After a 40 per cent rise in the Sensex since March 2009, the
cassandras of doom are out again predicting a global collapse. With $
11 trillion to be spent globally on creation of power generating
capacities by 2030, the only problem ABB will have will be to grow
fast enough to meet rising demand. A nice problem to have. What say?

I have been bullish about power equipment producers for as long as I
can remember, and topping that group of concerns has been the
Swiss-Swedish ABB. The $ 35 bn Zurich engineering giant builds the
equipment that makes up the innards of an electric grid. It's high
voltage direct current system (HVDC) is rapidly becoming the backbone
of National power grids, including India.

The corporate is positioned to benefit from the billions governments
worldwide are spending to build and upgrade electrical grids so they
can handle intermittent sources along with higher demand. As wind
turbines and solar panels add more energy to the grid in farther flung
places, ABB will be there to move energy.

ABB seems to be in a good spot. In addition to HVDC lines, ABB is
pitching it's electric transmission systems and it's electric sparing
motors to the dirtiest industries-utilities, mining, oil and gas and
heavy manufacturing as a way of becoming a little bit cleaner and more
efficient.

Customers have reposed their faith in the entity, with ABB reporting
an order back log of $ 25 bn, out which $ 7 bn came in Q4 and $ 11 bn
in Q2 of FY09.

Electricity demand is projected to double by 2030 says the
International Energy Agency and $ 11 trillion will be spent by then on
energy infrastructure. Half of this amount will go to transmission.
Private utilities will foot most of the bill, but in many parts of
socialist Asia, Government's will be the major providers of demand.

In the US over $ 19 bn will be spent on transmission, distribution and
generation, Europe plans to spend $ 6.5 bn to connect Eastern and
Western Europe and China will lay out $ 132 bn to add 16,000 miles of
grid lines.

ABB's best trick is its ability to take electric current of any
voltage and frequency, chop it into tiny bits and reassemble it into
the form needed. It does this with power electronics-semi conductors
which move, convert and transform power.

ABB's focus on HVDC is at odds with the current concept of using
alternating current to move power. ABB's technology goes alongside
Thomas Edison's idea that power should be distributed as Direct
Current. DC is ideal for moving power long distances and for moving
power underground and underwater.

ABB's HVDC system is helping China put up a 800,000 volt line, the
most powerful ever, to move 6.4 GW of power 1300 miles from a station
near the Three Gorges Dam to Shanghai. Last year ABB helped complete
the longest undersea link in the world, stretching 360 miles between
hilly Norway and flat Netherlands.  This allows alternating movement
of wind and hydel power between the two connecting points.

Now ABB is building the link between the biggest offshore wind farm
off the coast of Germany with links to the interior, and connecting
the grids of Ireland and UK through a 160 mile overland and undersea
HVDC link that will move 0.5 GW of power.

The only problem that concerns like ABB have is their inability to
expand power transmission output fast enough to handle the coming
growth. But that's a nice problem to have.