Rising demand for uninterrupted power and high maintenance and operations costs for overhead lines are boosting growth in the underground transmission and distribution cables market, according to a recent report by Frost & Sullivan.
The North American Underground Transmission and Distribution Cables Market earned revenues between $800 million and $840 million in 2006 and is forecast to see over $1 billion in 2012, the report said.
Price increases for raw materials like copper and aluminum have increased cable costs, the research showed.
“To effectively deal with the price hikes and maintain viable margins, manufacturers are passing any material price increase to customers, making the product prohibitively expensive,” said Srinivas Narayan Athreya, a Frost & Sullivan Research Analyst. “Instead of alienating customers with high prices, manufacturers need to compromise on their profit margins and reduce the overall cost of underground cables.”
Although a reduction in prices could help growth, there are still obstacles for market expansion. The report highlights the longer duration of power outages with underground cables versus overhead lines as a major factor, although outage causes like rain and wind have little affect on underground lines.
The report also notes that unlike overhead lines, underground cables do not pose a health concern with electromagnetic fields.
“Yet another advantage of underground lines is the relative ease in obtaining a license for its installation,” notes Athreya. “The increasingly tedious process and numerous delays in obtaining licenses for laying overhead cables and stringent regulatory norms are driving utilities toward underground lines.”
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