Transformers form critical components of a power grid, and hence, India's cherished power sector
ambitions depend squarely on the capability of the transformer industry to deliver. Be it transmitting power
at ultra-high levels of 1,200kV or reaching power to the remotest of villages, a transformer is an
indispensable and all-important link in the power chain. The Indian transformer industry has for long been
traditional but is now seen maturing rapidly. However, there are several challenges on the road ahead that
need to be tackled deftly. Only this will ensure that the transformer industry efficiently takes up the big "load"
of responsibility lying in store, notes
Venugopal Pillai.
The Indian transformer industry—including ony
power and distribution transformers—is estimated to
have grown by 14 per cent in FY11, according to
statistics released by IEEMA. The industry size is an
estimated
14,754 crore. However, this could be an
underestimate as it is based only on information compiled
from IEEMA members. India has a big class of small-scale
distribution transformers of whom physical and financial
data is difficult to obtain.
According to forecasts made by Electrical Monitor, domestic
production of transformers is likely to reach 2.3 lakh MVA in
FY12, up from an estimated 1.91 lakh MVA in FY11 and 1.53
lakh MVA in FY10. Capacity utilization of the Indian
transformer industry, as reliable statistics suggest, is between
65 and 75 per cent. The average annual production of
transformers has been rising steadily from 47,000 MVA in the
IX Plan (1997-02) to 83,000 MVA in the X Plan (2002-07). The
ongoing XI Plan has seen the highest ever average annual
production of around 1.7 lakh MVA.
Performance of Transformers: 2008-09 to 2010-11 |
|
Weight |
Market* |
y-o-y % change |
|
(%) |
( crore) |
2008-09 |
2009-10 |
2010-11 |
Transformers |
24.9 |
14,754 |
-1.2 |
9.1 |
15.0 |
Power Transformers |
10.7 |
6,181 |
25.8 |
17.2 |
13.0 |
Distribution Transformers |
14.2 |
8,572 |
-16.9 |
3.0 |
16.0 |
Total** |
100.0 |
58,315 |
2.7 |
11.3 |
14.0 |
Source: IEEMA; *Estimated industry size in 2010-11;**For entire electricals industry |
In terms of MVA (MegaVolt Ampere-the unit for measuring
a transformer's capacity) power transformers account for 65
per cent while distribution transformers have a 35 per cent
share. (See Box: Power and distribution transformers). In the
current Indian context, a power transformer has a rating from
11kV to 765kV, whereas a transformer with rating from 1.1kV
to 11kV is termed as a distribution transformer.
Power and distribution transformers |
Transformers are essentially devices that
are used to change voltage in the power
transmission and distribution process, with
minimum loss of energy. A power
transformer is installed at all points starting
from the source (power generation plant) up
to the last substation, just before
distribution of power starts. Depending on
whether the transformer causes an upward
or downward change in voltage, these are
called "step-up" or "step-down"
transformers. Power transformers are
usually oil-filled and are above the 33kV
range and above 10 MVA capacity. In India,
power transformers up to 765kV are
currently under commercial use.
A distribution transformer is a step-down
transformer that is used to convert highvoltage
power supply into low-voltage
supply for the end user. This stepping down
is usually done from the 33kV level to the
1.1kV level. Distribution transformers could
be oil-filled or of the dry type. As
distribution transformers are physically
closer to the end-users, safety is an
important consideration. Given that dry
transformers are less likely to explode than
the oil-filled variant, they are given
increasing preference despite the higher
capital costs. Dry-type transformers, apart
from offering higher safety, also take up less
space. Due to this, such transformers are
increasingly being used in commercial
applications like metro stations, malls,
cinema halls, hospitals, high-rise
buildings, etc. Currently, dry-type
distribution transformers account for only
10-12 per cent of the total production of
distribution transformers. |
Power utilities account for 70 per cent of the total
transformers consumed, followed by power-centric industrial
consumers (steel, cement, fertilizers, etc) that take up 20 per
cent. An estimated 10 per cent of Indian transformers are
exported. While principal export destinations have been
developing economies like Central Asia and Africa, Indian
transformers are also finding their way to developed countries
like USA, UK, Canada, etc.
GROWTH DRIVERS
Principal growth drivers to the power and distribution
transformers are discussed below.
XII Plan period: Growth of the transformer industry
would be linked squarely to the quantum of investment that
India commits to the power T&D sector. Traditionally, power
T&D has been a grossly neglected area. In an ideal situation,
every rupee spent in creating power generation facilities has to
be matched by an equal amount in setting up power T&D
infrastructure. This ratio of 1:1 has never been honoured in
India. Experts feel that at best investment in T&D has been 50
per cent of that in power generation, as against the desirable
100 per cent. The ensuing XII Plan period (April 2012 to March
2017) is expected to be radically different from its predecessors.
According to government estimates, India is expected to see an
investment of
13 trillion in the XII Plan. This will be equally
distributed—for the first time ever—between generation and
T&D. This by itself is the biggest growth driver for the
transformer industry.
The transmission sector is likely to see investment of
2.5
trillion in the XII Plan period with
4 trillion going towards power distribution projects. The demand for transformers can
be gauged from the fact that 15 per cent of the total cost of a
typical transmission projects goes towards transformers.
Hence, the business opportunity size for transformers coming
purely from transmission projects is
37,500 crore in the XII
Plan period. This translates into an addressable market of
7,500 crore per year.
The demand for transformers can also be viewed from
another angle. The traditional thumb rule has been that
every mw of new power generation capacity needs 7 MVA of
transformation capacity. In the XII Plan period, India is
expected to witness aggregate new power generation
capacity of 75,000 mw. This would need transformation
capacity of 525,000 MVA during the entire Plan period, or
105,000 MVA per year. Independently, the power ministry
has estimated that in the entire XII Plan period, around
150,000 MVA of new transformation capacity would be
installed at the 220kV level alone. The rule of 7 MVA per mw
was true at a time when India's transmission infrastructure
was largely of the 220kV type with sporadic instances of
400kV lines. Now, India has progressed to even 765kV lines
and therefore, as some transformer manufacturers point
out, the standard transformation metric in the coming
years, would be around 11 MVA per mw of new power
generation capacity.
Mandatory Star Labeling |
The growing tribe of distribution transformer manufacturers in
the unorganized sector and the poor quality of their equipment
has been a longstanding cause for concern. The number of such
manufacturers is inestimable as they are never part of formal
bodies like industry associations. Industry sources allege that the
sheer survival of these manufacturers is due to the unfortunate
collusion that has, perhaps inadvertently, developed with power
utilities. As these manufacturers do not exercise quality control or
use prime material, they can afford to quote prices that are
impossible for any quality-conscious producer to match. As
power utilities are bound by the L1 criteria, these manufacturers
qualify as suppliers. This ensures their subsistence and, worse,
contaminates the power T&D grid with inefficient equipment.
In January 2010, the Bureau of Energy Efficiency (BEE) made it
compulsory for distribution transformers to have a "star labeling".
This was done with a view to ensuring energy efficiency. In the
context of transformers, it means low energy loss during the
process of transformation. The industry has welcomed this move
and it is expected that the overall quality of distribution
transformers would improve significantly. Marginal players would
now be forced to improve their product quality or exit the business.
Either way, it is in universal interest.
While welcoming the move, transformer manufacturers also feel
that the process of BEE certification should be standardized and
type-testing should be obviated to the extent possible. There are
cases when a transformer supplier has BEE-certified equipment
but a slight variation in specification (sought by power utilities)
causes the supplier to undergo the type-testing and BEEcertification
process all over again.
|
Role of PGCIL: When it comes to very large power
transformers, Central transmission utility Power Grid
Corporation of India Ltd (PGCIL) is a big consumer. The
National Grid project that aims to facilitate seamless power
exchange between the five regional grids is PGCIL's flagship
project. As of September 2011, this interregional transfer
capacity (IRTC) stood at 23,800 mw. The original target was
to attain IRTC of 37,150 mw by March 2012, the end of the XI
Plan period. However, this target has now been scaled down
to 32,650 mw. Considering that 8,850 mw of capacity is to be
set up within 18 months (September 2011 to March 2012) if
the target were to be honoured, PGCIL is expected to expedite
the project resulting in a surge in demand for high-rating
power transformers.
PGCIL is likely to incur capital expenditure of
1 lakh crore
in the XII Plan period (2012-17), significantly higher than an
estimated
55,000 crore in the ongoing XI Plan. Going by the
norm that 15 per cent cost of a transmission project is towards
transformers, PGCIL is likely to spend
15,000 crore to this
effect during the entire XII Plan period.
R-APDRP: The Central government's Restructured
Accelerated Power Development & Reforms Programme (R-APDRP)
that aims to bring down ATC losses is construed as a
big demand driver for both power and distribution
transformers. R-APDRP aims to bring down aggregate
technical & commercial (ATC) losses in project areas to 15 per
cent. This nationwide programme is urban-centric, touching
cities and towns with a population of 30,000 or more. Apart
from transformers, R-APDRP calls for a large number of
products and services including sophisticated IT and telecomrelated
ones.
As R-APDRP aims at bring about efficiency in the power
transmission and distribution chain, the programme would
involve replacement of old transformers with more efficient
ones. R-APDRP has also resulted in a spurt in demand for pole-mounted distribution transformers, industry sources point
out. Besides, in some urban areas, higher-rating power
transformers are also being installed close to distribution areas,
with a view to reducing "step-down" losses.
India sets 1,200kV world record |
A big endorsement to India's indigenous
manufacturing capabilities has come in
the form of the 1,200kV transformer range.
These ultra-high voltage transformers will
form an integral part of India's ambitions of
transmitting power at 1,200kV levels - the
highest in the world so far. Power Grid
Corporation of India, in association with
domestic manufacturers, is in the midst of a
pilot project at Bina in Madhya Pradesh to
test equipment and monitor live conditions,
preparing the ground for commercial use of
1,200kV power transmission.
According to the best of Electrical Monitor's
knowledge, four domestic manufacturers
have so far built 1,200kV transformers that
are being deployed at the Bina test station.
The four companies include public sector
unit Bharat Heavy Electricals Ltd and three in
the private sector - Crompton Greaves, Areva
T&D India (now part of Alstom Grid) and Vijai
Electricals. Here is a brief summary.
Areva T&D (India) Ltd: The power
transmission business of Areva T&D India,
now part of Alstom Grid, flagged of India's
first 1,200kV capacitive voltage transformer
(CVT) from its Hosur plant in Tamil Nadu.
The CVT, shipped in October this year, will
be deployed at Power Grid Corporation of
India's 1,200kV Bina test station in Madhya
Pradesh. Apart from the CVT, Areva T&D
India will support the project with
disconnectors and digital current
transformers. All these equipments will be
produced at the Hosur and Chennai factories
in Tamil Nadu.
Bharat Heavy Electricals Ltd: In July this
year, BHEL announced that it had developed
the country's first indigenous 1,200kV ultra
high voltage alternating current (UHVAC)
transformer of 333 MVA rating. The
transformer has developed, manufactured
and successfully tested by BHEL entirely
through in-house know-how. In addition, the
company has manufactured and installed a
1200kV, 180 MVA transformer to be used as
a testing transformer in its UHV Test
Laboratory at Bhopal. BHEL is also involved
in the supply of other key equipment
including 1,200kV insulators for the Bina
test station.
Crompton & Greaves Ltd: Thapar Group
company Crompton Greaves in December
last year dispatched a 1,200kV capacitive
voltage transformer (CVT) for the Bina test
station. The product developed with
indigenous technology at CG's Nashik plant
in Maharashtra was tested at Central Planning
& Research Institute (CPRI), Hyderabad. CG
has promised to deliver some more
equipment including a 333MVA power
transformer of 1,200kV rating and a 1,200kV
surge arrestor, for PGCIL's Bina test station.
Vijai Electricals Ltd: In July 2011, Hyderabadbased
Vijai Electricals Ltd handed over a
1,200kV transformer to PGCIL. The 333MVA
single-phase power transformer will be used
in PGCIL's 1,200kV test station in Madhya
Pradesh. The mammoth transformer was built
by Vijai Electricals using in-house technology
at its Rudraram works in Hyderabad, Andhra
Pradesh. Vijai recorded this achievement
within just four years of diversifying into
power transformers.
(Apart from these, there are companies like
Transformers & Rectifiers (India) Ltd,
Siemens Ltd and ABB Ltd that are expected
to supply 1,200kV transformers to PGCIL in
the near future.)
|
Replacement Market: Apart from replacement of
inefficient transformers-mainly under RAPDRP-there exists a
big market for replacement of transformers that have outlived
their operational life. A transformer usually lasts for 25-30
years and going by this yardstick, transformers installed in the
1980s will now be due for gradual replacement. It is estimated
that India would need to replace between 18,000 MVA and
20,000 MVA of transformers every year in the medium term.
Given that the new transformers would be far more efficient
that their predecessors, the gradual replacement will also
contribute to efficiency in the power T&D chain.
Exports: India has always been an exporter of transformers
and this avenue is set to becoming even more lucrative in the
coming years. Exports from India are diverse including power
transformers, distribution transformers and even specialpurpose
transformers. It is estimated that around 15 per cent of India's production of power transformers is destined for
international markets. With India proving its technological
edge by producing even 1,200kV transformers, surpassing
global standards, the country has a very bright future, experts
feel. It is not only 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, etc.
Taking into account all types of transformers, exports from
India are estimated to have grown from 21,000 MVA in 2006-
07 to 30,000 MVA in 2008-09. The performance in recent years
is not known. In physical terms, exports today account for less
than 10 per cent of the total domestic transformer production.
By 2011-12, experts believe that exports would even grow to
over 55,000 MVA.
CHALLENGES
The Indian transformer industry does face serious
challenges, largely relating to lack of enabling infrastructure.
Here is a summary.
The CRGO Imbroglio: The biggest concern and also the
most widely discussed is inadequate supply of prime quality
electrical steel. Cold rolled grain oriented (CRGO) electrical
steel is a key component that can account for between 40 per
cent and 75 per cent of the manufacturing cost of a
transformer. As of now, there is no domestic production of
CRGO and the entire requirement is met through imports.
World over, there are only around eight companies making
CRGO and the technology is believed to be closely guarded.
Industry players explain that the concern is not with scrap or
prime CRGO, it is simply that there is no way to know the true
quality of the material imported.
Will China "transform" the market? |
A big speculation and apprehension in the
Indian transformer industry today is the
plausible entry of China in the medium term.
Thanks to all the demand drivers discussed
in this study, it is very clear that India will
face an imminent shortage of transformers.
China will be more than interested in
bridging this shortfall. It happened in the
case of main plant power equipment where
China briskly penetrated the market for
boilers and turbine-generators. As India's
focus shifts from power generation to power
T&D, so would China's.
When it comes to power transformers of the
most popular type (220kV to 400kV range),
there is a dearth of domestic manufacturing
capacity. Or rather, the envisaged demand
would be much higher than the existing
domestic capacity available. The demand
for power transformers, which is expected to
at least double over the next 3-4 years, will
also be faster than any capacity addition
effected by domestic manufacturers. It is
reliably learnt that the combined current
order book position of Indian transformer
manufacturers is around 2.5 lakh MVA. This
is likely to grow exponentially resulting in a
wide demand-supply gap.
China is very well placed to capitalize on the
situation. Thanks to its government
incentives, China is able to produce quality
transformers at low costs. Also the capacity
available with big Chinese players is much
higher than in India. It is learnt that the top
three transformer manufacturers in China
alone have an aggregate capacity of 3.5 lakh
MVA that is many times India's total
installed capacity.
In a very recent development, Tebian
Electric Apparatus Stock Company Ltd
(TEBA), a power transformer maker of
China, announced its plans to set up a large
transformer manufacturing facility in
Gujarat, with an investment of Rs.2,500
crore. TEBA was the first transformer maker
in China to go public. Reliable information
suggests that way back in 2007-08, TEBA
had a manufacturing capacity of around 1
lakh MVA. For a frame of reference, BHEL,
India's largest transformer maker, currently
has an installed capacity of 45,000 MVA.
|
In July this year, the government introduced the Steel &
Steel Products (Quality Control) Second Order, 2011, which
proposes that all CRGO/CRNGO steel used in India should
bear the BIS (Bureau of Indian Standards) certification. This
sincere attempt seeks to ensure that only prime quality CRGO
is used in transformers. India needs 2.5 lakh tonnes of CRGO
every year, and an appalling 70 per cent of this is scrap-grade
material. While conscientious manufacturers try their best to use prime material, they end up using scrap (inferior) material
inadvertently. On the other hand, there are reports of
unscrupulous manufacturers intentionally using scrap CRGO,
producing substandard equipment and then allegedly finding
a market for these low-quality products in connivance with
state power utilities. India is turning out to be a prolific market
for scrap CRGO and there are even reports of importers
turning into transformer manufacturers!
India being a very large and growing market for CRGO,
international suppliers have agreed to have their CRGO
"marked" to comply with the new regulations. Leading
transformer players, in recent interactions with Electrical
Monitor, have pinned their hopes on the timely
implementation of the steel quality control order. This order is
also seen bringing about much needed regularity in the
distribution transformer industry that today has a very liberal
sprinkling of unethical manufacturers.
In a related recent development, public sector entities Steel
Authority of India, Bharat Heavy Electricals and Rashtriya Ispat Nigam have decided to set up a joint venture to
manufacture special-grade steel including CRGO and CRNGO
steel. To be set up with an investment of
3,000 crore, this is
expected to be India's first unit for production of CRGO and
CRNGO steel. The three companies are believed to be in talks
with global suppliers of this technology. In the early 1990s,
Steel Authority of India had made an abortive attempt to
produce CRGO steel at its Bokaro plant in Jharkhand.
Posco of Korea that is building an integrated steel plant in
India has indicated that it could also produce CRGO and
CRNGO steel. It may also be mentioned that UK-based Corus
Steel, which was acquired by Tata Steel in 2007, is amongst the
world's select producers of CRGO steel.
Production of transformers |
(MVA) |
|
2004-05 |
2005-06 |
2006-07 |
2007-08 |
2008-09 |
2010-11* |
Power transformers |
60,787 |
62,577 |
77,674 |
94,390 |
119,101 |
148,876 |
Distribution transformers |
19,369 |
27,181 |
35,181 |
40,412 |
34,272 |
42,840 |
Total |
80,156 |
89,758 |
112,855 |
134,802 |
153,373 |
191,716 |
*ERIL estimates |
Testing Facilities: When it comes to testing of high-voltage
equipment such as high-rating power transformers India is
feeling the heat of inadequacies. The growth in testing
infrastructure has not kept pace with that of production - both
quantitatively and qualitatively. Testing infrastructure
available at India's premier agency Central Planning &
Research Institute (CPRI) is proving short of demand.
Manufacturers of large power transformers at times need to
send their equipment for testing in overseas facilities like
KEMA, Netherlands.
Failure rate: One of the embarrassing realities of the Indian
power sector is high failure rate of distribution transformers,
mainly those deployed by state power utilities. Going by
accepted technical standards, distribution transformers are
meant to have an operational life of between 25 and 35 years.
However, transformers are known to be recalled for repair in as
early as three years. The failure rate of distribution
transformers in India is estimated at 10-15 per cent as against
1-2 per cent, even in developing countries.
Problems faced by transformer manufacturers |
The vast and diversity fraternity of domestic
transformer manufacturers is represented
by its apex body Indian Transformer
Manufacturers' Association (ITMA). Although
the association is very upbeat about prospects
of the transformer industry, it has strived to
draw government's attention to the genuine
problems faced by its members. In an exclusive
interaction with Electrical Monitor, ITMA
shared some of the most pressing problems
that transformer manufacturers are coping with.
Much of the woes revolve around procurement
policies and inconsistency in tendering
procedures of government-owned power
utilities-the biggest transformer purchasers.
Here is a gist of the problems faced.
- Different power utilities stipulate different
criteria of sales turnover for registration of
vendors. Due to this, quality-conscious
but small suppliers end up in getting
disqualified. ITMA feels that CVC
guidelines should be followed uniformly,
and fresh entrants should be encouraged
by reserving 20 per cent contract quantity
in their favour.
- Power utilities and discoms tend to specify
minor changes even if the transformer to
be sourced is of BEE-star rating. This leads
to unnecessary type-testing of prototypes
in order to receive star-labeling. ITMA feels
that utilities should uniformly follow one
set of specifications certified by a
competitive body like BEE, for instance.
- Utilities tend to place orders on L1 fully
aware that the price quoted by the lowest
bidder is not viable. This results in
manufacturers resorting to use of inferior
material and hence end up supplying
substandard products. ITMA feels that
utilities should devise realistic
procurement policies and should not
blindly select L1 bidders.
- ITMA also feels that utilities tend to change
technical and commercial specifications
even after opening of the tender. This can
have a big impact on the selected bidder.
ITMA suggests that alteration of terms
should be avoided but if inevitable, utilities
could go in for fresh short-term bids.
- Sometimes utilities stipulate that
manufacturers would be blacklisted if the
equipment fails during testing. This
practice should be stopped and it could
lead to closure of units and stifling
of enterprise.
- ITMA has observed that after transformers
are dispatched, the procurer (power utility)
is sometimes found to carry out tests
unilaterally. False results are reported to
manufacturers and they are debarred for
future orders. ITMA strongly protests
against such unilateral testing and its
adverse consequences on suppliers.
|
This disconcerting failure rate has two aspects - technical
and commercial. The technical reasons are purely those of
overloading. As power demand has outpaced transformation
capacity, old distribution transformers (designed to operate at the then prevailing load conditions) tend to get overworked
and fail.
It is however the commercial aspect of transformer failure
that is more disturbing. State power utilities are bound by the
L1 procurement practice that requires them to purchase
equipment at the lowest quoted bid. Small-scale distribution
transformer manufacturers, with a singular objective of
winning the order, quote an incredulously low figure. The L1
guidelines are objective, leaving no room for subjective matters
like quality. It is learnt that the rates quoted by manufacturers,
in a desperate attempt to win the mandate, are sometimes
much lower than the cost of the bare components. Qualityconscious
manufacturers are known to keep away even from
bidding, making room for more substandard product suppliers
to enter. One reputed transformer manufacturer noted that in
an attempt to comply with L1 guidelines, power utilities end
up incurring much higher lifecycle costs, apart from being
responsible for higher downtimes in the power grid.
All said, BEE's "star labeling" guidelines for distribution
transformers, in force since January 2010, should see a gradual
but significant improvement in the situation.
Power transmission project |
(Cost break-up) |
Component |
per cent |
A. Transmission Line |
Towers |
17.5 |
Conductors, insulators, etc |
15.0 |
Construction cost |
17.5 |
Sub-total (A) |
50.0 |
B. Substation |
Transformers |
15.0 |
Switchgear, breakers, etc |
20.0 |
Others |
15.0 |
Sub-total (B) |
50.0 |
Total (A+B) |
100.0 |
CONCLUSION
India has a challenging road ahead with respect to the
transformer industry. All the same, the country would do well
if it considers this is a big opportunity to reform, grow and
prosper. India has the distinction of producing the world's
largest transformer-and that too through indigenous
technology. On the other hand, we also have the dubious
distinction of a shamefully high rate of distribution
transformer failure that even lesser developed countries could
scoff at. In all power sector-related ambitions, be it power for
all or lower T&D losses, the role of transformers is critical. The
transformer industry has been coping with challenges, many
of which are the creations of a debilitating policy framework
and lack of political will. India has many questions to ask itself:
Despite being a leading steel producer in the world, why is that
India cannot still produce electrical steel? Why do state power
utilities still buy cheap and worthless distribution
transformers just to adhere to archaic L1 procurement
policies? Why haven't state power utilities been able to
standardize technical specifications that can help
manufacturers achieve better economies of scale and reduce
repeated type-testing? Much can and needs to be done in the
transformer industry; on it depends the quality, reach and
reliability of India's future power transmission network.
Untitled Document
Top Transformer Manufacturers |
Capacity* |
(MVA) |
BHEL |
45,000 |
Crompton Greaves |
27,000 |
Emco |
20,000 |
ABB |
17,000 |
Siemens |
15,000 |
Areva T&D |
15,000 |
Bharat Bijlee |
13,280 |
Voltamp Transformers |
11,000 |
Indo Tech Transformers |
7,450 |
*Indicative, as per reliable sources |