Power Factor Correction Market

[238 Pages Report] The power factor correction market is projected to reach USD 3.3 billion by 2030 from USD 2.4 billion in 2024, at a CAGR of 5.5%. The demand for power factor correction systems is increasing due to the surging need for energy-efficient products, rising focus on reduction in energy bills, and strict environmental regulations and policies. While industries and commercial establishments are seeking new means of optimizing their energy usage and reducing electricity costs, correcting the power factor is a crucial aspect for minimizing the loss of power and enhancing the overall quality of power. Nowadays, various industries deploy power factor correction solutions since these solutions allow them to lower electricity bills, reduce downtime, and also enhance equipment efficiency. Power factor correction systems also reduce stress on electrical equipment, which enhances equipment life and helps reduce maintenance costs.

To know about the assumptions considered for the study, Request for Free Sample Report

To know about the assumptions considered for the study, download the pdf brochure

Power Factor Correction Market Dynamics

Driver: Increasing investments in clear energy projects

Global investments in energy transition technologies, including energy-efficiency products, are significantly driving the global power factor correction market. According to the International Renewable Energy Agency, global investment in energy transition technologies reached a record high of USD 1.3 trillion in 2022. These accelerated investments have been facilitated by the rising focus on using renewable energy sources and increasing awareness regarding the benefits offered by power factor correction systems.

Governments worldwide promote energy efficiency through stringent regulatory policies and initiatives, further fueling the demand for power factor correction systems. Companies from different industries are keen on deploying energy-efficient products and reducing power consumption and electricity bills. Power factor correction (PFC) systems are used globally by different sectors, including oil & gas, mining, and aerospace. Similarly, the increasing use of renewable energy sources is creating the need for power factor correction systems.

Restraints: High initial installation cost of PFC systems

Although PFC systems have numerous benefits with their reduced energy bills and efficiency of energy, overall high upfront cost of the system is hindering the deployment of PFC systems for many facilities. The PFC systems comprise of highly expensive components such as high-capacity capacitors and filtering inductors at low frequency. In addition to this, highly complex designing and engineering required to customize the PFC systems according to specific industrial applications would also drive up the costs. Therefore, industrial facilities carefully assess their power factor correction needs to mitigate the high initial costs and explore cost-effective alternatives such as active power factor correction systems that represents a similar functionality at a much-reduced initial cost also pose a threat to the market.

Opportunity:  Government incentives and regulations promoting energy-saving technologies

Power factor correction is pivotal to improving energy efficiency and cutting electricity costs. A low power factor may lead to higher energy bills, add strain to electrical systems, and reduce equipment lifespan. Therefore, governments have introduced initiatives to encourage power factor correction and assist businesses in advocating sustainable energy practices.

Several energy-saving programs, such as the NSW Energy Savings Scheme (ESS), provide financial incentives for companies to invest in power factor correction projects. Through the ESS, organizations can earn energy-saving certificates (ESCs) based on the energy savings achieved by implementing PFC systems. These certificates can be traded, resulting in a financial return on investment in PFC systems.

Additionally, regulatory measures have been put in place to ensure adherence to power factor standards. Some utilities impose penalties on businesses with low power factors, incentivizing them to improve efficiency. Furthermore, building codes and energy efficiency standards may require a minimum power factor for new constructions or renovations, further promoting the use of PFC systems. For example, the US Department of Energy's voluntary Energy Star guidelines recommend computing equipment to maintain a power factor of at least 0.9 at full load.

Governments often invest in educational campaigns and programs to raise awareness of the benefits of power factor correction. By informing businesses about these advantages and the resources available to support its implementation, these initiatives encourage widespread adoption and facilitate the transition toward a more energy-efficient economy.

Challenges: Complexities associated with integrating PFC systems into existing infrastructure

Integrating PFC systems with existing infrastructure can be challenging due to several technical reasons. PFC systems might use data formats different from those of existing systems. This can lead to difficulties in interpreting and exchanging information, requiring data conversion or mapping processes that can be error-prone and slow. Existing systems might use specific protocols that the PFC system does not understand, creating a communication barrier. This can hinder real-time data exchange and potentially cause delays in critical financial processes.

Integration challenges arise if the PFC system adheres to different security standards from those of the existing infrastructure, making it challenging to ensure consistent security across the entire system. This could potentially create vulnerabilities for unauthorized access or data breaches. Diagnosing and resolving issues becomes more complex when dealing with interconnected systems. IT teams may need to troubleshoot problems across the existing infrastructure and the new PFC system, extending resolution times and increasing resource demands. Maintaining the PFC system might require specialized knowledge or skills beyond the expertise of existing IT staff, necessitating additional training or hiring new personnel, thereby increasing the overall maintenance burden.

Similarly, dependency on the PFC system vendors for ongoing maintenance and support might increase, introducing vendor lock-in and potentially inflating maintenance costs over time. Merging data from disparate systems can be another challenge, making data consistency and accuracy critical to avoiding errors and maintaining reliable financial operations. Integrating new systems raises security considerations, and network vulnerabilities might be introduced if proper security protocols are not implemented during integration.

Power Factor Correction Market Ecosystem

Notable players in this industry comprise long-standing, financially robust manufacturers of power factor correction systems and related components. These companies have a significant track record in the market, offering a wide range of products, employing cutting-edge technologies, and maintaining robust global sales and marketing networks. Prominent companies in this market include Eaton (Ireland), ABB (Switzerland), GE Vernova (US), Schneider Electric (France), and Hitachi Energy Ltd (Switzerland).

500–1,500 kVAr segment to account for third-largest share of power factor correction market by reactive power during forecast period.

The 500–1,500 kVAr segment is expected to account for the third-largest share of the power factor correction market, based on reactive power, during three forecast period. Power factor systems under this category find applications across large industrial and commercial spaces with substantial electric loads. Power factor correction systems ranging from 500 to 1,500 kVAr will efficiently meet operational requirements for managing reactive power, leading to efficacy and lower energy costs. The improved power quality also benefits industries, such as manufacturing, heavy machinery, and larger commercial complexes, through reduced electrical losses, encouraging growth and making this sector more relevant in the market.

Data centers to hold third-largest share of power factor correction market, by application, during forecast period.

Data centers, as an application segment, are expected to hold the third-largest position in the power factor correction market during the forecast period due to the increasing demand for reliable and efficient power management in these facilities. With the rapid growth of cloud computing, big data, and digital services, data centers are experiencing a surge in power consumption. Power factor correction solutions are essential in these environments to optimize energy usage, reduce operational costs, and prevent power inefficiencies that could lead to downtime or equipment damage. This critical need for energy efficiency and reliability boosts the demand for power factor correction solutions in data centers.

North America to be fastest-growing market from 2024 to 2030.

North America is expected to be the fastest-growing market during the forecast period. Grid reliability and efficiency concerns are rising in this region, thereby promoting investments in the modernization of energy infrastructure. Additionally, the need to comply with stringent regulations and policies on energy conservation and reducing carbon footprints is increasingly forcing industries to adopt PFC solutions. Moreover, the increased integration of renewable energy sources further supports the adoption of PFC technologies in North America.

Key Market Players

The power factor correction market is dominated by a few major players that have a wide regional presence. The major players in the Power factor correction  market are GE Vernova(US), ABB (Switzerland), Schneider Electric (France), Eaton (Ireland) and Hitachi Energy Ltd. (Switzerland). Between 2019 and 2024, Strategies such as product launches, contracts, agreements, partnerships, collaborations, alliances, acquisitions, and expansions are followed by these companies to capture a larger share of the Power factor correction  market.

Want to explore hidden markets that can drive new revenue in Power Factor Correction Market?

Unlock Insights

Click on image to enlarge

Scope of the Report

This research report categorizes the power factor correction market by reactive power, type, sales channel, application and region.

On the basis of reactive power, the power factor correction market has been segmented as follows:

• 0-200 KVAR
• 200-500 KVAR
• 500-1500 KVAR
• Above 1500 KVAR

On the basis of type, the market has been segmented as follows:

• Automatic
• Fixed

On the basis of sales channel, the market has been segmented as follows:

• Distributors
• OEM Direct

On the basis of application, the market has been segmented as follows:

• Industrial
  • Mining
  • Oil & Gas
  • Metals & Minerals
  • Automotive
  • Other Manufacturing Plants
• Renewables
  • Solar
  • Wind
  • BESS
  • Others
• Commercial
• Datacenters
• EV Charging

On the basis of region, the market has been segmented as follows:

• Asia Pacific
• Europe
• North America
• Middle East & Africa
• South America

Recent Developments

• In May 2024, GE Vernova collaborates with TECO to enhance Taiwan's power grid by deploying advanced STATCOM technology. This technology plays a crucial role in maintaining the stability of the grid, particularly when integrating higher amounts of renewable energy sources such as solar and wind power. Renewable energy sources produce power intermittently, which can lead to voltage fluctuations and disrupt power supply. The STATCOM system, a type of Flexible AC Transmission System (FACTS), regulates voltage and reactive power to ensure the grid's sustained reliability and efficiency.
• In March 2024,  Schneider Electric announced a significant investment of USD 140 million in 2024 to expand its US-based manufacturing base, focusing on supporting critical infrastructure, industries, and data center demand. This investment includes transforming and equipping an existing building in Mt. Juliet, Tennessee, and upgrading the Smyrna, Tennessee manufacturing operations to produce custom electrical switchgear and medium-voltage power distribution products. These upgrades will enable the company to better meet the growing demand for power factor correction (PFC) solutions, which are critical for ensuring efficient and reliable power distribution in data centers and other applications where high-power computing and artificial intelligence are prevalent.
• In August 2023, Eaton invested over USD 500 million to increase the manufacturing of electrical solutions and meet the surging demand for these solutions from North American industries. This substantial investment aims to expedite the energy transition and digitalization in utilities, commercial, healthcare, industrial, and residential sectors. This strategic initiative is also projected to significantly influence the power factor correction market, especially in North America. Eaton's improved manufacturing capabilities will play a key role in meeting the growing demand for efficient power factor correction systems in the region.

Frequently Asked Questions (FAQ):

To speak to our analyst for a discussion on the above findings, click Speak to Analyst