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Uninterruptible demand for UPS and inverters

EM NEWS BUREAU ,  Thursday, May 12, 2011, 15:35 Hrs  [IST]

Untitled - 61.jpgThe power supply situation in India has two primary concerns—quantitative and qualitative. There are not only power shortages but even the quality of power supply is not up to the mark. This explains the need and the existence of a very large industry— generally referred to as the "power backup" industry—that not only ensures power supply at all times but also makes sure that the raw grid power supply is filtered into true sine wave (pure) quality. Hence, the power backup equipment is often referred to as a power conditioning equipment.

It is estimated that lack of quality power is chiefly responsible for damage to sensitive electronic hardware like computers, printers, medical and telecom equipment, etc.

The power backup industry is estimated to be over $1 billion and includes batteries (at the lower end) and uninterruptible power supplies (UPS) and inverters at the higher end. In the Indian context, UPS and inverters are the major power conditioning equipment used, depending on the nature of application.

 A UPS refers to a power backup system where the backup power duration is very limited, usually less than an hour. The UPS system can be online, which is connected to the load at all times, or offline where the UPS comes into play only when there is a grid supply failure. The reason why the power duration time in UPS is limited is that there is a backup system like a diesel generator that comes into play very soon after grid supply fails. In the Indian context, the online UPS finds major application and is used in desktop computers, hospitals, data centres, telecom exchanges, etc.

A typical backup device like UPS or inverter has two major components— battery and power electronics. Due to a lower backup time, the battery accounts for only 30 per cent of the total system cost, unlike in inverters where backup time is much higher.

An inverter refers to a power backup source where the backup time is usually high, ranging from one hour to eight hours. Inverters are used in areas where there are planned power cuts and load shedding. Inverters have a much higher rating in terms of kVA and the battery accounts for up to 60 per cent of the system cost.

 The total market size for UPS and inverters is estimated to be around 6.5 million units per year. Out of this, around 35 per cent is accounted for UPS in the sub-5KVA range. Within this, 70 per cent is taken up by the sub- 600VA range, which typically finds application in desktop computers.

The demand for low-rating UPS is linked to the growth in desktop computers. The UPS segment saw its highest annual growth of around 18- 20 per cent in the 5-6 years prior to the global recession of 2008. In 2009 and 2010, the growth rate nearly halved. Experts feel that the spurt in the sale of laptops, notebooks and netbook, has resulted in lower desktop sales. This has depressed the sale of UPS, mainly in the sub-600VA category. The highest revenue earning segment is the 10-100kVA segment coming from industrial UPS like the online and line-interactive systems.

Leading players catering to the Indian UPS market are APC (a unit of Schneider), Emerson, Numeric Power Systems, DB Power, Eaton, etc. These five players account for half of the market size, in terms of revenue.

The market for inverters is much smaller than UPS in volume terms. An estimated 1.8 million inverters are sold in India per year with over half of them in the 1.5kVA range. Power outages (planned power cuts) are the main business driver for inverters. Sales of inverters pick up in the summer season when power shortages peak. Over the past few years, a trend of purchasing higherrating inverters-those that can support air conditioners apart from other low-wattage appliances-is being seen. Just like the UPS segment, the inverter is also flooded with unbranded products, mainly in tier-II and tier-III cities. The power electronics that goes into inverters is usually sourced from China and Taiwan, with the domestic manufacturing base virtually absent. There is tremendous pricing pressure which results in domestic products unable to compete with imported (Chinese) brands. This has brought about a situation where manufacturers find it profitable to simply trade in imported inverters.

Outlook: The market for UPS, inverters and other power conditioning equipment will continue to remain upbeat, although the high growth rates seen in the pre- 2008 period might not be sustained. Although India has aimed at attaining a "power for all" situation by March 2012, power shortages are likely to persist in the foreseeable future. Besides, pure quality power is still at a distance, which means that power conditioning equipment would be used more for the "qualitative" aspect, even if not for the "quantitative" one.

The IT and IT-enabled service sectors will continue their high growth rates, which means that industries like telecom, banking and financial services, data centres, etc would continue to drive demand for UPS and inverters. Even healthcare—a sector that needs uninterruptible power supply and pure power to protect sensitive equipment— will significantly drive demand.

To some extent demand for power conditioning equipment will subside with the advent of battery-operated devices. An important example of this phenomenon is the advent of laptops and netbooks that saw sales of desktop computers slide. This in turn diminished demand for UPS.

One trend that experts feel would emerge in the coming years is efficient and greener equipment. A solar powered inverter is a case in point. Currently, these inverters are expensive but as technology evolves, they might become more affordable.

While one can be assured of a steadily growing demand for power conditioning equipment in India, there are concerns about the maturity of the industry. There is very little production of power electronics components in India. As such, India is heavily dependent on imports. There is need for the component industry to evolve, which can make the industry survive the onslaught of imported equipment from China and Taiwan where the industry is fully integrated.
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