Flying high with its streak of contract wins, ABB Ltd. ABB has now landed on German soil with a new government order. Recently, the company was awarded a $900 million worth contract – Nordlink project – from a coalition of Germany’s two leading utilities companies Statnett, TenneT and a government bank KfW.
The Nordlink project will facilitate Europe’s longest HVDC connection – 623 km long – between these two countries. As per this $900 million worth deal, ABB will provide on-shore high-voltage direct current (‘HVDC’) converter stations and the cable system to assist the interconnection between German and Norwegian power grids. The contract has a five-year term and Nordlink is slated to go into commercial operation in 2020.
In particular, this power and automation technology giant, using its HVDC Light technology, will provide two 525 kilovolt, 1,400 MW converter stations that will be positioned in southern Norway and northern Germany. Apart from these, ABB will also develop and install a mass impregnated cable system (525 kV) in the German sector, which comprises 154 km of subsea and 54 km of underground cable.
Citing the economic implications, the NordLink project will contribute highly towards the creation of an integrated European Union energy market. The project, designated as one of the European Commission’s projects of common interest, will aid the integration of renewable energy into grids and boost the energy security in Norway and Germany. This is expected to cater to the energy needs of 3.6 million German households.
Bottom Line
For ABB, the above-mentioned premium contract win will contribute greatly towards the recovery of its Power Systems Division, which has been delivering a weak performance majorly due to a decline in the order level. Of late, ABB has been diligently aiming on bring this segment on the growth track via major contract wins. Recently, the company had won such power contracts from Norway’s Statoil and Denmarks’ Energinet.dk and DONG Energy.
This latest contract win also highlights ABB’s technology leadership in HVDC. Currently, ABB comes across as a dominant market player, supplying power to city center infeeds, subsea interconnections, oil and gas platforms and most importantly, for integration of renewable energy. The company also boasts the commissioning of 25 high voltage DC connections as well as multiple AC connections. Since 60 years, ABB has won around 100 HVDC projects, which accounts for about half the global installed base.
ABB currently has a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the industry include ESCO Technologies Inc. ESE, II-VI Inc. IIVI and AO Smith Corp. AOS. All three stocks carry a Zacks Rank #2 (Buy).
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