Investment

Active Power to cash in on slim margin of failure

By Liu Yiyu (China Daily)
Updated: 2010-08-13 13:49

BEIJING - Cashing in on the 0.1 percent failure rate in China's power supply reliability may not seem to be a huge business, but Active Power, a backup power supplier, is eyeing the niche market in China and believes it is likely to grow with the country's increasing demand for a stable electricity supply.

China State Grid, the country's largest power distributor has vowed to keep electricity reliability at 99.9 percent, meaning there is still a 0.1 percent possibility of failure.

Even with the minor chance of failure in the country's power system, Active Power is eyeing huge potential.

The power supplier recently launched its Beijing office providing uninterruptible power systems (UPS) to entities with mission-critical operations, including data centers, airlines, broadcasters, healthcare facilities, financial institutions and industry.

The firm said it so far has deployed 12 of its containerized power systems in China and is in partnership with 20 clients.

"China's burgeoning online and data sectors have higher standards for supply stability," said Wang Huan, Active Power's China head, adding that a blackout may mean losses in the millions for an online business.

Wang said the company's major clients will be search engine operators, e-commerce websites and data centers.

The transaction value of China's e-commerce industry in the first half of 2010 was 2.25 trillion yuan ($332.6 billion).

"The China market will account for 20 percent to 25 percent of our global business within five years," said John Penver, the company's chief financial officer.

Emerson, which also makes uninterruptible power systems, is set to make "major investments" in China, according to Chief Executive Officer David Farr.

The Asia market in UPS systems was worth approximately $2 billion in 2009, with China alone generating over $500 million, according to IMS Research.

The UPS market in China is projected to grow at 12 percent compound annual growth between 2009-2014, second only to India.

This increase is due to many China-based companies continuing to expand their local information technology infrastructure, such as data centers, as the country's technology market gets stronger.

In the meantime, this rapid expansion will place even greater demand on China's power grid. As a result, this will create power quality problems due to the strain on the country's grid infrastructure that will in turn increase the need for highly efficient and reliable UPS technology.

China Daily