Southeast Asia, with its high gross domestic product, growing population and rural electrification drives, is energy-hungry. To help power grids in South East Asia cope with the additional loads, utilities are investing in large-scale transmission and distribution infrastructure development. This will give a significant boost to high voltage transmission.
This is according to research from Frost & Sullivan which is forecasting the market revenues to hit US$3.75 billion in 2018. The market earned revenues of US$2.73 billion in 2013
Grid upgrade to harness abundant resources
While southeast Asia has an abundance of energy resources in the form of hydro, oil, gas and renewable power, gas, and renewable power, the existing grids are not coping with the extra capacity and large-scale transmission needs.
Electric utilities in Indonesia, Vietnam and Myanmar are the fastest growing markets in the region for high voltage transmission. These markets are mainly driving market growth and have already laid out extensive power generation strategies.
The Asian Development Bank, Japan International Cooperation Agency and the World Bank are also offering their support to utilities to help them with their grid expansion projects.
The privatisation of the distribution grids in Cambodia and the Philippines, and the expected privatisation of grids in Vietnam are also likely to attract private investors toward Transmission and Distribution power grid projects.
However, the market is not free of challenges like project delays, financial constraints, land acquisition laws and local content regulation. For example, in Indonesia, a set percentage of goods used in every project have to be locally produced. In Malaysia, there are regulations that restrict overseas companies from offering engineering, procurement and construction (EPC) services.
"To comply with these regulations, equipment manufacturers are partnering with local companies in countries such as Malaysia and Indonesia," said Avanthika Satheesh, Frost & Sullivan energy and environment senior research analyst. For instance, For instance, Crompton Greaves entered into a joint venture with Prima Layanan Nasional Enjinring in 2013 to manufacture high voltage switchgears in Indonesia.
Major technical trends
By 2018, projects likely to be completed as a part of the Association of Southeast Asian Nations (ASEAN) grid realization are Thailand-Malaysia, Sarawak-Indonesia, Thailand-Laos, and Vietnam-Laos.
Grid reliability improvement and integration of smart grid features are predicted to be major technical trends in the High Voltage transmission market by 2018.
"Overall, the market is expected to be buoyed by utilities' plans to enhance the grid and strengthen it for power additions in the future. Most of the revenue growth is expected from new substation projects, augmentation of existing substations, replacements, transmission line erections, and EPC services,” explains Satheesh.
The opportunities and benefits for vendors and customers are numerous. Vendors have taken the opportunity to offer a wide range of products and excellent after-sales support. This will all go towards creating a good relationship with the utilities so as to strengthen their presence in the Southeast Asia transmission and distribution grid market.