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Brisk business in the backup lane?


RICHA CHAUDHARY | Issue Dated: July 21, 2013, New Delhi
Tags : power system defecit | e-commerce | Central Electricity Authority |

A well designed power supply system can ensure a high level of reliability for meeting the growing needs of e-commerce, data centres and the ever increasing number of servers, electronic and medical equipment. All of these need a highly reliable power supply, which only a power continuity system can address. But in India, where electric power generation is woefully short of the requirement, and the quality of power leaves much to be desired, the need for a suitable power conditioning system to buffer the equipment from electric utility supply variations and fluctuations is all the more imperative.

In fact, over the years, India has been constantly facing power deficit. According to the statistics of the Central Electricity Authority, power shortfall during FY2011-12 was 8.5% with the demand touching 9,37,199 million units and generation lagging at 8,57,886 million units. The country faced a huge power deficit of over 12,000 MW during the peak hours in the last financial year. Against the peak demand of 1,35,453 MW, total power availability was 1,23,294 MW in the last fiscal, the data showed.

In order to support economic growth and meet the ever growing demand, there is a need to increase primary power supply by 1-4 times, and power generation capacity by 5-6 times. Though the government  is taking action to bridge the gap between demand and supply, the demand for power is growing much faster than the government’s ability to increase capacity. As a result of the power deficit, there is a growing demand for alternate or backup power sources, which has created a thriving market for the UPS (Uninterrupted Power Supply) business in India. According to Frost & Sullivan, the power backup market in India is addressing a 17% power deficit. The cumulative cost of nationwide power outages is a staggering Rs.1,300 billion.

Industry experts broadly classify the UPS market into three segments: Micro UPS segment (up to 3 KVA) largely caters to the SOHO, SME, and corporate sectors for stand-alone PCs, small network stations. The government is also a big customer of this segment. Small-medium UPS segment (3-20 KVA) caters to corporates, institutions, retail outlets, and hypercritical applications such as ISPs, ERP implementers, VSAT, email servers. At the top end, high-end UPS or enterprise segment (20 KVA and above) caters to segments such as Infotech, telecom, datacenters, BPOs, and industrial entities. The smaller systems are sold primarily through channel partners, while large systems are supplied directly to end-users. The small-UPS market (up to 5 KVA) is about 50% of the total market at Rs.9 billion. The medium and large categories are Rs.4.5 billion each in terms of market size.

Driven by steady demand from various sectors, the Indian UPS market is expected to witness a CAGR of 13.4% up to 2014. As this sector is crucial for business continuity of the corporate sector, it indicates the tremendous opportunity, the market offers for UPS manufacturers to expand, particularly those who address the commercial and industrial segments. In fact, with customers’ focus shifting rapidly to end-to-end solutions encompassing power backup solutions, top players are repositioning themselves as complete power backup solutions providers. Vendors are consolidating their offerings and including DC management software, KVM, infrastructure management appliances and power distribution units in a single package. “Green UPS solutions are becoming popular, also because of infrastructure challenges and efficiency is particularly prized in power-starved India,” says Sunil Khanna, MD, Emerson Network Power.

But even though the UPS market is growing at a fast rate, the level of indigenisation of the industry has been slow. The basic technology for manufacture of UPS is available in the country though it is at a medium level. The peculiarity of this industry is that despite availability of technology it is not put to use, because of the lack of an adequate component base. As the component base is almost nonexistent, the industry is heavily dependent on imports for critical electronic components. While Indian manufacturers have the capability to manufacture high frequency UPS, they are constrained due to non-availability of components like power semiconductors and magnetic devices. “The production of such components in India, to international standards should increase, and the government should bring policies that incentivise local production of these components,” says Khanna. In the case of electro mechanical and mechanical components, the gaps in the technical know-how and production expertise in the areas of lower micron engineering and precision toolings, there is lack of standardization, making it difficult to cater to the large variety and small quantity requirements. In recent years, however, large manufacturers have taken to extensive R&D work of their own, and have been able to develop UPS working on low cost indigenous semiconductors, instead of high cost imported components.

However, with customers increasingly seeking a single-point solution for their total power protection needs, UPS suppliers are upgrading themselves to become total power solutions providers. “The UPS industry is advancing towards providing various value-added services such as power quality audit, thermograph survey and remote monitoring services due to the increasing demand from IT/ITeS, manufacturing as well as government and infrastructure end users,” says the Frost & Sullivan report. Going forward, the UPS market will get hotter, with vendors offering a slew of offerings cutting across all segments. While big players will gun for the big enterprise mandates, the entry level will see volumes growth. As far as technology goes, modular and scalable UPS that best address the challenges and demands of flexible capacity enhancements and lowest MTTR will come to dominate the market.

Already, the trend is moving more and more towards compact systems and rack based solutions to minimise the space required. As networks are becoming more complex, far flung and being managed from remote control sites, UPS needs to be equipped with multiple network management protocols and flexible enough to incorporate diagnostics and predictive failure analysis. In the years to come, the UPS market is expected to get more organised, achieve greater standardisation of products, and enjoy higher consumer awareness. “The market is being consolidated globally and this is impacting India as well,” says Mark Werle, CEO, Numeric India. Indian suppliers will continue to explore for opportunities for collaboration with MNCs by forming joint ventures, and technical or distribution tie-ups to stay ahead in the market. If such a development comes to pass, it would spell a win-win situation for both Indian companies as well as MNCs.

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Issue Dated: Feb 5, 2017