ABB to Power Saudi Arabia - Analyst Blog

ABB Ltd . ( ABB ) received a contract from King Abdullah Economic City (KAEC) for providing substations to boost its transmission capacity and electric supply. The contract, booked in the fourth quarter of 2013, is valued at $60 million. These substations are expected to strengthen the existing transmission grid, thereby improving power supplies to drive economic growth.

Substations are important installations in the power grid that transform voltage levels per requirement, thereby facilitating reliable and efficient transmission and distribution of electricity. The substations primarily include equipment that protect and control the flow of electrical power.

As per the contract, ABB will be required to supply its compact gas-insulated 380 kV (kilovolt) switchgear (GIS) technologies. These technologies will ensure reliability and reduce the negative impacts on the environment. Apart from this, other key product supplies comprise control and protection equipment, auxiliary systems and substation automation equipment compliant with the international IEC61850 standard to enable monitoring and control of the substations from a remote control centre KAEC is an important commercial hub in Saudi Arabia that is expected to generate about one million jobs for the country, thereby ensuring strong economic development.

Prior to this, ABB was awarded a contract by Saudi Electricity Company to design, supply, install and commission an expansion of the 380 kV (kilovolt) Haramain high-speed railway (HHR3) substation that supplies electricity to KAEC at 110 kV. This proves ABB's strong presence in Saudi Arabia.

The initiative to strengthen the existing power grid is integral to Saudi Arabia's plans to rank among the top ten investment destinations in the world by attracting foreign capital. This is a move to diversify the country's predominantly oil-based economy.

ABB is the leading supplier of air- and gas-insulated substations and has more than 10,000 installations across the globe, with voltage levels of up to 1,100 kV. These substations serve various industries including utility, industry and commercial customers and also sectors like railways, urban transportation and renewables.

ABB currently has a Zacks Rank #3 (Hold). However, other stocks in the Power sector which are worth considering at the moment are Pioneer Power Solutions, Inc. ( PPSI ), ITT Corp. ( ITT ) and Tyco International Ltd . ( TYC ). Pioneer has a Zacks Rank #1 (Strong Buy) while ITT and Tyco carry a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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