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The UK UPS market is currently experiencing a period of adverse
trading conditions although certain sectors are performing better
than others. In general terms, the UPS supply sector is
characterised by a relatively small number of large companies, with
predominantly foreign ownership, and many small independent
companies, a number of which are also foreign owned.
The total market in 2001 is estimated to be worth some £130m at
manufacturers' sales prices. The UPS market demonstrated underlying
growth from 1997 to 2000 ranging from 6 to 10%, although there was
an adverse impact from the South East Asian crisis in 1999, with
longer term factors including the strength of the Pound Sterling and
varying levels of activity in UK manufacturing and construction.
The UPS market continued to expand, principally fuelled by the
growth in the internet, telecoms markets and the requirement for
continuous, 'clean' power. Towards the end of 2000, the market was
widely regarded as having 'peaked', with a substantial increase in
internet and telecoms orders. Subsequently a severe contraction
occurred in early 2001 due to substantial reductions in investment
in the telecommunications and IT infrastructure. Now, in early 2002,
official figures indicate the extent of the decline with a 54%
reduction in the production of telecom components since December
2000.
Reviewing the situation at the date of publication of this
report, there appears to be little prospect of an immediate
improvement in the telecom and internet (and manufacturing) sectors,
but our research indicates that there is a certain amount of
confidence that more modest underlying growth trends will resume in
the long-term. It is therefore deemed prudent to forecast a 2%
growth rate for 2002, which in real terms reflects relatively 'flat'
or stable market conditions, followed by modest growth rates of 4 to
5% from 2003 to 2006.
It is forecast that long-term expansion of the UPS market will be
driven by:
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An underlying increasing demand for 'clean' and continuous
power for the internet, telecommunications, and electronic
devices, microprocessors, etc.
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Greater reliance on electrical supplies and users acceptance
that it is uneconomic (in commercial sectors) to be without
electricity for any length of time.
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It is claimed that broadband and third generation mobile
phones will increase traffic through the UK's internet 'hub' by
ten times in the next two years.
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The proliferation of electronic devices in building management
systems, manufacturing and industry driven by trends to
automation, increased efficiency, environmental compatibility,
and health and safety criteria, fuelling the demand for clean
power.
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The development of distributed power is likely to result in an
increase in UPS systems, thereby motivating the market in the
long term.
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The occurrence of electricity grid failures and poor quality
power tends to motivate the demand for UPS, with particular
areas experiencing more problems than others.
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Arising from the above, the high cost of power failures in
computerised and telecommunications applications encourages the
wider application of UPS systems.
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Developments in battery-free storage systems will facilitate
UPS market penetration into areas where weight and space
considerations preclude the use of battery installations.
Market influences also include trends in the major end use
sectors such as industrial, transport and distribution, the water
industry, general commercial, and oil, gas, marine, etc. Whilst some
sectors are growing, others are stable or declining with a 5.4%
reduction in manufacturing output recorded in the year to November
2001 (ONS).
It may be argued that the most recent significant technical and
commercial development in the UPS market is the introduction of
flywheel storage - a battery-free storage system. Whilst it is as
yet too early to comment on the progress of products in the flywheel
range, it would appear that market penetration of battery-free UPS
systems will be facilitated by lower weight, lack of battery
problems and the absence of air-conditioning to maintain the
required battery temperature. Additionally, the elimination of
chemical hazards and environmental disposal factors also presents
benefits.
Specific threats to the UK market include:
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Threats to UPS battery systems in certain size ranges,
emanating from the development of flywheel storage systems.
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A threat to both battery and battery-free UPS systems arises
from CHP cooling and power solutions utilising continuous
running gas engine generating sets with N + 1 redundancy
(back-up) and independent mains feeds.
Major suppliers to the UK UPS market include APC, Chloride,
Invensys, Liebert Hiross, MGE, Siemens and others.
The distribution of UPS in the UK is served by distributors,
resellers, electrical wholesalers, the direct channel and others,
including electronic component distributors, etc. The main sectors
of the UK UPS market may be broadly categorised as up to 3 kVA, 4-10
kVA, 11-100 kVA, and over 100 kVA.
In summary, the outlook for the UK UPS market is positive, with
medium to long term projected growth of around 4-5% from 2003 to
2006.
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