Transformers are critical equipment for any transmission and distribution (T&D) utility, and play a key role in ensuring consistent electricity flow across long distances. India’s transformation capacity has registered a steady increase over the years and stood at 1,092.7 GVA across the 220 kV to 765 kV levels in May 2022. Between 2015-16 and 2021-22, AC transformation capacity grew at a CAGR of 8.8 per cent. In addition, the HVDC transformation capacity stands at 33,500 MW, of which the majority, 54 per cent, is at ± 800 kV level; 40 per cent at ± 500 kV level; and the remaining 6 per cent at ± 320 kV level. Between 2015-16 and 2021-22, HVDC transformation capacity has grown at a CAGR of 14.3 per cent. Further, in the distribution segment, 730-740 GVA of transformer capacity was operational in March 2021, at the 33 kV level and below, across 40 utilities in the country. Between 2016-17 and 2020-21, transformer capacity grew at a CAGR of 6 per cent.
The demand for transformers is mainly driven by the growth in the T&D segments. The transmission segment is set to witness rapid growth owing to the need to evacuate large-scale renewables. With the government’s target of increasing non-fossil fuel electric capacity to 500 GW and meet 50 per cent of its energy requirements from renewables by 2030, a massive expansion in renewable energy capacity is expected, and a commensurate increase in transmission networks will be required. Several central programmes are also under way to support this expansion, which will drive the demand for transmission equipment, including transformers.
One such key programme is the Green Energy Corridors (GEC) initiative, which is being implemented in a phased manner by Power Grid Corporation of India Limited (Powergrid) and state transmission utilities. The objective is to integrate large-scale renewable capacity addition into the national grid. Under GEC Phase I, 3,200 circuit km (ckm) of interstate transmission lines and 17,000 MVA of substation capacity have been commissioned for evacuation of 6 GW of renewable energy. Recently, the Cabinet Committee on Economic Affairs, chaired by the prime minister, approved the GEC Phase II programme for intra-state transmission systems. Under this phase, projects will be set up in seven states – Gujarat, Himachal Pradesh, Karnataka, Kerala, Rajasthan, Tamil Nadu and Uttar Pradesh – to expedite the evacuation of approximately 20 GW of renewable energy. Under GEC Phase II, approximately 10,750 ckm. km of transmission lines and 27,500 MVA of substation transformation capacity at the intra-state level are expected to be added.
Similarly, the transmission scheme for renewable energy zones (REZs) aims to evacuate 66.5 GW of renewable energy capacity (50 GW solar and 16.5 GW wind) at an estimated cost of Rs 432 billion in seven renewable energy-rich states – Tamil Nadu, Andhra Pradesh, Karnataka, Gujarat, Rajasthan, Maharashtra and Madhya Pradesh. A comprehensive transmission system has been planned for integration of potential REZs. The implementation of schemes is being undertaken in a phased manner in Rajasthan and Gujarat.
In the distribution segment, the Revamped Distribution Sector Scheme aims to reduce aggregate technical and commercial losses to pan-India levels of 12-15 per cent, and the average cost of supply-average revenue realised gap to zero, by 2024-25. The reforms-based and results-linked scheme has an outlay of Rs 3,037.58 billion over five years, with an estimated government budgetary support of Rs 976.31 billion. As of December 2021, the government has reportedly approved proposals worth over Rs 1.62 trillion for 13 states. Of this, about 54 per cent (Rs 880 billion) has been earmarked for smart metering and the remaining for infrastructure upgradation for loss reduction. As per the scheme guidelines, distribution infrastructure works are required for strengthening and modernising the system as well as for loss reduction.
Besides T&D, transformers are required at conventional as well as renewable energy plants. Given the country’s ambitious solar energy target of 300 GW by 2030, the demand for solar step-up transformers from renewable energy developers is expected to accelerate. These transformers step up the direct current (DC) voltage to the required AC voltage before supplying it to the electricity grid. Their ratings typically range from 500 kVA up to 5 MVA (for three-phase 33 kV class transformers).
In addition, the metro and railway segment is another key consumer of transformers, especially traction transformers, which are important components in the traction chain that affect train performance and operator services. Given Indian Railways’ (IR) target of electrifying the entire broad-gauge network by 2023, the demand for these transformers is set to grow. In January 2022, Chittaranjan Locomotive Works and Diesel Loco Modernisation Works, part of the IR, awarded a contract for traction transformers to Hitachi Energy. The IR undertook the record electrification of 6,366 rkm during 2021-22, taking the total electrified broad gauge route to 52,247 rkm as of March 2022, which is 80 per cent of the total broad gauge route. In addition, the expansion of metro networks across urban areas is driving the demand for dry-type transformers, which are generally installed in metro stations. Further, transformers over the age of 20 years need to be replaced in a phased manner, which is a potential growth area for the renovation and refurbishment business. Domestic transformer manufacturers also stand to gain from the ban on power equipment imports from China, which has been supplying low-cost products in the Indian market.
Transformer technologies have evolved significantly over the years, with smart and digital transformers, green transformers, phase shifting transformers, dry-type transformers, ester-filled transformers, convertor transformers and flexible transformers, among others.
Smart transformers, which can independently regulate voltage while allowing remote operation, are an integral component of digital substations. Green transformers come with the features of low noise levels, better safety against fire due to the use of ester oil, and a lower carbon footprint. Meanwhile, dry-type transformers are solid state devices comprising an air-filled, pressurised and sealed tank with core windings. In ester-filled transformers, natural esters are used for liquid insulation of the transformer vis-à-vis mineral oils used in conventional transformers, thereby providing these transformers with fire-retardant properties. Converter transformers are deployed in HVDC projects to convert the generated electricity into DC and then back to AC for power consumption. Flexible transformers can adapt to a range of voltage ratios and impedance levels, and can therefore be deployed for a variety of applications by utilities. Phase shifting transformers are special purpose transformers, used to control the active power flow in the network by regulating the phase of line voltage. Finally, coupling transformers are used in flexible AC transmission systems to enhance the control and stability of the system and increase its power transfer capabilities. Operation and maintenance practices for transformers have also seen a shift in recent times, with utilities increasingly focusing on reliability-centred maintenance and condition-based monitoring for these critical assets.
Issues and the way forward
Increasing commodity prices, the rise in crude oil rates and growing inflation have affected transformer manufacturers significantly. The prices of key commodities such as aluminium, copper and cold-rolled grain-oriented (CRGO) steel, used in the manufacture of transformers, as well as that of transformer oil, have increased tremendously – in the range of 25-90 per cent – in the past year and a half. As per the Indian Electrical and Electronics Manufacturers (IEEMA), the price of aluminium has increased by 85 per cent, copper by 80 per cent, CRGO by 60 per cent, steel by 50-80 per cent, polymers by 50-90 per cent and transformer oil by 25 per cent during this period. In a recent statement, the IEEMA has requested purchasing organisations to incorporate price variation clauses in all future and existing contracts, at least for unfinished supplies. This will help in mitigating the price surge of raw materials and protect the financial health of suppliers, contractors and vendors in the long term. While the volatility in raw material prices is a cyclical phenomenon, it may hamper manufacturers’ ability to supply equipment such as transformers for critical T&D projects, if left unaddressed in the long term.
These challenges notwithstanding, the long-term drivers for transformer demand and the outlook for the country’s power sector remain positive.