Analytical Report RF high voltage cable accessories market High voltage cable accessory market of Russia, development trends Cable accessories are special devices aimed to connect cables mechanically and electrically into cable line and to electrical units and overhead lines. Use of accessories is determined by different cable characteristics: operating voltage, number of conductors, insulation type and constructional features. This document presents main types of high voltage cable accessories: Termination (to connect cables to different equipment) Joints (to connect cables to each other) Stable development of high voltage cable accessory market depends, to a greater degree, on internal market than external. Growth of high voltage cable accessory market is directly dependable on growth of high voltage cable market, and high voltage cable market - on power market respectively. This complicated dependency will be described in the section Market capacity in details. High voltage cable accessory market uses the most modern technology. Every year Manufacturers spend a greater part of investments for development and enhancement of cable accessories. Reliability of cable line basically is determined by accessories. Majority of emergencies happens in places of accessory installation that is why while designing much attention shall be paid not only to the cable but to accessories as well. Reliability depends not only on process but quality of installation works performed, so manufacturer shall provide technical decisions to simplify installation at sight. Besides main aspect of a good manufacturer is work experience within this sector, production process base and high engineering potential allowing introduction of innovations. Earlier porcelain cable accessories were mostly used. Today more preferences are given to composite accessories. In this type of accessories insulator is glass reinforced epoxy tube with silicon sheds and aluminum flanges. The accessory is filled with electroinsulating gas or elegas (SF6). Main manufacturers of high voltage cable accessories High voltage cable accessories on the Russian market are presented by foreign manufacturers. Russian plants produce accessories only for low and medium voltage. Foreign manufacturers supply goods of high quality. The advantage is that accessories manufactured by foreign companies are compatible with cable products of Russian manufacturers. 1
Table1. Foreign manufacturers of high voltage cable accessories Manufacturer Country Voltage Accessory type Advantages Disadvantages Prysmian Finland From 110 up to CLICK-FIT Termination for 500 kv oil-insulated apparatus Pfisterer Germany From 60 up to 300 kv Nexans France From 110 up to 500 kv NKT Cables Germany From 110 up to 500 kv ABB KABELDON Sweden From 84 up to 420 kv Brugg Switzerland From 45 up to 500 kv Cable accessories, type IXOSIL - Synthetic terminations - Composite terminations - Terminations with enameled porcelain insulators - Transformer terminations - Joints - Terminations (ceramic insulators, composite insulators, dry-type) - Joints (for XLPE cables) - Transition joints (single-, three-phase) - Terminations (outdoor, universal, elegas) - Joints - Terminations - Joints - Unique technology CLICK-FIT provides easy installation and excludes human factor from installation process. - High reliability of accessories during operation. - Perfect compatibility of cable and accessories as they are produced by the same manufacturer, this increases operational reliability of the line. - Different creepage distance - Accessory is equipped with silicon sheds and reinforced plastic pipe -Filling compound as an insulating medium inside reinforced plastic pipe - Wide range of cable accessories. - Easy to install - Wide range of high voltage cable accessories - Correspond to standards - Gas burner is not necessary to heat shrinkage of outer insulator to cable - Assembly can be done in horizontal position at sight before installation - Supplied of a high degree of factory assembly for installation - Certified according to ISO 9001 and ISO 14001 - Cables and accessories are compatible that increases operational line reliability Elegas terminations weak point is system of tubes from expansion tank to termination. Terminations - unsatisfactory quality Bad price-quality trade-off Joints consist of three units, filling up Terminations are labour-consuming. Additional equipment is necessary: degassing unit, nitrogen system. Elegas connectors weak point is expansion tank, gas penetration through current carrying conductor to insulator. Preparation of large section of cable for installation. Terminations weak point is transition from semiconducting layer to XLPE. Elegas terminations - labour-consuming, KADWELL welding system (powder welding). Weak point is terminationexpansion tank connecting pipes. Terminations are labour-consuming, difficult to install Suedcable Germany Elegas terminations are easy to install, reliable. Elegas terminations cable process spare is minimal, inconvenient if connected to GIS. Terminations difficult to install. 2
Table 2. Market share by manufacturers for 2010* No. Manufacturer Supply scope in 2010 (pc.) Market share 1 Nexans 57 19,3% 2 Prysmian 50 17.0% 3 Pfisister 49 14.2% 4 ABB 43 13.4% 5 Suedcable 39 13.2% 6 Brugg 35 11.9% 7 NKT Cables 15 5.1% 8 Taihan 13 4.4% Total 294 100% *Source: Statistic data from Federal Custom Service Diagram 1. Market share. High voltage cable accessory manufacturers in 2010 Based on Federal Custom Service data in 2010 main market share belongs to Nexans (market share 19,3%), Prysmian (market share 17,0%), Pfisister (market share 14,2%). These Companies take main market share of 50,5%. Production of high voltage cable accessories by Russian plants is not developed. They basically produce cable accessories of low and medium voltage. 3
Market Capacity (demand and supply) The growth of high voltage accessories market depends directly on the growth of high voltage cable market and high voltage cable market depends on power market. Development of power sector is planned within 2011-2020. Average annual growth rate will be 1,9% 2,9% for a year. The growth of power generation and consumption in Russia is given in Diagram 2. Diagram 2. Power generation/consumption 2008-2020*. * Source: Marketing Plan of New Technologies High Voltage Cable System Co Ltd Generation and consumption is almost on the same level. If introduce new generating capacities, construct and retrofit power stations, the generation will exceed consumption close to 2013. 57% of generating capacities will work out their primary and secondary resources. Development of power sector in Russia will require considerable investments. Today the growth of high voltage cable system market is rather rapid. The growth rate is about 24,4% per year. This fact can be explained by the following: Russian power sector has started to use power cables with XLPE insulation and corresponding accessories; Retrofit and extension of existing networks for power transmission stimulates use of cables of a higher power and high voltage cable accessories. Increase of power consumption in conditions of compact residential and industrial construction has led to construction of high voltage cable systems of 110-500 kv. With high voltage cable systems overhead cable lines can be changed into underground ones according to city infrastructure requirements. Underground cable lines allow to avoid trips and damages caused by wind storms. Quick urbanization, city development of RF encourages increase of underground high voltage cable system installation. Overhead lines installation is becoming more and more difficult. 4
Diagram 3. Demand and Supply proportion of high voltage cable systems, bln.rub.* * Source: Marketing Plan New Technologies High Voltage Cable System Co Ltd. Calculation by NT-Systems Co Ltd. This diagram shows that the demand for cable and wiring products up to 2020 will exceed the supply. The maximum break will be within 2011-2015. Growth of the demand in these years is connected with infrastructure and housing construction, construction of Sochi Olympic Games facilities and etc. Decreasing of the break between the demand and the supply will be in 2022. Later the supply will prevail. Above mentioned shows that within 2011-2020 there will be a growth of consumption and generation of electric power and this will lead to high voltage cable system market growth, consequently high voltage cable accessory market will be influenced. 5
Calculation of Demand and Supply of high voltage cable accessory market As high voltage cable accessory market depends on development of high voltage cable market, so a parallel can be done between them. Table 3. Demand and supply of high voltage cable system market, bln. rub.* 2009-2010 2011-2015 % of growth 09-10vs11-15 2016-2020 % of growth 11-15vs16-20 Demand 33,1 130,4 394% 127,9-1,9% Supply 37 99 268% 112 13% *Source: Calculated by NT-Systems Co Ltd The table 3 shows that within 2011-2015 the growth of high voltage cable systems will be about 394% (Demand) and 268% (Supply). From 2016 up to 2020 based on calculations there will be market saturation and the supply will gradually become equal to the demand. Equilibrium point will be reached in 2021-2022 (see Diagram 3). Table 4. Annual growth rate within 2011-2020,%* Demand 28,6% Supply 20,2% *Source: Calculated by NT-Systems Co Ltd Thus this percentage ratio can be used also for high voltage cable accessory market Table 5. Demand and supply of high voltage cable accessory market, pc.* 2010 2011-2015 % of growth 2016-2020 % of growth Demand 263,1 1424,8 394% 1394,9-1,90% Supply 294 1081,92 268% 1222,5 13,0% *Source: Calculated by NT-Systems Co Ltd Diagram 5. Demand and supply proportion of high voltage cable accessory market, pc.* Source: Calculated by NT-Systems Co Ltd 6
Table 5 and Diagram 5 shows that the demand from 2011-2015 of high voltage cable accessory market will be about 1424 (pc.), 285 accessories every year. In 2016-2020 will be a gradual market saturation and the supply will be equal to the demand. Equilibrium point will be reached in 2021-2022. After 2020 the supply will exceed the demand. SWOT analysis Correspondence analysis of internal opportunities of the Company (i.e. balance of its weak and strong sides) and external environment is extremely important for strategy development. The analysis shows points the Company shall improve within itself, industry and market. Strength - own production site - integration with a manufacturer - favourable financing terms (low % rate) - 8 years on cable and wiring products market - positive company image - experience and key competences: general contractors, customers, partners, sales management, development and approval of design documentation and etc. - high degree of compliance with contract obligations - production cost is lower than one of foreign manufacturers Weaknesses - quality of foreign manufacturers is better that domestic - incompatibility with cable and wiring products of other manufacturers - no experience in production setting up Opportunities - development of power sector and increase of power consumption in RF - increase of share in high voltage cable system market which will lead to high voltage cable accessory market growth - access to high voltage cable accessory production market - development of corporate customers and new industries of users - integration with manufacturers of high voltage cable accessories Threats - WTO accession - occurrence of Russian manufacturers - changes in suppliers policy - a sharp rise in Euro and US dollar exchange rates. This may lead to cost increase of reverts and decrease the demand - threat of access of foreign manufacturers to Russian market (introduction of new productions on the territory of RF) 7