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Hubbell, Inc. Becoming a Stronger Participant in the Market for Grid Modernization with RFL and Aclara Acquisitions

Here are the reasons for our viewpoint that Hubbell’s Power segment (known as HPS) will lead the company’s growth over the coming years.
Continue reading Hubbell, Inc. Becoming a Stronger Participant in the Market for Grid Modernization with RFL and Aclara Acquisitions

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A Closer Look at the Changing Russian Electric Power Industry

Russia is the world’s third largest consumer of energy, and as such the country has announced plans and programs to modernize its energy infrastructure, especially for the nation’s power sector. Currently, the Russian national power grid includes more than 230 GW of production capacity. The country’s utilities are known as energos. These energos operate more than 31,000 T&D substations located throughout multiple regions and time zones. There are almost 800 large scale power plants in the country, including 15 nuclear sites operating some 35 reactors. Seven new nuclear units are now under construction as of mid-2017.
Continue reading A Closer Look at the Changing Russian Electric Power Industry

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Progress Report on the 2016-2018 Study of Protective Relays

This week the staff at Newton-Evans Research is in the midst of conducting pre-testing of our 2016 survey design with our panel of leading utility contributors. After reviewing the results and feedback from our panel, we will finalize the North American version of the survey and begin requesting participation from utilities, ISO/RTO organizations, industrial firms and rail transport organizations. The pre-testing process will then be undertaken with our international utility panel.

This periodic study was last undertaken in 2012, with guidance provided in the four volume set of reports for the P&C community through 2014. The report series has been relied upon by relay manufacturers, substation automation developers and control systems integrators around the world for more than three decades. The reports are referenced by standards organizations and the operational consulting community looks to the series for guidance on protection and control status, learning where the “real world” of utilities is today and understanding the technical drivers and operational trends that will impact utility and supplier planning over the next few years.

We are hoping to receive participation from more than 100 key electric utilities in this year’s study. Typically we do obtain cooperation from 100 or more utilities. It is more difficult to obtain high levels of cooperation today, with concerns about security and competitive activities. We are trying not to be intrusive in our questioning, so would-be participants can safely and securely provide information without having to be concerned with cyber security policy issues.

The richly illustrated Executive Summary from this new study will be about 40 pages in length and will enable participants to “benchmark” the findings relative to their own P&C activities and plans and compare with other utilities within their size range and utility type.

For interested parties, keep in mind that the pre-publication price offer for the four volume set of report is $5,500.00 through May, 2016. Once the study is published, the report series price will be $5,950.00.

A brochure with order form for the 2016-2018 series is available here.

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The Year in Summary (2015)

2015 was another busy year for Newton-Evans Research. Some of the studies conducted this past year covered new research topics. While our work was focused on client-commissioned studies, we obtained many insights from operational and engineering perspectives that will assist our research programs in 2016 as we once again conduct our flagship multiclient studies of protection and control, substation modernization, and operational control systems with utilities around the world. For over 30 years Newton-Evans has observed and reported on the fundamental shifts in operational systems and electric power infrastructure technology developments and usage patterns. In 2016, there will be additional changes in usage patterns, plans and outlooks among operational end engineering officials to note, both in North America and internationally.

Continue reading The Year in Summary (2015)

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Bumps in the Road to Grid Modernization – Caution Ahead?

The T&D Industry and Grid Modernization Efforts in the second half of 2015 – A Middling Performance – So What Lies Ahead for 2016?

While a number of energy industry pundits suggest that the T&D markets for infrastructure equipment and control systems always go up, I will revert to what another Newton stated a few centuries ago in his Third Law of Motion (“What goes up must come down”).

An informal survey of marketing/product managers being undertaken concurrently with the development of this article strongly suggests that we are in a “down” or at best, a “flat” year for much of T&D infrastructure and for the systems that monitor and control distribution networks. There are some exceptions as noted below.

A more formal study of CAPEX and OPEX plans among the world’s utilities will follow in the fourth quarter. The findings from this scheduled study will enable suppliers of equipment, systems and services to plan more appropriately for the coming two years. This will be the sixth edition of the Newton-Evans CAPEX/OPEX report that began with the financial crisis of 2008 and continued through 2013. Now that low load growth and low capital investments have again hampered the bumpy road to grid modernization, the timing for this study will be helpful.

In preliminary discussions with U.S.-based manufacturers, integrators and industry observers, it is clear that we have entered into a period of further uncertainty and limited investment capabilities for utilities, with some major infrastructure and grid modernization projects being delayed or deferred for months or even years. The significant industrial consumers of electric infrastructure products and smart grid equipment and systems are, in some cases, in a more difficult position than are electric utilities. With falling commodity prices, and the widening spread of corporate bond costs versus Treasury bond costs, the ability of many companies and utilities to source capital for investment is not as “low-cost” as current interest rates would have it. Continue reading Bumps in the Road to Grid Modernization – Caution Ahead?

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First Quarter 2015 Projects Underway at Newton-Evans Research:

Study for CIGRE WG D2.38 – Operational Readiness for Cyber Threats. The Newton-Evans staff is conducting an international survey of electric utility IT and OT organizations to learn about the current status of preparations and readiness to minimize the impact of cyber threats. Utilities that participate with us in this “pro bono” study for CIGRE will be entitled to share in the findings and recommendations from the survey and from the guidance to be set forth in a 2016 CIGRE technical brochure.

2015-2017 Substation Automation U.S. Market Overview Series: Newton-Evans is in the process of releasing a new series of market synopses concerning 14 components of electric power substation modernization in the United States. Fourteen report summaries are available individually or as a complete series. Taken together the fourteen components reported in the series accounted for an estimated $1.7 Billion in 2014 shipments to U.S. utility and industrial customers. Growing at an average rate of about six percent, Newton-Evans expects 2017 shipment values to reach nearly $2 Billion.

Included in the series are these individual topics: SA01 – Remote Terminal Units; SA02 – Programmable Logic controllers; SA03 – Substation Automation Platforms; SA04 – Multifunction Meters and Recorders; SA05 – Inter-Utility Revenue Meters; SA06 – Digital Relays; SA07 – Digital Fault Recorders; SA08 – Sequence of Events Recorders; SA09 – Power Quality Recorders; SA10 – Substation Reclosers; SA11 – Substation Automation Integration Specialists; SA12 – Substation Communications; SA13 – Substation Voltage Regulators; SA14- Substation Precision Timing Clocks. The report summaries are available individually at $150 per report, or the group of 14 report summaries is available for only $975.00.

2015-2017 Protective Relay U.S. Market Overview Series: Newton-Evans is now underway with work to update the 2012 series on protection and control. A total of ten market summaries will become available on April 10. The P&C series will include the following topical summaries:
PR01 – Feeder Relays; PR02 – Transmission (Distance, Overcurrent, Line Differential) Relays; PR03 – Generator Relays’ PR04 – Bus and Busbar Relays; PR05 Transformer Protection Relays; PR06 – Motor Control Relays; PR07 – Electro-Mechanical Relays; PR08 – Drop-In Control Houses; PR09 – Synchrophasors (PDUs/PDCs); PR10 – Teleprotection. The report summaries will be available individually at $150 per report, or the group of 10 report summaries will be available for $875.00.

Worldwide Study of the Protective Relay Marketplace In Electric Utilities (2015-2017). Newton-Evans staff is preparing to undertake a major update to the four volume flagship study of protective relay use in utilities around the world. We need to hear back from interested parties as to whether this study should be scheduled for a spring kick-off or whether we should defer work on this massive study until autumn 2015. Early commitments will mean lower subscription prices and earlier reports availability. Please provide your thoughts and information requirements on the study’s timing and desired content to us.

Commissioned Studies:  Privately funded studies this first quarter include North American assessment of the recloser market; cyber security topics; ADMS market overview; software module pricing for AMI-OMS related systems; new compilation of North American EHV/HV and MV substations, transmission and distribution line mileage totals. (By state and by type and size of utility).

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2014 Autumn Electric Power Conference Season Well Underway

For the electric power industry, late summer through mid-autumn brings a number of conferences to the forefront each year or at least every two years.

This year is no exception. From the international CIGRE Conference held in Paris every two years, to the annual EMMOS conference and Southeast Distribution Apparatus Conference, there are lessons to be learned and topics of interest to those following industry trends. The CIGRE conference provides information on key electric power topics, while EMMOS focuses on large control systems used by utilities and independent systems operators (ISOs). The SDAC offers briefings and training on a variety of power distribution topics, ranging from meter management to control systems to cyber security.

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In late August I attended and participated in my 10th CIGRE conference. This year set a new record for attendance (more than 3,000 delegates and another 5,000 visitors) and the number of exhibitors and working group sessions also reached new heights. One of the more interesting observations for me has been to witness the growth in CIGRE participation by utilities and T&D equipment and systems companies from North America. Delegates are either actively volunteering on working groups or doing booth duty for an increasing presence of large-to-small North American companies whose equipment, systems and services are part of the exhibition.

Continue reading 2014 Autumn Electric Power Conference Season Well Underway

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What to Expect Next: Potential Synergies of the Alstom (Power and Grid) Acquisition by General Electric

As many long-term readers of Newton-Evans’ reports and articles knew from our assessment reported in 2009 there were back then three major contenders for the $7 billion Transmission and Distribution business units of the old Areva T&D Corporation. These were the American firm General Electric, the French corporate combination of Alstom and Schneider Electric, and the Japanese company, Toshiba. In the end the French government simply divided Areva T&D in half, and placed the “T” business into Alstom and the “D” business into Schneider Electric.

On June 21, 2014 GE was informed that Alstom’s board of directors decided to recommend GE’s offer to acquire the Power and Grid business of Alstom Corporation. These units are: Alstom Power (generation assets) and more importantly for this assessment, Alstom Grid, the HV and control systems components of the old Areva T&D business. The “D” business of Areva has now become a core business within the capable Schneider Electric camp of medium voltage equipment offerings.

Newton-Evans Research believes significant benefits to GE’s efforts targeting the global electric power industry will accrue if the company staffs truly work synergistically. Here are six key reasons for this view, in our opinion:

(1) IMPROVED WORLD MARKET ACCESS: GE will gain improved access to European electric power markets and other world regions with long-established relationships nurtured by Alstom and predecessors under the French management and government policies, which may continue under GE ownership, now that the French government is slated to become a significant shareholder investor in Alstom securities. Keep in mind that GE has more than a century of experience and accomplishments in France. I can recall visits to Belfort in eastern France and visiting both GE and Alstom (Areva) factory sites.

(2) ATTAINMENT OF ORGANIC GROWTH: GE Energy Management will again be able to lay claim to some real growth within 24 months of the close of this acquisition. Growth will come from both inorganic sources (via this acquisition – itself worth more than $4 Billion in current year sales of Alstom Grid products, systems and services) and organic growth (through increased interest in, and procurement of all combined GE-Alstom equipment, products and services). Each of the four component businesses of GE Energy Management including: Digital Energy, Industrial Solutions, Power Conversion and Energy Consulting will each benefit significantly if all goes as planned and envisioned in early July 2014. The big issue we see is whether Atlanta and Toronto will report in to Paris, or whether the reverse will be true.

(3) REDUCTION IN OFFERINGS “GAP”: GE will be able to fill several significant product/equipment gaps in its electric power transmission and distribution product line and related automation offerings. This will result in significant mid-term benefits to GE Digital Energy. However, a key issue for GE will be the “branding” of product offerings going forward from midyear 2015.

(4) MARKET-LEADING POSITION IN POWER GENERATION: Alstom’s power business includes assets for power generation such as turbines for coal, gas and nuclear power plants, wind farms while GE is a co-leader in both fossil, nuclear, hydro and renewables businesses.

(5) INCREASED SHARES OF OPERATIONAL CONTROL SYSTEMS: While GE’s EMS offerings have had somewhat limited success beyond North America, it’s DMS, OMS and GIS offerings are well-respected and are high quality offerings. Alstom Grid is a world leader in EMS, with a world-class group of systems for power transmission and distribution. The company’s “e-terra” line of systems is the leading market shareholder among critical T&D operational control systems used in the global electric power industry. The company also has developed a growing customer base among large utilities for advanced distribution network management with its IDMS offering. If the companies’ technical and product marketing teams work together as they have over time on various technical committees (IEEE, IEC, CIGRE et al) and provide smooth cross-systems integration capabilities, the company will be a force to be reckoned with in the world market for control systems. GE has a strong substation modernization/automation business focus across all components (systems, products, intelligent devices, communications equipment) that leads the North American market and is a growing force internationally.

GE Energy Management will likely become a major player in several growing portions of the transmission equipment business, establishing a stronger foothold in the North American and international transmission market segments described below. Together these segments are worth $32-40 billion on a worldwide basis. Newton-Evans’ estimates that Alstom Grid earned about $3.5 billion to $4.1 billion in HV equipment sales in 2013.

Here is our take on the gains to be realized for both electric power infrastructure and electric utility automation and services:

FACTS and Reactive Power Compensation:
ABB is probably the global leader in flexible AC transmission systems and the related reactive power compensation segment of high voltage equipment for transmission networks. Siemens Energy is a strong number two supplier with several others (notably Mitsubishi Electric Power Products, and American Superconductor) also active in North America, and around the world. Alstom Grid and GE are also participants that together could challenge the market leading positions of ABB and Siemens within three years of a merger of product lines.

HVDC Equipment:
Siemens is the market leader in HVDC, with ABB a reasonably close second place share holder and MEPPI the likely third most important player. However, an integrated Alstom Grid-General Electric product grouping would enable the company to attain up to a quarter of the available market shares.

Gas Insulated Substations/Switchgear:
The North American market for High Voltage GIS equipment is in excess of a quarter billion dollars. While Alstom Grid has only a small share (stronger in Canada than in the US), GE Energy could now present itself as a player in this growing market segment of high voltage switchgear. GE would also play a much more important role in international markets where – unlike in North America – GIS equipment is prevalent. Globally, GIS equipment is a 2-3 billion dollar annual market.

High Voltage Bushings:
This relatively small (about $125-150M in annual worldwide sales) market is led by Siemens and ABB. However, the combined Alstom Grid and GE offerings could make GE into a formidable player in this segment.

High Voltage Capacitors:
GE Energy is already the major participant in the North American market for HV capacitors, but globally, ABB is the leader. Alstom Grid, by virtue of its recent acquisition of the Finnish manufacturer, Nokian Capacitors, is also a very strong player in Northern Europe. Together, the product lines could pose a real threat to ABB dominance here (yet another billion dollar global product segment).

High Voltage Circuit Breakers:
Alstom Grid is already a major player globally, and with GE’s “sales boots on the ground” could significantly increase its share in North America and abroad. ABB and Siemens are both very strong manufacturers in this large annual global market of better than $2 billion.

Disconnect Switches:
High voltage disconnect switches are vital components of many transmission systems, and the global market runs to about $500 million annually. GE and Alstom Grid are among the six leading suppliers of disconnect switches in North America, but lag behind Hubbell, S&C and Southern States, some of which offer circuit switchers used for disconnect applications.

Large Power Transformers:
Alstom Grid is number three in the world in terms of large power transformer market share and assets, operating 13 plants with an annual production capacity of more than 130 MVA. GE Prolec is a major North American market force with about a 14% share of the U.S. market. Together, this alliance may become number three in the global market for LPTs behind ABB and Siemens). To do so, the GE-Alstom combine will have to fend off HICO, Hyundai, Toshiba and MEPPI as well as three up-and-coming Chinese manufacturers.

Instrument Transformers:
The market for high voltage instrument transformers had been dominated by specialist “independent” manufacturers until recently. A recent buying spree had Siemens acquiring Trench Electric, Alstom Grid acquiring Ritz and ABB acquiring Kuhlman. Currently, the market for HV IT equipment is shared primarily by these three firms, with GE very active in the MV segment. Together, the combined HV/MV instrument transformer offerings of an integrated GE-Alstom Grid would change the shape of this market, which in North America alone hovers around $100 million, and close to one-half billion dollars worldwide.

Air Core Reactors:
Another component of some transmission network architectures, Siemens-Trench and Alstom Grid-Ritz are key players, with GE also strong and MEPPI further behind, but with a growing share. A number of smaller participants account for a rather large share of this $400 million global business.

Surge Arresters:
Another sizable market in its own right (about $1 billion per year globally) high voltage surge arresters are manufactured by a number of US-based firms such as Hubbell, Thomas & Betts, and Cooper Power, each of which competes quite successfully against the likes of ABB, Siemens and GE.

Automation Systems:
GE’s older XA/21 EMS platform and Alstom Grid’s highly rated E-Terra offerings are both held in high regard around the world, although GE’s systems are mainly installed in the USA. By year-end 2015 and more likely into 2016, General Electric-Alstom Grid will see benefits from world-leading combined market shares in substation automation, protection and control and T&D control systems (energy management, DMS, OMS, GIS and SCADA). Earlier (1990’s era) acquisition efforts have been fraught with initial business unit integration problems (to wit- ABB with its acquisition of the older Ferranti EMS business (Spider v. Ranger offerings) and Siemens-Control Data (Sinault-Spectrum v. Empros).

Substation Modernization:
If protective relays are included in the mix of substation modernization, then the collaborative efforts of GE and Alstom will lead to a global co-leadership market position across the board. Alstom Grid enjoys a strong position with transmission class relays and related MiCOM systems and equipment, and has been fairly strong participant in the global market for substation automation. GE enjoys a strong position in protective relays in North America (number two supplier) and in some Western European and Asian markets, and does make the list of qualified suppliers elsewhere.

Protection and Control:
Internationally, Alstom Grid (with part of the Stafford, UK-based relay business) holds an estimated 16% share of the global protective relay market (outside of the U.S.), estimated by Newton-Evans to be about $2.4-$2.6 billion this year. GE Multilin, based in Toronto, is also a very strong market participant, especially in the Americas, and is the leader in industrial protection and control markets.

T&D Services:
GE is a major participant in T&D equipment repair and services, especially with its transformer repair business, and Alstom Grid outside of North America earns about $550 million per year with its array of high voltage equipment services and global agreements for automation systems maintenance and upgrades.
Let’s not count this as a “done deal” quite yet. I do believe it is now very likely to be seen through by all parties (GE, Alstom, French government, possibly various international courts). The important role of Alstom’s minority shareholders and their reaction to the GE acquisition is somewhat unclear as is the role the French government’s strong minority ownership position will play. GE has made significant concessions regarding job retention among the French workforce, and has promised to add another 1000 jobs in the country. This could have ripple effects on its global workforce, especially if workforce reductions take place.

The following chart (used with permission of General Electric) illustrates the current state of the acquisition and the alliance formation.

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Transmission and Distribution Equipment and Systems: Facts and Figures

Newton-Evans Research Company has completed hundreds of studies encompassing most aspects of the U.S. transmission and distribution equipment and related information management, monitoring and control systems markets in the nearly 36 years of its existence.

During the second quarter of 2014, the company will again be publishing more than 85 T&D segment management summaries which provide top-level overviews of most major components of T&D spending. These management summaries provide information on infrastructure topics as well as automation and control systems and engineering services. Definitions, Market size, market shares, recent year shipment estimates and the 2014-2016 outlook is provided in each summary. While some of the information provided in these reports is based on secondary research, much has been developed from meetings and discussions held directly with equipment manufacturers and systems integrators. In some instances, the supporting data is based on larger studies completed by Newton-Evans.

When coupled with the very large “third party services” market and operational communications network investments, T&D-related spending in the United States has grown to more than $25 Billion as of 2013. Importantly, much of these expenditures would occur naturally, without being classified as “smart grid” related. With a mature electrical infrastructure in place for decades, much of the procurement of T&D goods and services today centers on refurbishment and upgrades of existing facilities and field assets, and the smartening up of an older generation of “passive” equipment.

Spending for high voltage equipment itself accounts for more than $5 billion (excluding power transformers). HV substation upgrades, together with circuit breakers and switchgear, make up the bulk of HV-related spending. Gas insulated HV switchgear will likely grow in importance in the U.S. just as it has in countries around the world. Transmission monitoring and control is now being upgraded with the development and deployment of two relatively new technologies, synchrophasors and dynamic line rating systems. HV substation and transmission line/tower construction spending tends to vary each year and ranges from about $2.5 billion to more than $5 billion in recent years.

TDMktplaceMay2014

Shipments of medium voltage (MV) equipment are now approaching $4.5 billion in value. Major MV equipment categories include air-insulated metal-clad switchgear, reclosers and sectionalizers, load interrupters and surge arrestors. When coupled with spending for distribution automation, and a host of related services and control systems, MV-related spending exceeds $10 billion.

Looking at transformers, which can range from extra-large power transformers to medium power units, to a variety of pad-mount and pole-top distribution units, the value of product shipments for this entire category approaches $5 billion to about $6 billion in a “typical” year.

The emerging field of advanced distribution automation includes the monitoring and control systems supporting field instrumentation devices such as pole-top RTUs, faulted circuit indicators and controllers for capacitor banks and reclosers and voltage regulators. Supporting platforms required for processing data acquired from these devices include newer applications hosted locally, at substations or at the control center-based distribution management systems, which often includes modern “distribution SCADA” systems for mid-size utilities.

Operational control systems have been a mainstay of the electric power delivery industry since the early 1970s. Today, modern energy management systems are in operation in virtually every North American transmission utility. Distribution-focused SCADA systems are now installed and operating at nearly 1,900 U.S. utilities. Separate DMS hosting platforms supporting advanced DA activities are becoming prevalent in many of the largest utilities. When coupled with spending for geographic information systems, outage management systems, meter data management systems, mobile workforce management systems, market management systems, cyber-security applications software and supporting services, the annual external spending for supporting operational IT systems of the U.S. electric utility community is now approaching $2.5 billion.

Combining the very large market for systems protection in the form of protective relays, the market for smart/intelligent electronic devices (various types of substation meters, power quality monitors and event recorders) and the market for integration and processing of all of this data, the recent year aggregated market for HV and MV substation automation and modernization has hovered between $1.5 billion and $2 billion.

Realizing that the investor-owned community of electric utilities accounts for around 70% of all customers, industry revenues and spending on T&D, keep in mind that the 1,800 public power utilities and the more than 900 electrical cooperatives represent an attractive, growing (and often leading edge) user base for newer technologies, especially for MV equipment, systems and services.

In addition to the electric utility community, the 710,000 industrial companies and nearly 18 million commercial firms account for about 15% of all T&D equipment and services purchased in this huge $22-$25 billion marketplace.

Unlike many countries around the world, and unlike many other components of the American economy, U.S.-based factories produce more than 90% of all T&D equipment purchased by U.S. utilities. A few years ago this was not the case for large power transformers, but with the opening of several manufacturing facilities in the southern U.S., this has changed for the better, and has resulted in shortened lead times for power transformers. North American-based business operations also develop and provide the vast majority of services, systems and applications software needed for utility operations and implement virtually all control and monitoring systems used here.

In multiple recent studies conducted by Newton-Evans, the nation’s electrical equipment manufacturers have reported that they have the capabilities to produce whatever may be required to advance the development of a more resilient, more reliable power grid. Smaller firms continue to lead in research and development of advanced energy technologies, and the follow-on benefits of the 2009-2012 ARRA programs under the guidance of the U.S. Department of Energy continue to positively impact the development of a 21st century electric grid.

It will take sustained investment over the next 20-30 years, along with ongoing research and development, to realize a fully reliant, resilient and sustainable power grid here and elsewhere. The development of demand response techniques, inclusion of distributed energy resources, deployment of micro—grids, large scale energy storage, cost-effective underground distribution networks where sensible, and the integration of renewables are each poised to play an important role in the future development of a modern American grid. We don’t need to tear down and start over, but we do need to modernize and upgrade the grid components in an iterative and intelligent manner. We need to improve and safeguard what remains as one of the world’s great technical achievements of the past century, the North American electric power grid.

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Here We Go Again: Potential Synergies of an Alstom (Power and Grid) Acquisition by General Electric:

As many long-term readers of Newton-Evans’ reports and articles knew from our assessment reported in 2009 there were then three major contenders for the $7 billion Transmission and Distribution business units of the old Areva T&D Corporation. These were the American firm General Electric, the French corporate combination of Alstom and Schneider Electric, and the Japanese company, Toshiba. In the end the French government simply divided Areva T&D in half, and placed the “T” business into Alstom and the “D” business into Schneider Electric.

This past week, there have been widely circulated rumors of another attempt by GE to acquire Alstom’s power business, principally Alstom Power (generation assets) and Alstom Grid, the HV component of the old Areva T&D business. The “D” business of Areva is now squarely in the capable Schneider Electric camp of medium voltage equipment offerings.

Newton-Evans Research believes there could be significant benefits to GE’s efforts targeting the global electric power industry if the company’s current purported acquisition attempts bear fruit. There are four key reasons for this view, in our opinion:

(1) As reported by others, GE will gain improved access to European and other world regions with long-established relationships nurtured under the French management and policies, which are likely to continue under GE ownership.

(2) GE Energy Management will again be able to lay claim to some real growth within 24 months. These increases will come from both inorganic growth (via this potential acquisition – itself worth about $4.5 Billion in current year sales of Alstom Grid products, systems and services) and organic growth (through increased interest and procurement of all GE Energy Management equipment, products and services). The four component businesses of GE Energy Management include: Digital Energy, Industrial Solutions, Power Conversion and Energy Consulting. These will each benefit significantly.

(3) GE will be able to fill several significant product/equipment gaps in its electric power transmission and distribution product line and related automation offerings. This will result in significant mid-term benefits to GE Digital Energy.

(4) Alstom’s power business includes assets for power generation such as turbines for coal, gas and nuclear power plants, and wind farms.  Alstom Grid  offers a world-class group of control systems for power transmission and distribution as well as many leading transmission-class equipment offerings. The company’s “e-terra” line of systems is the leading market shareholder among critical systems used in the global electric power industry.

A successful acquisition by General Electric would provide the firm with world-leading combined market shares in substation automation, protection and control and T&D control systems (energy management and SCADA). GE Energy Management would become a major player in several growing portions of the transmission equipment business, establishing a stronger foothold in the North American and international transmission market segments described below. Together these segments are worth $32-40 billion on a worldwide basis. Newton-Evans’ estimates that Alstom Grid earned about $3.5 billion to $4.1 billion in HV equipment sales in 2013.

FACTS and Reactive Power Compensation: ABB is probably the global leader in flexible AC transmission systems and the related reactive power compensation segment of high voltage equipment for transmission networks. Siemens Energy is a strong number two supplier with several others (notably Mitsubishi Electric Power Products, and American Superconductor) also active in North America, and around the world. Alstom Grid and GE are also participants that together could challenge the market leading positions of ABB and Siemens within three years of a merger of product lines.

HVDC Equipment: Siemens is the market leader in HVDC, with ABB a reasonably close second place share holder and MEPPI the likely third most important player. However, an integrated Alstom Grid-General Electric product grouping would enable the company to attain up to a quarter of the available market shares.

Gas Insulated Substations/Switchgear: The North American market for High Voltage GIS equipment is in excess of a quarter billion dollars. While Alstom Grid has only a small share (stronger in Canada than in the US), GE Energy could now present itself as a player in this growing market segment of high voltage switchgear. GE would also play a much more important role in international markets where – unlike in North America – GIS equipment is prevalent. Globally, GIS equipment is a 2-3 billion dollar annual market.

High Voltage Bushings: This relatively small (about $125-150M in annual worldwide sales) market is led by Siemens and ABB. However, the combined Alstom Grid and GE offerings could make GE into a formidable player in this segment.

High Voltage Capacitors: GE Energy is already the major participant in the North American market for HV capacitors, but globally, ABB is the leader. Alstom Grid, by virtue of its recent acquisition of the Finnish manufacturer, Nokian Capacitors, is also a very strong player in Northern Europe. Together, the product lines could pose a real threat to ABB dominance here (yet another billion dollar global product segment).

High Voltage Circuit Breakers: Alstom Grid is already a major player globally, and with GE’s “sales boots on the ground” could significantly increase its share in North America and abroad. ABB and Siemens are both very strong manufacturers in this large annual global market of better than $2 billion.

Disconnect Switches: High voltage disconnect switches are vital components of many transmission systems, and the global market runs to about $500 million annually. GE and Alstom Grid are among the six leading suppliers of disconnect switches in North America, but lag behind Hubbell, S&C and Southern States, some of which offer circuit switchers used for disconnect applications.

Instrument Transformers: The market for high voltage instrument transformers had been dominated by specialist “independent” manufacturers until recently. A recent buying spree had Siemens acquiring Trench Electric, Alstom Grid acquiring Ritz and ABB acquiring Kuhlman. Currently, the market for HV IT equipment is shared primarily by these three firms, with GE very active in the MV segment. Together, the combined HV/MV instrument transformer offerings of an integrated GE-Alstom Grid would change the shape of this market, which in North America alone hovers around $100 million, and close to one-half billion dollars worldwide.

Air Core Reactors: Another component of some transmission network architectures, Siemens-Trench and Alstom Grid-Ritz are key players, with GE also strong and MEPPI further behind, but with a growing share. A number of smaller participants account for a rather large share of this $400 million global business.

Surge Arresters: Another sizable market in its own right (about $1 billion per year globally) high voltage surge arresters are manufactured by a number of US-based firms such as Hubbell, Thomas & Betts, and Cooper Power, each of which competes quite successfully against the likes of ABB, Siemens and GE.

Automation Systems: GE’s long-established XA/21 EMS platform and Alstom Grid’s highly rated E-Terra offerings are both held in high regard, although GE’s systems are mainly installed in the USA. Earlier (1990’s era) acquisition efforts have been fraught with initial business unit integration problems (to wit- ABB with its acquisition of the older Ferranti EMS business (Spider v. Ranger offerings) and Siemens-Control Data (Sinault-Spectrum v. Empros).

Protection and Control: Internationally, Alstom Grid (with part of the Stafford, UK-based relay business) holds an estimated 16% share of the global protective relay market, estimated by Newton-Evans to be about $2.2-$2.4 billion on an annual basis. GE Multilin, based in Toronto, is also a very strong market participant, especially in the Americas, and is the leader in industrial protection and control markets.

T&D Services: GE is a major participant in T&D equipment repair and services, especially with its transformer repair business, and Alstom Grid outside of North America earns about $550 million per year with its array of high voltage equipment services and automation systems maintenance agreements.

We will soon see learn whether and how the French government will allow Alstom to sell off all but its transportation business to a “foreign” company. GE will likely have to make significant concessions regarding job retention among the French workforce. This could have ripple effects on its global workforce.

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Market Trends Digest

A special December 2013 edition of the Newton-Evans Research Company’s Market Trends Digest is now available on our website. This edition looks at some of the studies Newton-Evans has put together in 2013. Also, see some preliminary results from our study of the World Market for Substation Automation & Integration 2014-2016, and read two articles by our CEO Chuck Newton:

1. ASAT and Alstom Grid: One Year Post-Merger
2. Cyber-security: Still Time to Heed the Warning Signals

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New Report from Newton-Evans Emphasizes U.S. Know-How and Capacity to Forge a Modern Electric Power Grid

Study entitled “American Manufacturing and Systems Integration Capabilities for Power Grid Modernization” Provides Specific Guidance from Manufacturers and Systems Integration Firms concerning Readiness to Serve

September 25, 2013. Ellicott City, Maryland. Newton-Evans Research believes that American manufacturers can accommodate more rapid growth in U.S. grid modernization efforts than currently exists. Based on repeated surveys of several of the key manufacturing companies active in grid modernization product development and firms involved with grid management and control systems integration activities, there is sufficient manufacturing and integration capacity to meet expected demand levels for almost all core components of the smart grid investment grant program identified by the U.S. Department of Energy as well as additional grid modernization components studied by Newton-Evans Research Company. The latter group includes the intelligent electronic devices required for various automation projects from transmission and distribution level applications down to smart infrastructure equipment.

Regarding the nation’s ability to increase systems integration workloads and capabilities, there is sufficient integration expertise available to expand usage levels of the following: (1) dynamic transmission line rating systems; (2) synchrophasor-related monitoring systems used in the nation’s high-voltage transmission networks; (3) operational control systems deployed for power generation management, transmission and distribution network operations and outage management; (4) information technology with which to intelligently manage deployments of grid modernization components, including telecommunications and analytical tools.

Newton-Evans’ ongoing discussions and formal studies with suppliers, appropriate consultants and utilities have enabled the research firm to develop an independent update and prepare a fresh outlook for each of the DOE-identified smart grid components and a number of additional grid modernization components studied on a repetitive basis by Newton-Evans. Nationwide grid modernization efforts could be largely completed by 2040, including widespread deployment of a variety of scalable energy storage devices sited along the electric power delivery network and at customer premises, according to these observations and insights.

The core technologies identified as smart grid investment grant (SGIG) program components by DOE and discussed anew in this report are as follows: Energy storage, dynamic line rating (DLR), operational control and monitoring systems including SCADA and energy management, distribution management system, Advanced Distribution Automation (ADA) and outage management systems, synchrophasors, advanced metering infrastructure, smart meters, home-area networks and smart electricity loads

In addition, Newton-Evans has included observations from its own related studies of other essential components of grid modernization. These additional grid modernization components include substation modernization programs, protection and control activities, cyber security developments, time synchronization and a variety of grid infrastructure equipment.

Newton-Evans also conducted its fifth tracking study of capital investment in grid modernization during the summer of 2013. This new report includes key excerpts from findings reported in the company’s report Global CAPEX and O&M Expenditure Outlook for Electric Power T&D Investments: 2013-2014.

The 41 page report is priced at $975.00 and is available on our reports page.

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Utility CAPEX/OPEX Report Published with Results of April-July 2013 Newton-Evans Study of Electric Power T&D Investment

Ellicott City, Maryland – July 24, 2013: The Newton-Evans Research Company today announced the publication of its fifth study in the multi-year tracking research program looking into electric power utility capital expenditures or CAPEX budgets related to smart grid investments and infrastructure spending plans.

Findings from the second and early third quarter 2013 Newton-Evans global tracking study of electric power transmission and distribution investment remain positive, comparable with the four earlier tracking studies conducted in 2008, 2009, 2010 and 2011. Each of six “smart grid” component areas, plus transmission and distribution infrastructure development, has been reported by utilities located in 30 countries to more likely be either “increased” or “unchanged” rather than “decreased” from the last study. The highest percentages of officials reporting CAPEX increases were in the areas of transmission infrastructure and protection and control, followed by distribution infrastructure and control systems.

2013-14PlannedCAPEXtable

O&M budgets reflect a somewhat upbeat story as well. Several categories of O&M spending were more likely to see an increase from the OPEX budgets of two years ago. Distribution infrastructure and Distribution Automation both have gained some budget increases. Overall, international utility officials were more likely to indicate increases in both CAPEX and OPEX spending allocations for the majority of grid modernization topics.

Read the archived news release here.

This report is available on our reports page for $495.00. Feel free to call (410-465-7316) or email info@newton-evans.com for more information.

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New Report from Newton-Evans: Mid-2013 Assessment and Outlook for the North American Market for HV and MV Instrument Transformers

This new study of High Voltage and Medium Voltage Instrument Transformers shines a light on the growing requirement for additional current and voltage transformation equipment in electric power substations as more intelligent electronic devices are installed both in the substation and on the grid. From protective relays to substation meters to additional substation-based intelligent electronic devices, all require a reliable lower voltage, lower current power source to enable device operation.

According to Chuck Newton, “Newton-Evans Research undertook initial research on the topic of high voltage (HV) instrument transformers in mid-2012, then continued earlier this year for a private client study. Now, as follow-on to these efforts, Newton-Evans has extended its efforts into medium voltage (MV) instrument transformers during the second and early third quarters of 2013.”

Following are some key observations based on the HV/MV IT research program described in the report:

• By 2016, the combined HV/MV IT market will likely grow to more than $400 million annually with about $340-$370 million in U.S. expenditures and $50-$65 million spent by Canadian utilities and industry.
• Cumulative shipments of HV/MV instrument transformers within North America during 2013-2016 will approach $1.5 Billion.
• The manufacturing of HV IT equipment has a high “concentration ratio” (CR3) of suppliers.
• MV IT equipment manufacturing is less concentrated, with the medium voltage IT market addressed by several additional participants. (CR8).
• Sub-transmission level IT equipment, if viewed as a separate segment, would reveal additional market segment suppliers identified in the report.
• The spate of acquisitions a few years ago, involving the acquisition of the three leading “independent” HV IT equipment manufacturers (Trench, Ritz and Kuhlman) by Siemens, Alstom Grid and ABB, respectively, foreshadowed then-anticipated growth in this segment of the IT market in North America. Now, this T&D market segment continues to show promise in light of the construction and installation of new substations and quickening pace of grid modernization programs.

More information on this report, priced at $575.00,  can be found by clicking on the”Reports” tab.

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Fault Current Limiters: Newton-Evans Market Assessment and Overview through 2016

Newton-Evans Research Releases Report on Fault Current Limiters

This new (July 2013) publication is entitled: Mid-2013 Assessment and Outlook of the Market for Medium Voltage Fault Current Limiters. Newton-Evans began research work during the past year on a study of the U.S. market for Medium Voltage Fault Current Limiters (MV FCL). Initial work resulted in the aggregation of then-current secondary information on MV FCLs. Contact was established with the officials responsible for FCLs at the two known U.S.-based suppliers that have existing successful FCL installations (ABB and G&W). Both of these firms actively manufacture, market and provide support for their MV FCL products. Following an initial market assessment, Newton-Evans staff undertook telephone interviews with distribution engineering officials at 42 leading U.S. and Canadian Utilities to discuss use and plans for FCLs.

The resulting report is a 12 page assessment of the recent history and mid-term outlook for further development of this small segment of the electric power transmission and distribution equipment market. Synopsis of the two leading suppliers and a glimpse into the role superconductors may play now and in the mid-term to encourage further expansion of this market in both high voltage and medium voltage applications, and setting the stage for additional manufacturer participation.

This new report is priced at $275.00, with the market outlook through 2016 prepared by supplier shares, by world region, and by application (end-user), and is available for immediate download from our REPORTS tab.

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Newton-Evans Finds Major Electric Power Operations and Enterprise Software and Systems Sales in U.S. Now Exceeds $1.1 Billion

Three year growth from 2011 to 2014 projected at 26% for the entire group of ten key operational topics. Cyber Security Software Growth to outpace Other Topics in this series

November 12, 2012. Ellicott City, Maryland. The Newton-Evans Research Company has announced its publication of a set of 10 U.S. market summaries covering operational systems and software used by American electric power utilities. The newest series of market overview reports (executive two-page market summaries) includes supplier listings, representative products, and estimated market size for each topic, vendor market share estimates, and market outlook through 2014. For several topics, typical software and/or system cost ranges are also provided. Electric utilities accounted for more than 95% of all purchases of control-related systems and utility CIS software. Total 2011spending for the systems and packaged software included in this series exceeded $1.1 billion, with an even larger amount spent internally or with developers for custom development and maintenance of these systems and applications software packages.

The Control Systems series ($975.00) includes U.S. market size, market share estimates and market outlook for these ten topics: CS01 – EMS Systems Integration, CS02 – Distribution SCADA, CS03 – Geographic Information Systems, CS04 – Customer Information Systems, CS05 – Outage Management Systems, CS06 – Meter Data Management Systems. CS07 – Mobile Workforce Management Systems, CS08 – Advanced Distribution Automation, CS09 – Electric Power Market Management Systems and CS10 – Cyber Security Software for Control Systems

Other T&D topical series published this year by Newton-Evans Research are also available including: substation automation (13 market segment snapshots), power transformers (11 market segment snapshots), distribution automation (12 market segment snapshots), protective relays (8 market segment snapshots), high voltage equipment (15 market segment snapshots) and medium voltage equipment (20 market segment snapshots). Forty companies represent the majority of sales of products, systems and software covered in the series. This group of market overviews is the final series to be published in 2012. In total, 84 T&D-related equipment, software and services market segment overviews are available.

Total shipment values for the 84 components of the Newton-Evans U.S. T&D market overview series exceeded $15 Billion in 2011, and are projected to reach $18 Billion by 2014. The report summaries can be purchased online, either individually or by topical series. More than 200 suppliers are each represented in at least one report.

Further information on this new series of U.S. electric power transmission and distribution market snapshots is available from Newton-Evans Research Company, 10176 Baltimore National Pike, Suite 204, Ellicott City, Maryland 21042. Phone: 410-465-7316 or visit the specific Newton-Evans website page at http://www.newton-evans.com/wp-content/uploads/MktSummarySrs-2012-brochure.pdf for a brochure or to order any of the related report series or individual report summaries online. For those interested in subscriptions to multiple summary report series, please call or email us for special introductory pricing offers. Khristina Newton can be reached at knewton@newton-evans.com .

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NEMA features Newton-Evans Research Findings Article in “Economic Spotlight” for November 2012 Edition of Electroindustry Magazine

The article is entitledAn Overview of the U.S. Market For Transmission and Distribution Equipment and Systems” and was written exclusively for NEMA, the National Electrical Manufacturers’ Association. The article can be found here http://www.nxtbook.com/ygsreprints/NEMA/g29979_nema_ei_nov12/#/32. The timing of the article is coincidental with the release this week of the final portion of the Newton-Evans series of 90 brief market summaries on discrete infrastructure components of the nation’s transmission and distribution grid and supporting automation and control systems. The final group of market summaries covers the operational control systems and supporting enterprise systems used by electric utilities. The new series will be available on-line on November 9, 2012.

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October Update to The Newton-Evans Outlook for Electric Utility Procurements Over 2013-2015

On June 25, and again on August 1, 2012, we published articles on our view of the global economic outlook and its effect on spending for electric power infrastructure and automation. We have now completed an early fourth quarter review of economic and financial conditions based on external resources such as the World Bank. As a result, we continue to retain a cautiously optimistic view for most smart grid market segments. We reported quite accurately on these developments in the mid-2011 Newton-Evans study (Smart Grid: A Reality Check) and again at mid-year this year for these developments:

  • • Slowdown in China
  • • Critical financial and economic issues facing the Eurozone
  • • Minimal growth in Western Europe outside of the Eurozone
  • • Retrenchment in economic outlook for the United States (as it remains the single largest country market in the world).
  • • World Bank and NGO outlook that suggested continuation of low growth.

At this time, we need to add three more specific concerns to this list:

  • • Concerns with Regional Stability in the Middle Eastern nations:
  • • Slowdown in Growth Projections for other East Asia Countries- in addition to China
  • • Inaction by the U.S. Congress on Fiscal and Energy Policy Matters

Concerns with the Middle East

The ongoing tension in some of the Middle Eastern nations is disruptive in and of itself and could have negative effects on infrastructure investment throughout the entire region. There has been some pullback in previously announced plans to procure hundreds of millions of dollars of systems, equipment, power stations and substation projects in countries with political instability at this time. While still relatively minor, such project deferrals reflect both the growing regional concerns over Iran and Syria, and the still unsettled issues in Libya, Iraq and Afghanistan. The World Bank’s most recent outlook for the region suggests further retrenchment to earlier GDP growth forecasts.

Slowdown in China and East Asia in General

Secondly, East Asian GDP growth rate forecasts have again been cut by the World Bank, as recently as October 7. World Bank officials now anticipate that economic growth in Asia will be 7.2% in 2012, down from the 7.6% projection made in May and lower than last year’s rate of 8.2%. However, growth is expected to rebound next year, spurred by strong demand in developing countries. Some countries, including Vietnam and Mongolia, are outpacing others in their electricity infrastructure modernization investments this year. For 2013, a good bit of the reliability of the outlook will also depend on some sort of rebound in exports of Asian goods and services to the Eurozone countries and to North America.

Inaction by the U.S. Congress

Thirdly, the ongoing failure of the United States Congress to enact both sane fiscal policy measures and a cohesive long term energy policy could become a further drag on the region’s outlook, with little time remaining for the Congress to act before automatic federal spending cuts take effect. If no budget agreements are reached by the end of 2012, this in itself will have an important negative effect on planned electric power industry expenditures during 2013 by at least some of the major investor-owned utilities, and an even more important negative effect on public utilities. In turn this will cause a CAPEX decrease similar to the falloff in 2009 and 2010 from the devastating 2008 financial crisis.

It’s Not All Bad News

On the positive side, sub-Saharan African countries continue to make very good progress with the regional GDP up over six percent again to date in 2012. Regional investments in electric power plant construction, transmission and distribution infrastructure and the addition of millions of new electricity customers over the 2010-2012 period auger well for further near-term and mid-term growth, despite some regional political issues, and in spite of the pessimistic outlook in some other global regions. However, the price-based concerns of these developing nations will favor lower-cost, faster-delivery Asian exporters over some Western companies whose emphasis is on equipment quality and reliability.

“A third of African countries will grow at or above 6 percent with some of the fastest growing ones buoyed by new mineral exports and by factors such as the return to peace in Côte d’Ivoire, as well as strong growth in countries such as Ethiopia,” said World Bank Vice-President for Africa, Makhtar Diop. “An important indicator of how Africa is on the move is that investor interest in the region remains strong, with $31 billion in foreign direct investment flows expected this year, despite difficult global conditions.” Newton-Evans believes that at least several billions of these dollars are flowing into electric power infrastructure and automation projects in the sub-Saharan region.

Latin America – Still Growing

Growth for the Latin America and the Caribbean region was projected at mid-year by the World Bank to slow to 3.5 percent for the full 12 months of 2012, down from 4.3 percent in 2011. Improved financial conditions and growth outside the region “…should contribute to a modest acceleration of growth to 4.1 percent in 2013 before easing modestly in 2014” according to the World Bank. Nonetheless, electric power industry expenditures for the region have continued to be relatively strong over the past 36 months, as reported to Newton-Evans by major manufacturers for the company’s Smart Grid “Reality Check” market studies.

Overall, we see no reason yet to dramatically change our overall outlook for smart grid expenditures or for infrastructure CAPEX spending over the coming 24 months. Western nations likely will continue their investments in smart grid programs with annual growth in such investments hovering in the mid-upper single digits. For the developing nations of the Southern Hemisphere and a good portion of Asia, smart grid investment will likely be even higher, perhaps growing as much as 10-12% over the same period.

New Studies Underway

Newton-Evans Research will again conduct its year-end survey of industry manufacturers and systems integration firms concerning their views of the global outlook (by region) during the fourth quarter. This will supplement our findings from dozens of countries regarding their plans for large operational control systems (2013-2015 World Market for EMS, SCADA and DMS) and our fourth study on utility CAPEX covering the 2013-2014 outlook period (Global CAPEX and O&M Expenditure Outlook for Electric Power T&D Investments: 2013-2014). Once these studies are completed, we will update our outlook for the upcoming periods for our readers at the beginning of the New Year and in our next MARKET TRENDS DIGEST edition.

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Newton-Evans Research Releases Nine Market Snapshot Reports on Distribution Automation Topics Covering the Electric Power Industry in the United States

Estimated U.S. Sales of Distribution Automation Components, Including Equipment and Services, Accounted for more than $500 Million in 2011, Forecast to Increase to $704 Million by 2014.

August 1, 2012. Ellicott City, Maryland. The Newton-Evans Research Company has announced its publication of a set of nine U.S. distribution automation market two-page summaries. The new series of market overview reports (executive market summaries) includes supplier listings, representative products, and estimated market size for each topic, vendor market share estimates and market outlook through 2014. Electric utilities accounted for about 87% of all purchases of distribution automation related goods and services. A majority of distribution automation equipment purchased by American utilities and industrial firms currently is produced in the United States.

The Distribution Automation series ($975.00 for all report summaries or $150.00 per individual report summary) includes U.S. market size, market share estimates and market outlook for these 9 DA product and service categories: DA01 – Automatic Circuit Recloser Controls; DA02 – DA/DMS System Components (including distribution network analysis; distribution network condition monitoring and fault location and characterization) ; DA03 – Voltage Regulators; DA04 – Capacitor Bank Controllers; DA05 – Fault Indicators (covering both fault current indicators and faulted circuit indicators); DA06 – Pole Top RTUs; DA07 – Line Mounted Monitoring Devices; DA08 – Communications Components for DA (covering PLC/DLC; cellular and 900Mhz); and, DA09 – Engineering Services for Distribution Automation Projects (covering consulting engineering services, related services provided by manufacturers; DA services provided by smart grid consulting specialists).

Other topical series currently available include: substation automation (13 market segment snapshots), power transformers (11 market segment snapshots), protective relays (8 market segment snapshots), and medium voltage equipment (20 market overviews). The final two series to be released later in August cover high voltage equipment market summaries (16 market segment overviews) and T&D control systems (11 market segment overviews).

Further information on this new series of U.S. T&D market snapshots is available from Newton-Evans Research Company, 10176 Baltimore National Pike, Suite 204, Ellicott City, Maryland 21042. Phone: 410-465-7316 or visit www.newton-evans.com for a brochure or to order any of the related report series or more than 90 planned individual report summaries online. For those interested in subscriptions to multiple report series, please call or email us for special introductory pricing offers. Khristina Newton can be reached at knewton@newton-evans.com.