Transforming the Middle East

Increased demand for efficiency in power transformers could see a move away from passive grids to more active systems.

 A booming transformer market using efficiency gains to drive investment is also attracting increased attention from overseas competitors, creating a challenging landscape for existing players.

Today, the GCC’s power transformers market is worth around $1.4 billion, with a compounded annual growth rate of about 7.5 per cent. These figures, from a soon-to-be-published report by Frost & Sullivan, portray an industry looking at a healthy future.

“The Middle East is, and remains, one of the key growth regions in the world,” says Wolfgang Braun, General Manager Energy Transmission & Distribution at Siemens Middle East. “It is one of the most evolving business environments anywhere, and even in downtimes the region’s GDP has remained positive.”

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However, while the market may be buoyant, increased competition looks set to make it harder for established firms to maintain their market share - as Braun puts it: “You’ll never be a single player in a growth region.”

He’s right – increasingly, competition from south east Asia and local companies is seeing an increased market share going to firms new to the market.

“This will provide a challenge for the typical European majors,” comments Abhay Bhargava of Frost & Sullivan. “Prices have been going down over the last year, and I think we’re going to see that it will become more challenging for companies that are already in the market to operate.”

With government policies favouring increasingly competitive local firms, and price pressure from abroad, it’s looking like the market – while expanding – is going to have to make room for a new set of players.

Increasing efficiency requirements also look set to alter the transformer landscape, and also that of the wider grid, as Braun predicts a move from active to passive grids.

“Since today’s power supply infrastructure is not adequate for meeting future energy demands, there will be a paradigm shift,” he says. “Power supplies must be more efficient, more reliable and more flexible – transmission in the future will have to be environmentally compatible, competitive in costs and have to guarantee secure power suppliers.”

However, a lack of standardisation in the region’s transformer business is presenting challenges to the industry, making it difficult to fulfill challenging design parameters and features.

“It’s difficult to design a transformer that fits for all markets in the region,” says Braun, “due to a lack of standardisation between the different countries. This can result in inconsistent designs and pricing structures.”

Testing and diagnostic firm Omicron has also noticed a healthy increase in the transformer market, driven in part by a change in attitude to maintenance.