Rejuvenating a Mature Industry – A Snapshot of the European Transformer and Switchgear Market

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An Analysis by Vikas Ravindran, Frost & Sullivan.

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Rejuvenating a Mature Industry – A Snapshot of the European Transformer and Switchgear Market

  1. 1. Rejuvenating a Mature Industry – A Snapshot of the European Transformer and Switchgear Market Vikas Ravindran, Team Lead Energy & Power 19th April 2011
  2. 2. Today’s Presenter: Vikas Ravindran 2
  3. 3. Focus Points• Scope of the study• Technology and component overview• Market Overview• Industry Challenges• Force Field Analysis of Drivers and Restraints• Revenue Forecast – Transformers & Switchgears• Porter’s Five Forces• Tier and Market Share Analysis• Regional Hot Stops and Emerging Geographies• Summary of Key findings 3
  4. 4. Scope and Definitions Geographical Scope Technology Scope • The scope of the study includes Western Europe, as detailed in the Power transformers map below. The total market forecast is developed for all European countries included in the scope. Distribution transformers • Detailed analysis is conducted on the following eight countries/regions: Germany, France, United Kingdom, Italy, Industrial Transformers Benelux, Scandinavia, Rest of Europe (Austria, Greece, the Republic of Ireland, Portugal and Switzerland). Isolation Transformers • The above countries are selected based on the size of the market and upcoming opportunities. Instrument Transformers Countries within the scope of High Voltage Switchgear the study and analysed in detail Countries within the scope of Medium Voltage Switchgear the study, not analysed in detail Countries not within the scope Low Voltage Switchgear of the study Other Metrics • The base year for the study is 2009 Included into the study scope • The forecast period is 2010-2016 Not included into the study scope • The study period is 2006-2016 • All prices quoted in the study are in US Dollars ($) unless otherwise specifiedM675-14 4
  5. 5. Technology and Component Overview Types of Transformers Technologies Types of Switchgear • Technologies • Oil circuit breakers • Laminated Core • SF6 circuit breakers • Torodial • Vacuum circuit breakers • Autotransformer • Air circuit breakers • Stray Field transformer • Polyphase transformer • Resonant transformer • Ferrite Core • Oil cooled transformer • Cast resin transformer • Isolating transformer Applications • Substation • Industries • CommercialM5B8-14 5
  6. 6. Market Overview • Power & Distribution transformers constitute close to 70 percent of the total transformers sales in Europe. Transformers • Increased focus on interconnection of grids is driving the need for efficient transmission technologies • Distribution transformers market has suffered a setback owing to a slowdown in the construction market. • Switchgear market is in its mature phase with slow growth • Increased focus on renewable energy sources, especially off-shore wind farms, act as a major driver. With the Switchgears advent of smart grid, switchgear manufacturers are presented with new market opportunities. • Recent economic downturn as well as price based competition is slowing down the growth of switchgear. Factors of Influence New Market Trends Slowdown in construction Unutilized capacities and markets piling up of inventory Slowdown in Entry by Asian manufacturers demand Increased pricing pressure Price volatility of raw materials Slowdown in market uptake Source: Frost & SullivanM5B8-14 6
  7. 7. Industry Challenges Non Uniformity in Price Volatility of Raw Regulation Impeding New Materials Technology Development 2 1 European Transformer and Switchgear Markets 3 4 Entry by Asian Companies Impact of Global Economic Downturn 1 Source: Frost & SullivanM675-14 7
  8. 8. Force Field Analysis of Drivers and Restraints Increased focus on renewable energy sources, particularly offshore wind energy Increasing focus on total grid Harmonisation of grids automation across Europe Drivers Drivers Restraints Restraints Unfavourable economic conditions influencing investments Increase in price based competition Denotes Current Impact Source: Frost & Sullivan Denotes Long term ImpactM675-14 8
  9. 9. Revenue Forecast – Transformers & Switchgears Power and Distribution Transformer : Revenue Forecasts (Europe), Power and Distribution Transformer : Revenue Projection by Transformer Type 2006-2016 (Europe), 2009 and 2016 4,000.0 2,000.00 Distribution Transformer Power Transformer 3,500.0 1,800.00 Revenues ($ Million) Revenues ($ Million) 1,600.00 3,000.0 1,400.00 Distribution 1,560.2 1,200.00 Transform er 2,500.0 1,000.00 1,250.0 800.00 2,000.0 600.00 Power Transform er 400.00 200.00 1,500.0 1,947.8 1,650.0 0.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1,000.0 2009 2016 Year High and Medium Voltage Switchgear Market : Revenue Forecasts High and Medium Voltage Switchgear Market : Revenue Projection by Segment (Europe), 2006-2016 (Europe), 2009 and 2016 3,000.0 1800 High Voltage Medium Voltage 1600 Revenues ($ Million) 1400 2,500.0 1200 1000 2,000.0 Medium 1,659.8 800 Voltage 600 1,314.6 1,500.0 400 High 200 Voltage 1,000.0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1,097.9 930.0 Year 500.0 Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan 2009 2016 Source: Frost & SullivanM675-14 9
  10. 10. Porter’s Five Forces Threat of New -Product differentiation is low - Too few companies concentrate on Entrants +Price is a major factor for new service after sales entrants High Bargaining Power of Bargaining Power of Suppliers -Low levels of product differentiation Buyers -Number of companies that offer complete Weak and customized solution is minimal High - Standardized equipment Degree of Competition +Price competitiveness available Medium between the suppliers puts the buyers in the driver’s seat Threat of Substitute Products - Transformers and Switchgears form an - There are no product substitutes integral part of the transmission and Weak distribution space Key: “+” denotes higher threat/bargaining levels; “-” denotes lower threat/bargaining levels Source: Frost & SullivanM675-14 10
  11. 11. Tier and Market Share AnalysisPower and Distribution Transformers Market: Tier Analysis by Installed High and Medium Voltage Switchgear Market : Tier Analysis by Installed Capacity (Europe), 2009 Capacity (Europe), 2009 Tier 1 : 65% Tier 1 : 60% ABB, Siemens, Areva ABB, Siemens, T&D, Alstom, Schneider Schneider Electric, Electric Alstom Grid Tier 2 : 20% Tier 2: 30% Crompton Greaves, Efacec, SGB Eaton, Lucy Switchgear, Efacec Tier 3: 10% Tier 3 : 15% S&C Electric, Driescher Wegberg, Hawker Siddeley Imefy, Vonroll, Incoesa, Gedelsa and others. and others. Source: Frost & SullivanM675-14 11
  12. 12. Regional Hot Stops and Emerging Geographies Transformer and Switchgear Market: Region-wise Ranking (Europe), 2009 Country Renewables Infrastructure Smart Grid Transformers and Switchgear Market : Regional Snapshot Germany 1 1 3 (Europe), 2009 France 5 5 5 United Kingdom 4 2 2 Italy 3 3 1 Benelux 6 4 4 Scandinavia Spain 2 7 6 Opportunity indicator Scandinavia 7 6 7 High ROE 8 8 8 The United Low Kingdom Note: The countries are ranked on a scale of 1-8, 1 being the most favourable and 8 being the least favourable market opportunities. Germany Benelux Transformer and Switchgear Market : Country-wise Percentage Split (Europe), 2009 France ROE Germany 8% Spain Italy Scandinavia 17% 14% France Note: Spain 8% 16% Size of the bubble indicates the market size. Benelux Color of the bubble indicates the current growth. 8% Italy United Kingdom Source: Frost & Sullivan 12% 17% Note: All figures are rounded; the base year is 2009. Source: Frost & SullivanM675-14 12
  13. 13. Summary of Key FindingsTransformer industry is highly localized, with imports meeting only 20 percent of demand globally.Strong local participants dominate the transformer market.Power transformers market has witnessed continuous expansion, although on a smaller scale.The distribution transformers market has endured the brunt of the economic downturn withalmost zero development in certain pockets of Europe.Switchgear sales are highly project based and the market is expected to boom owing to the recent impetus fromrenewable energy and smart grid implementation.The industry at the moment is seeing price wars due to the increase in price of raw materials.Utilities, which are the primary customers of switchgear manufacturers, require further investment towards up-grading of the electricity grid and this might slow down the growth of switchgear investments. 13
  14. 14. Next Steps Request a proposal for Growth Partnership Services or Growth Consulting Services to support you and your team to accelerate the growth of your company. (enquiries@frost.com) Join us at our annual Growth, Innovation, and Leadership 2011: A Frost & Sullivan Global Congress on Corporate Growth occurring in London on 17 – 18 May 2011. (www.gil-global.com) Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities (www.frost.com/news) 14
  15. 15. Your Feedback is Important to Us What would you like to see from Frost & Sullivan?Growth Forecasts?Competitive Structure?Emerging Trends?Strategic Recommendations? Rate this presentation via the ‘Rate This’ button on the top right-hand side of your screen.Other? Frost & Sullivan’s Growth Consulting can assist with your growth strategies 15
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  17. 17. For Additional InformationChiara CarellaCorporate Communications Director Juliet ShawEurope Sales Director+44 (0) 207 343 8314 +44 (0) 207 343 8363chiara.carella@frost.com juliet.shaw@frost.com Vikas Ravindran Team Lead Energy & Power +91 446 160 6666 vikasr@frost.com 17

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