Market Research done by ABS Energy Research

Research Methodology & App. Statistics

Submitted To:T Anupama

Asst. Professor of Research Methodology

Submitted by:BINIT KUMAR DAS MBA-PM 2nd Sem SAP- 500014638

UPES, Dehradun

About them:
ABS is an independent energy market research company founded in 1990. They specialize in energy market research reports, energy market databases and energy market consulting as well as analysis and market forecasts. Our global energy market research reports cover the electricity, water and waste, gas, hydrogen, nuclear and the renewable energy markets. They follow the energy markets very closely and they produce a wide range of reports, databases and directories. They also answer very specific energy market information requirements with our energy market consulting and data services. Our energy market analysis and forecasts are independent and benefit from our wealth of experience and knowledge about the energy markets and extensive sources that they use. They can help you jump the gap from where you are to where you want to be. They provide information to a wide range of companies, associations, education and government bodies and organizations. They are a team of experienced consultants providing: Robust Data Knowledge of the global energy and environmental services markets In-depth-knowledge of regional differences Published studies Databases Directories Tailored research to match your needs

Clients
Perusahaan Listrik Negara (State Electricity Company, Jakarta, Indonesia) Eskom, South Africa Arad Ltd, South District of Israel Vattenfall, Stockholm, Sweden Fortum Corporation, Finland E.ON, Dsseldorf, Germany

They specialize in:

ABS has charted the development of the electricity markets and supply industry for 16 years. They have followed the restructuring of the industry from supply-based, engineering driven, vertically integrated utilities into market-driven companies competing in different segments of the industry. ABS follows and monitors the electricity markets on a continuous basis and produces key electricity market research reports and databases on these markets: Electrical Supply Industry and Utilities Transmission & Distribution Electricity Deregulation The EU Electricity and Gas Markets Hydropower - Large and Small Hydropower British Electricity Utility Market ABS Power Predictor World Electricity Meter

Gas and Coal Market Research ABS monitors the global gas and coal markets closely and produces essential gas and coal market information. Gas is an attractive source of energy in today's crowded world and coal is vital for a number of the major industrialized economies. Gas and coal are at opposite ends of the spectrum - gas is clean, coal is not. ABS follows and monitors the gas and coal markets on a continuous basis and produces key gas and coal market research reports and databases on these markets: The World Coal Gas Deregulation World Gas Meter The EU Electricity and Gas Markets Gas Supply Industries and Utilities of the World The British Gas Utility Market

Oil Sands and Orimulsion Renewable Energy Market Research ABS successfully added renewable energy market research products to its portfolio of energy market research products in 2003. They now publish renewable energy market research reports and databases on - solar photovoltaic, solar thermal, ocean energy, geothermal, wind power and biomass. They publish key renewable energy market research reports and databases every year following the developments and changes in the market: Renewable Energy Renewable Manufacturers Directory Solar Photovoltaic Solar Thermal Power The Geothermal Wind Power The Biomass The Ocean Energy

Multi-Utility Market Research ABS monitors the energy and environmental services sectors and also produces multi-utility market information. With deregulation and privatization a new type of energy utility has entered the scene - the multi-utility. They publish key multi-utility market research reports and databases every year following the developments and changes in the market: Multi Utility Meter Multi-Utility Deregulation Prepayment Metering The British Utility Markets The Russian Energy Sector EEBR Country Utility Meters Directory

ABS Energy Research Products and Services

ABS offers three services: Energy market research reports & databases

ABS publishes a wide range of energy market reports and databases for the electricity, gas, water & waste, renewable, hydrogen and nuclear markets. They are a premier provider of energy market analysis, information and energy market forecasts. These cover the supply side and the markets for equipment and components servicing these industries. They follow the energy markets closely and produce new energy market research reports and energy market research databases every month.
Data services

ABS holds a vast wealth of energy market data and energy market forecasts in-house. This data is not all contained within our energy market research products. This enables us to provide customers with a specific customized data service. They can provide specific data sets or customized databases for marketing and planning purposes.
Customized energy market consulting

ABS conducts a wide range of market and industry research projects using quantitative and qualitative techniques. Studies use both primary and secondary research and can answer a wide range of information requirements. They have conducted industry, market and country surveys and analysis, acquisition studies, market estimation and forecasting, product development and competitive analysis. ABS's energy market consulting services can assist in a wide range of projects such as market entry strategies, export strategies, customer satisfaction and product positioning and gap analysis.

Current Projects
Harnessing the Power of the Ocean: A Program Still in its Infancy Offshore Wind Power and the Challenges related to Public Participation and Local Acceptance Solar Photo Voltaics Water and Waste Water Utilities of the World Prepayment Metering

ABS Research Methodology

PRIMARY DATA COLLECTION

ABS collects primary quantitative and qualitative data with a range of interview techniques, whichever is appropriate for the study. For quantitative data they use personal face-to-face, telephone, postal mail, email interviews. For qualitative data they use in-depth interviews and focus groups. ABS uses a number of carefully selected field agencies. They select the agency most suited to the study in question and can thus offer the best facility available.

Excellence of data collection is a priority for ABS and fieldwork is under the continuous supervision of our senior research team. Technical Notes on Forecast Methodology Generation, Transmission and Distribution, Equipment Markets ABS has produced a number of different forecasts of different components of the electricity supply industry and its equipment markets. These were carried out in sequence, starting with generating capacity, transmission and distribution capacity, growth and product demand. The first forecast was for generating capacity. The model developed for that was reapplied to forecasting transmission and distribution markets, with various refinements. GENERATING CAPACITY FORECASTS (ABS Power Predictor 1 and 2) A number of determinants affect the rate of growth of electrical generating capacity, the most commonly quoted being population growth, urbanization, economic development, natural resources and environmental factors. One forecasting method is to produce a weight for each factor and to apply the weight to current capacity levels. Analysis of the data indicates that the most significant single determinant globally is the level of economic development. Some of the other variables can work either way. Increased population and urbanization in very low income countries can put such a strain on resources that it retards development and the ability to install new capacity, rather than creating more consumers, ergo more electrical capacity. ABS believes that there has been confusion between demand and the ability to supply. Because demand rises it does not necessarily mean that it is met. Almost all undeveloped and developing countries are chronically short of electricity, many to a development-threatening level, until they reach a point at which the economy starts to change into that of a newly industrialized country. Countries like China, India and Pakistan habitually suffer 20-40% power shortages, which are in many cases cited as the biggest single obstacle to economic development. 1. THEORETICAL STAGE - REGRESSION ANALYSIS The installed capacity of every country has been tabulated at five year intervals from 1970 to 1995. World totals and capacity for the major countries are available at five year intervals since 1950. Regression analysis was carried out, based on historical capacity levels from 1970 to 1998/99 in four stages; globally and disaggregated at three levels and forecasts were produced to 2020. Overall - based on global capacity levels from 1970 to 1995 a global forecast was made to 2020. The effect of evening out is so strong that the world demonstrates almost linear growth. It is at the succeeding stages of this analysis that the regressions provided the most useful trends, when different segments were fitted by different functions, with different gradients. Disaggregated 1 - countries were classified into four groups within the four World Bank national income categories - high income, upper-middle income, lower-middle income, low income. Regression analysis

was carried out on these four groups. This analysis showed clearly that at a certain point of economic development electrical growth decelerates, indicating that the growth of electrical capacity is finite. Disaggregated 2 - countries were classified by ten geographical regions - Western Europe, Eastern Europe, FSU (Former Soviet Union), Africa, Middle East, Asia, Pacific, North America, Central America, South America. Regression analysis was carried out for 33 sub-sets of groups of countries within economic category. Disaggregated 4 - in some of the sub-sets of economic group within geographical region, important countries were isolated and separate regression analysis was carried out for these, to explain the effects of broader trends. This was mainly in Asia. There are inherent variations between countries, every one of which is in a different position on a continuum of electrical development, ranging from the maturity of the industrialized countries when no significant growth will occur or the installed capacity base may even contract, to under-capacity in countries which have just started to develop and which can only go up. Countries and groups of countries therefore have different regression equations; logarithmic, quadratic, power and in one case linear. 2. INDIVIDUAL COUNTRY ASSESSMENT The limitation of theoretically generated forecasts is that they are limited to specified and quantifiable conditions. They take no account of unforeseen events and lack judgmental sensitivity. An obvious recent example was the Asian financial crisis which erupted in 1998 and which has caused business analysts to downgrade many forecasts. This has been acute because prior to the Asian crisis, forecasts were being based on extremely confident assumptions of growth, disregarding the underlying realities of the Asian countries, many of which have serious structural flaws. Yet for over three years there had been warnings of weaknesses in the Asian economies from a small number of observers. In ten years of producing reports about the energy sector in every country, ABS has amassed a considerable amount of information about most countries and basic information for the remaining few. We have accumulated knowledge and personal experience of many of them. It was decided to use this knowledge to approach the forecasting from two, opposite directions. The first was generated theoretically, from a global base downwards, as shown above. The second was a laborious process, independently to scrutinize every country in the world and to assess judgmentally its future potential and what it can achieve. The individual forecasts were accumulated into the same groups and sub-sets as those used in the regression analysis and the results compared. There was close agreement in most groups, excepting the low income countries. This enabled us to examine areas of difference critically and to review individual forecasts. The particular circumstances affecting forecast results are discussed in the text of the Power Predictor report. The final outcome is the individual country forecasts. CORRELATION BETWEEN FORECASTS AND THE PROJECT DATABASE The project database has been compiled empirically from as many sources of information as available. They are independent sets of information, based on separate sources and constructed differently from the forecasts. It is therefore an excellent cross-check to compare them. The total project capacity for completion in the five-year period 1999 to 2003 is 493 GW. It averages 109 GW a year for the first four years but tails off to 56 GW in 2003. The reason for this is that reports on

project completion's five years ahead are bound to be lower than reports for the more immediate future. The net effect of this is that the figure of 493 GW from 1999 to 2003 is about 10% low for the total period and an average of 109 GW represents a truer figure. The independently estimated forecasts are 486 GW for the five years for 1996-2000 and 578 GW between 2001 and 2005, averaging 106 GW a year from 1996 to 2005. The comparison of 109 GW from the project database and 106 GW from the theoretical estimates are within 3.3% of each other, representing a correlation of 96.7% from the two independent sources. This is a substantial improvement on the already excellent correlation of 91.7% obtained in Power Predictor I. CALCULATIONS FOR REPLACEMENT MARKETS Market estimates have been made for replacement of obsolete equipment, which is not contained within the forecasts of installed capacity growth. These are particularly important in the mature markets, where installed capacity may even decline as more efficient plant is built and changes in capacity will seriously undervalue the size of the market growth. The estimate for replacement is based on a plant life of 30 years. The replacement market in 2000 is calculated as 0.03336 installed capacity in 1970. The lifespan has a huge effect on the replacement market size when the installed base is rising. The period 1970-1975 saw an increase of 453 GW in world capacity. By decreasing life from 30 to 25 years, the proportion to be renewed in 2000 would be increased from 3.333% to 4.0% and would be based on an world installed base of 1,624 GW in 1975 instead of 3.33% of 1,171 GW in 1970, giving an estimate of 64,960 MW compared with 39,000 MW. This disparity evens out after systems reach a mature plateau. METHODOLOGY OF THE TRANSMISSION & DISTRIBUTION FORECASTS (The T&D Report 2000) The methodology of the market size estimates and forecasts of development of the transmission and distribution systems consisted of four stages, combining a top-down and a bottom-up approach. This methodology was found to be highly effective in creating the forecasts of electrical generating capacity in ABS Power Predictor. Stage 1 All available data about electrical installed capacity, transmission and distribution that we could locate was entered into a master database. Basic information about electricity generation and consumption is included in the database for every country. Original information about transmission and distribution is included in the database for 116 countries, varying in extent. In some cases it is extensive and over a period of time, in other cases it consists of circuit lengths of transmission lines at one point in time. The database contains information on the following areas; installed generating capacity (MW), HV transmission line lengths by voltage (kV), MV and LV distribution line lengths by voltage (kV and V), transmission substation capacity (MVA), where possible for transmission and distribution separately, capital expenditure on transmission and distribution. The ideal is to have all of this data for each country but this does not exist. The database contains comprehensive entries containing information in all these sub-sectors for 32 countries.

Information has been obtained from utility company reports, national industry association reports, national government statistics, and international agencies. As a guide to the extensive coverage of the database, the information derived from this exercise is summarized in the review of all countries contained in Section 2 of this report, although this section does not contain all of the information in the database. With the exception of low voltage line lengths in the United States, every figure in this section has been extracted from one of the above sources. The National Electrical Reliability Council of the United States (NERC) publishes the most comprehensive information and analysis of the country's electricity industry provided by any country, with one exception; data about distribution lines below 4 kV is not collected and cannot be obtained from the regional offices of NERC. ABS conducted a survey of 191 out of the 3,199 electricity utilities in the US and projected an estimate of LV line lengths from the sample data. The sample was selected with a stratified probability design. Generally there is less information available about low voltage distribution than about transmission. The data available to the analyst is strangely variable. Some very small national utilities have published exemplary reports for many years, with all the information required. There are several in Africa, the Middle East and Asia. These countries are extremely valuable in providing benchmarks for similar economies where only the most elementary electrical statistics exist. Most of the industrialized countries publish excellent and comprehensive information but by no means all. Extremely detailed information is now becoming available about the larger former Comecon countries but is limited for some of the smaller ones. Many countries, especially those with a large variety of utilities in both public and private ownership, provide little more than a national overview of the most basic nature. The data came in so many forms and from so many sources that many conversions were required, the most common being from route lengths to circuit lengths and from miles to kilometers. The sources were not all for the same year, so care was taken to ensure that data was recorded in the right year, where necessary being projected forwards or backwards to a base year for forecasting. The base year used was 1995. In many cases they have information for 1998 and even in a few cases for 1999. This is a valuable check on the forecasts based on 1995. Stage 2 A set of models was created; Installed generating capacity, MW Transmission line lengths, circuit km Distribution line lengths, circuit km Transformer capacity, MVA Capital expenditure on transmission and distribution, US$ These models take 1995 as the base line for every country and forecasts were made to 2010. Where past data is available it has been entered and where not available reverse regressions have been made. Actual capital expenditure is entered for a total of 67.7% of the final projected world estimate in 1995. The global market was modelled on different criteria; installed generating capacity, transmission line lengths and transformer capacity and a series of projections made. The variation between projections of total market size arising from the different criteria was between 95% and 106%. Time series projections have been made on the basis of a number of variables.

The market can be viewed in two basic elements; new installations and replacement of existing installations. New installations have been forecast on the basis of capacity growth and economic development, taking into account such factors as rural electrification in developing countries. There are different reasons for replacement. Stage 3 The final stage of analysis was a bottom-up examination of every estimate in the spreadsheets. Each figure was scrutinized in the light of market experience and carefully evaluated. Particular attention has been paid to evaluation of the actual achievements of governments against published development plans and targets. This is an area requiring considerable experience of the markets because the outcomes are not always obvious. An example is a comparison between India and Taiwan. Some knowledge of the Indian power market will reveal very quickly that India has not achieved a single power target in the Development Plans throughout the past fifty years and it is wise to be conservative about the targets in the current Ninth Plan, which runs from 1998-2003.
Equipment demand forecasts

Interviews with executives in the power and engineering industries have been conducted to construct a set of ratios of the composition of total capital cost for five components; land purchase or way rights, design and engineering, construction, equipment purchase and finance cost. There are wide variations in the composition of these costs and comments in the relevant section of the report should be noted. Average figures should not be used without careful evaluation of each situation but as an indicator. For example, there is a land cost in constructing distribution networks for greenfield housing developments but there is no additional land cost in up-grading either underground cables or overhead lines. Important issues in the transmission and distribution sector were explored in these interviews. A set of models was constructed for product composition within the market when producing the first edition of this report in 1996. These models have been reviewed and adjustments made in 1999.

General Assistance & Enquiries

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