Transforming the Middle East
A booming transformer market is driving investment through efficiency
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.”
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.
“Up until the last 20 years, there was a general philosophy in the Middle East region of only performing basic maintenance on power transformers unless they suffered major problems,” says Andy Hedgecock, Omicron’s Middle East Manager.
“Recently there has been a noticeable increase in the demand from the asset owners to have more complete information on the condition of their transformers, with a view to extending the operational life and preventing failures.”
He says a key point is to look to the future, and to recognise an ever-increasing need to perform diagnostic measurements to assist with the condition assessment of a transformer, especially in the region’s challenging conditions.
“The harsh ambient conditions in conjunction with heavy loading – especially in the summer months – mean that many transformers are under great stress for an extended period of time,” Hedgecock explains.
“Although this does typically fall within their design criteria, it does inevitably lead to a need for more routine maintenance and additional attention, compared to units in temperate climates.”
Recent innovations for Siemens include the addition of converter transformers, which for the first time can boost voltage by 60 per cent to 800kV for high-voltage direct current transmission, but Braun sees the introduction of renewable energy as a large investment opportunity for the region.
“By 2020, more than 50 per cent of the worldwide investments in the power plant market will go into developing renewable energy resources,” he says, following the announcement that Siemens will collaborate with Masdar, Abu Dhabi’s renewable energy initiative, to establish a strategic partnership.
Pressure to be environmentally friendly will touch all areas of the power industry, and Hedgecock has noticed that many companies have initiated environmental programmes in order to fall in line.
“There has been a noticeable increase in demands to suppliers to declare details on waste byproducts, possible contaminants and carbon emissions; at Omicron, this has only resulted in a little more bureaucracy as we are already a very eco-friendly company, and pleased to cooperate with such requirements.”
It’s also difficult to discuss the future of the transformer industry without mentioning smart grids, which will affect both the design of units and also the way companies run diagnostics.
Braun, comments: “The expansion of power grids and the development of smart grids will ensure the optimal use of available electricity,” adding that his company’s technical advancements already include environmentally friendly transformers with biodegradable insulation and, crucially, reduced load losses.
From a testing and diagnostic perspective, smart grids will provide a platform to effectively implement existing technology.
“Online monitoring of transformers has been available for some time, but mainly with limited parameters,” Hedgecock explains. “The future will demand additional tests for a more complete assessment, including the integration into substation automation systems and an expert data analysis system to provide initial warnings and suggested subsequent actions.”