Global power and automation technology group, ABB Ltd. ABB, was recently awarded a $100 million contract for providing converter transformers and components to Lingzhou-Shaoxing, one of the largest ultrahigh-voltage direct current (‘UHVDC‘) transmission links in China. This order, which also requires ABB to supply wall bushings and circuit breakers to the one-of-a-kind UHDVC link, will be registered in the company’s first-quarter 2015 books.
Lingzhou-Shaoxing Project
Lingzhou-Shaoxing project, the 7th 800 kilovolt (kV) UHVDC transmission system in China, will aid the transfer of electricity from remote power plants to thriving urban areas, in order to meet the country’s rapidly growing electricity needs. The project involves the transmission of 8000 MW of power over a large distance of 1,700 km, stretching from Lingzhou in the northwestern Ningxia region to Shaoxing in the eastern Zhejiang province, with minimum losses. Moreover, this is the world’s first 750 kV AC to 800 kV UHVDC connection which considerably minimizes any adverse environmental impact.
ABB’s Role
ABB’s converter transformers and components, manufactured by deploying state-of-the-art technology, will be the first ones to link a 750 kV AC power supply grid, collecting electricity from a host of power plants, to an 800 kV UHVDC link. The company, leveraging the competence of its highly innovative UHVDC transformer technology, will be able to supply electricity from 750 kV AC grids, instead of the conventional 500 KV grids.
Achievement of ABB’s converter transformers is commendable, considering the fact that it has successfully overcome the existing power bottleneck of transmitting electricity from UHVDC side of the converter to AC side. Moreover, ABB holds a proven track record of developing and testing technology of 1,100 kV converter transformers, resolving issues like size, scale and electrical insulation, including bushings & thermal performance parameters.
Bottom-Line
The latest award indicates that ABB’s contract-winning spree is likely to remain unfazed in the current financial year as well. The company has won a spate of contracts in recent occasions.
Last month, ABB won a $900 million contract – Nordlink project – from a coalition formed by Germany’s two leading utilities companies, Statnett and TenneT, and a government bank KfW (read more: ABB Wins Major European HDVC Contract). The company also secured a contract worth over $160 million from the South African national electricity provider, Eskom, for developing its latest coal-fired power station at Kusile (read more: ABB Wins $160M Contract from South African Power Plant).
We believe such contracts will fuel ABB’s top-line growth, countering the challenges faced by its power systems segment, going forward. Moreover, benefits reaped from increased spending in the power and infrastructure industry will enable the company to upgrade and deploy its electric power transmission infrastructure. This indicates rosier prospects for ABB’s UHDVC in the future, which in turn, will drive the company’s growth.
Zacks Rank
ABB currently has a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the industry include Dycom Industries Inc. DY, ESCO Technologies Inc. ESE and AO Smith Corp. AOS. While Dycom Industries sports a Zacks Rank #1 (Strong Buy), both ESCO Technologies and AO Smith carry a Zacks Rank #2 (Buy).
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