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Sumitomo Electric, Siemens join forces in grid business

Partners see Indian underground wire project as first step

Sumitomo Electric and Siemens will take part in a project to lay underground cable in India.

OSAKA -- Japan's Sumitomo Electric Industries and German industrial group Siemens landed their first joint contract for power grid equipment in India and will partner on bids for similar electrical infrastructure projects around the world, the companies said Monday.

In India, the partners are eyeing a project worth roughly $538 million to lay underground transmission lines as part of a power link spanning Pugalur in the southern state of Tamil Nadu and Thrissur in Kerala. The 128km of cable will be able to carry 2,000 megawatts of electricity.

Underground cables cost more to install than overhead wires, but Sumitomo Electric says its cables enjoy a cost advantage over the competition thanks to their narrow diameter.

The German partner will supply converters, a key element of grid equipment. Siemens ranks as the world's second-largest supplier of power generation equipment, after U.S. conglomerate General Electric.

Sumitomo Electric takes in around 170 billion yen ($1.53 billion) in sales of transmission lines, with particular strength in undersea cables. The Osaka-based company ranks alongside Italy's Prysmian and other leading names in electric cables.

The global market for power transmission and distribution systems is expected to grow to around $270 billion in 2020, with such emerging segments as smart-grid technology attracting players from beyond the industry's traditional boundaries.

In Europe, demand for low-cost, efficient undersea cables should rise with an expected surge in construction of offshore wind turbines. Offshore wind farms are also being planned in Japan, in such areas as Akita Prefecture in the north and the southwestern city of Kitakyushu, and more are expected.

Sumitomo Electric and Siemens will seek out supply contracts in Japan as well as the rest of the world while exploring other areas of cooperation, including research and development in power transmission. The Japanese company has been trying to diversify an earnings base in which wire harnesses and other automotive products account for around half of group sales.

(Nikkei)

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