Despite end-user conservatism and increasing competition from cheaper supervisory control and data acquisition (SCADA) solutions, distributed control systems (DCS) remain the control solution of choice in traditional markets such as metals and minerals, chemicals and petrochemicals. The DCS market has also received a boost from plans by Eskom, South Africa's electricity utility, to invest heavily in capacity expansion and rehabilitation.
New analysis from Frost & Sullivan (industrialautomation.frost.com), South African Distributed Control Systems (DCS) Markets, finds that market earned revenues of $121.4 million in 2006 and estimates this to reach $292.4 million in 2013.
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"Eskom's need to increase generation capacity between 2007 and 2012 has led to a spate of refurbishment activities and the planning of new power plants," says Frost & Sullivan Research Analyst Litiya Matakala. "This will increase demand for control solutions. DCS suppliers can also expect their revenues to increase due to the additional nuclear power stations being considered, as DCS solutions are highly suitable for the safety and redundancy requirements of nuclear power stations."
Although large, established multinationals that are able leverage their wide range of products and installed base dominate the power segment, Eskom's decision to expand its supply base will open up the market to smaller market participants.
However, the utility still faces some budget constraints that will hinder its plans to invest in new generation capacity and the timely initiation of its projects. It is hoping to remedy this situation by raising half of the required $49 billion from financial markets. Once it obtains adequate funding, Eskom should invest heavily in DCS products.
The dynamic DCS market will also witness increased investment from the metals and mining sector due to rising commodity prices. The sustained demand from other key markets such as chemical and petrochemicals, and the food and beverage sector has significantly boosted the revenues of the few large suppliers that dominate the market and opened up several opportunities for smaller and niche participants.
Market participants with superior service offering capabilities are likely to be the biggest gainers, since services related to DCS products account for approximately 58.2 per cent of the total market revenues. End-user demand for superior service and maintenance has encouraged system integrators and smaller market participants to collaborate with the majors that do not have in-house resources to cater for all service requirements.
"Delivering projects on time and within budget, and ensuring the quality of backup services are critical for success in this market," notes Matakala. "Market participants that have access to a broad range of skills and offer a broader range of products are likely to gain significant market share."
Furthermore, with the increasing entry of DCS suppliers, competition is likely to intensify. This situation will also make it worthwhile to partner with niche market suppliers or services providers. It also bodes well that most end users have begun to overlook the cost factor in favour of engineering expertise and reliability of suppliers.
South African Distributed Control Systems (DCS) Markets is part of the Industrial Automation & Process Control Growth Partnership Service programme, which also includes research in the following markets: automation and control solutions in the Southern African metals and mining industry, automation and control solutions in the Southern African power generation sector. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants. Interviews with the press are available.
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