Russian UPS Market

Opportunities for UPS Continue to Exist in Public and Infrastructure Applications

Russia's strong performance over the past seven years has been brought to a halt due to the economic downturn. Industrial production was at negative 6.1 per cent in the fourth quarter of 2008, as compared to the fourth quarter of 2007. Fixed capital investment declined by 2.3 per cent in the fourth quarter of 2008 and oil production fell by 0.1mb/d in 2008. However, Russia is the largest country in the world and its electricity grid is old and outdated. Given the appearance of major capacity gaps across the country, the demand for uninterruptible power supply (UPS) systems is on the rise. Moreover, investment in upgrading infrastructure, including roads and airports, is being undertaken, which is expected to have a positive effect on the demand for UPS.

"Russia is the largest country in the world and, with nearly 142 million people, is the ninth largest in terms of population," notes the analyst of this research. "Although nearly 90 per cent of the UPS installations are in the big cities of Moscow and St. Petersburg, smaller cities such as Samara and Saratov along with regions such as Siberia and the Urals are upcoming in terms of UPS demand, mainly due to rising industrial and mining applications." Moreover, the Russian electricity grid is in serious need of upgrade. The Ministry of Industry and Energy has predicted a shortage of around 6.5-24.0 per cent in terms of maximum power load across all regional power systems in 2010. In such a situation, consumers are installing UPS systems to avoid any downtime.

Developing and Nurturing a Strong Network of Local Dealers and Distributors Key to Success

Given that Russia is such a large country, it is essential that UPS manufacturers have a wide network of subsidiaries, dealers, distributors and service organisations. Although currently the concentration of UPS sales is mainly in the big cities of Moscow and St. Petersburg, other areas in their outskirts are developing, requiring prompt delivery and after-sales service. Leading participants such as APC and IPPON have succeeded in the Russian market due to their strong sales and service networks.

"Having a strong network of local dealers and distributors is the key to success in the Russian UPS market," remarks the analyst. "Customers have greater confidence in local suppliers who have a wide network that ensures that the right product reaches the right place at the right time." This is crucial as the country occupies a large territory. Manufacturers should forge key relationships with customers as well as distributors. Currently, as the low power output range, below 20kVA, occupies the highest share of the market, IT distribution is the most popular route to market. However, in the future, with increasing sales of higher power ranges, direct selling or selling through partners will rise, warranting the need for strong rapport with resellers and agents, amongst others. "Although most manufacturers are concerned about maintaining their market shares, the future will demand that they focus more on establishing relationships with resellers, contractors and distributors," advises the analyst.

Market Sectors

Expert Frost & Sullivan analysts thoroughly examine the following end user applications in this research:

• Datacenters and financial services
• Industrial
• Commercial
• Public and infrastructure

By Power Range:

• Below 5kVA
• 5.1-20kVA
• 20.1-50kVA
• 50.1-200kVA
• Above 200kVA