied applications like renewable, conventional power generation and also to infrastructure like housing. We have had good success in solar in India, or the power systems.
What potential do you see in renewable segment in India for a company like ABB?
The potential is there. It’s the question of how the countries’ regulators or the politicians deal with it. In wind, it was a booming market till recently but all of a sudden it went down. Similar is the case with solar. There is growth at present, but let’s see what happens now onwards. In India, it depends more on the regulator, on the subsidies offered and how the market dynamics play.
Presently, we deliver the main components to renewable segments. For wind we supply everything electrical inside a windmill including generator, inverter convertors and medium voltage switchgears and transformers. For solar, except the cell, ABB has the whole value chain of power products which fit or support the application in renewable. So, we are prepared to serve the renewable solutions in India and we have all the products lined up.
How have you managed to sustain the current weakness in the India’s power infrastructure business?
In the power products segment, we have been able to increase portion in our exports. It is giving additional volume to support the business in India, which is passing through a challenging environment at present. Our world-class facilities operate as feeder units for the other factories globally.
This gives us cushion during any lean spell in domestic market. Currently, our export from India operations is 15% of total sales and they are growing. Because of the feeder factories network, ABB has the flexibility to balance the domestic demand-supply fluctuations with the international demand.
We have products that are totally global. You can say almost single source is India for the globe. We have sent transformers as far as the US. So, we have flexible market to cater to, and that is why it is important to set up world-class facilities in India. The concept works in such a way that the idea is to balance the demand and supply. It’s not like saying that your core market is your domestic market.
Is India moving towards ultra high voltage transformers? What are the prospects for it?
For a strong grid, you need ultra high voltage corridors because higher the voltage, lower the losses. If that is 800 kv or 1200 kv, it depends on topology of the grid you are setting up.
But in a large country like India there is a potential for ultra high voltage transformers like 1200 kv. We have recently delivered one 1200 kv transformer for PGCIL. Looking at the geographic expansion of power grid in India, we see overall trend towards high voltage.
Also, with increasing urbanization, there is a need for space efficient, environmentally friendly and quick-to-install switchgears and distribution transformers.
Gas-insulated switchgears (GIS) cuts down the size of carbon foot print by 90% of that be air-insulated switchgear (AIS) up to 90%. In the distribution transformers, dry-type transformers are safer at places like cinema buildings, hotels, multiplexes etc.