Southeast Asia, with its high gross domestic product, escalating population and rural electrification drives, is energy-hungry. The region has enormous energy resources in the form of hydro, oil and gas and renewable energy, however, its electricity grids are unable to handle the additional loads.
To better meet the soaring demand for electricity, utilities are investing in large-scale transmission and distribution (T&D) infrastructure development and thereby, giving a huge boost to the high voltage (HV) transmission market.
New analysis from Frost & Sullivan, Southeast Asian HV Transmission Market, finds that the market earned revenues of $2.73 billion in 2013 and estimates this to reach $3.75 billion in 2018.
Electricity utilities in Indonesia, Vietnam and Myanmar have already laid out extensive power generation plans. Nevertheless, the market is beset by project delays due to financial constraints and utilities' inertia in payouts. In certain countries, challenging land acquisition laws and local content regulation further restrict market growth.
For instance, in Indonesia, a set percentage of goods used in every project has to be locally produced. In Malaysia, there are also regulations that restrain foreign companies from offering engineering, procurement and construction (EPC) services.
"To comply with these regulations, equipment manufacturers are partnering with local companies in countries such as Malaysia and Indonesia," said Frost & Sullivan Energy & Environment Senior Research Analyst Avanthika Satheesh.
The HV transmission market has also got a boost with the Asian Development Bank and World Bank offering considerable support to utilities in their grid expansion projects. Utilities are investing huge sums in upgrading their infrastructure, especially in Vietnam, Indonesia and Thailand, which are the fastest growing markets for HV transmission in the region.
By 2018, projects that are likely to be completed as a part of the Association of Southeast Asian Nations (ASEAN) grid realization are Thailand-Malaysia, Sarawak-Indonesia, Thailand-Laos, and Vietnam-Laos. Also, by that period, grid reliability improvement and integration of smart grid features will be major technical trends in the HV transmission market.
"Overall, the market is expected to be buoyed by utilities' plans to enhance the grid and strengthen it for power additions in the future," noted Satheesh. "Most of the revenue growth is expected from new substation projects, augmentation of existing substations, replacements, transmission line erections, and EPC services."