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Opportunities in power transmission - Views on News from Equitymaster
 
 
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  • Jul 3, 2008

    Opportunities in power transmission

    Power transmission plays an equal if not a bigger part in a nation's power sector growth as compared to the generation and distribution segments. The transmission segment involves companies that are involved in transmitting power generated at the plant to the distribution company (for the latter to ultimately distribute it to final consumers of power) along with engineering companies that set up transmission projects and manufacture equipments such as transmission lines, power cables, transformers, switchgears and control gears.

    In the past, (state) governments have not given much attention to the transmission segment but rather have been focusing on the generation aspect. However, it is important to understand that in order to achieve the plan of increasing the total generation capacity by nearly 70% to 200 GW (gigawatts; 1 GW = 1,000 MW) by 2012, the focal point should be distributed equally amongst all the three aspects of generation, transmission and distribution.

  • Also read - Opportunities in infrastructure

    Observing this, second year into the current five-year plan, the officials from the Ministry of Power (MoP) have suggested certain initiatives to facilitate the process of improvements in the transmission segment. One of which includes utilities making it a habit to place large transmission orders every year (for around 20,000 MW of generation capacity) rather than clogging up the order books of the respective companies towards the end of the plan period. Further, nearly half the investments made on generation should be made towards the transmission side as well. Another good recommendation made by the officials was to review the plans on a bi-annual basis rather than on a five-year basis.

    Issues with power transmission
    There have been a few issues that the transmission sector has been facing, with quite a few of them interlinked to one another. One of them includes constraints with respect to the equipment supplies. There are very few experienced and established players in the market who provide equipment on a large scale, thus leading to usage of non-good quality material and gear. For example, there have been numerous cases of pollution and humidity causing tripping and blink-outs in wires. This indirectly translates as a strong opportunity for the major established equipment manufacturers like ABB, Siemens and Crompton Greaves, that have reputation for quality and have product offerings across the transmission value chain.

    While engineering companies in India have benefited tremendously over the past few years due to large orders being given by the power generation companies, the fact that investments in power transmission and distribution are yet to scale up, provides them with a whole new set of opportunities in the future.

     

     

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