T&D World Magazine

Frost & Sullivan: ANZ Switchgear and Transformer Markets Powering Up

The current trend of replacing or upgrading old transformers by the power transmission utilities coupled with the boom in the mining industry has seen growth of the switchgear and transformer market in the Australia-New Zealand region. The building of new substations in the region to meet the increasing demand for electricity is also contributing to the growth of the market.

New analysis from global growth consulting company, Frost & Sullivan, ANZ Switchgear and Transformer Markets, reveals that the market earned revenues of AU$1,544 million (US$1,296 million) in 2006 and estimates this to reach AU$1,699 million (US$1,426 million in 2013).

“The efforts of utilities to extend the lifetime of their equipment by increasing maintenance spending and refurbishment did not show expected results,” notes Frost & Sullivan industry analyst M. R. Srivatsan. “However, their new strategy of replacing and upgrading the assets has resulted in increased demand in switchgear and transformers market in Australia.”

Growing investment in the mining industry is also expected to drive the demand for transformers and high-, medium-, and low-voltage switchgears in the ANZ region. Moreover, investments made in the power generation sector is likely to have a cascading effect on increasing transmission and distribution infrastructure to connect supply and demand points in the power industry, stimulating demand for transformers and switchgear by the utilities in the region.

However, local production capacities are inadequate to meet the current surge in demand. Manufacturers are hesitant to increase their production capacities as they fear the market may subdue in the future resulting in overcapacity and over stocking.

This gap in demand-supply chain is encouraging new participants from low-cost countries to increase their market presence in the ANZ region. Major importers are looking to tap into the opportunities available in industrial and infrastructure end-user segments in ANZ region, where barriers to entry are relatively lower compared to utilities. Importing transformers from other countries has led to the increase in delivery lead time.

Although the market is attractive, it is not “open for all,” as the procurement strategies of the power utilities are highly driven by standards and local market experience of manufacturers in serving the utilities in the region.

“Manufacturers who source transformers from manufacturing facilities in low-cost countries must educate their end-users and convince them that engineering and design of the equipment have been done in-house,” said. Srivatsan. “In addition, end-users need to be assured on the after-sales service capabilities of the manufacturers.”

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