Switchgear Market Size, Share and Trends

[277 Pages Report] The global switchgear market is estimated at USD 93.1 billion in 2023, with a projected growth to USD 119.9 billion by 2028, exhibiting a Compound Annual Growth Rate (CAGR) of 5.2%. The dominant force in the market is the Asia Pacific region, followed by Europe and North America. A surge in power demand, attributed to factors such as rising population, industrialization, and urbanization, has been significant. Notably, electrification is experiencing a notable uptick, particularly in developing economies such as Asia Pacific, Africa, and South America. The global trend towards environmental consciousness and a transition to cleaner energy and renewables is evident, driven by stringent environmental regulations compelling utilities to adopt cleaner energy sources.

Within the Asia Pacific region, characterized by burgeoning energy demand, the replacement of aging coal-fired power plants, and the development of smart infrastructure, presents lucrative opportunities for the switchgear market. In Europe, the deployment of smart switchgear is on the rise, primarily influenced by stringent emission regulations. Another pivotal factor propelling switchgear utilization globally is the increasing adoption of high-voltage direct current (HVDC) power transmission systems, crucial for efficient electricity transportation over long distances. Collectively, these factors are poised to bolster the switchgear market.

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Switchgear Market Dynamics

Driver: Modernization of power distribution infrastructure

New regulations have emerged to reduce power blackouts and enhance power distribution networks. Consequently, the market for power sector equipment, particularly monitoring solutions and advanced switchgear, is expanding rapidly. These technologies empower maintenance teams by providing real-time data, allowing them to detect aging or overused equipment and take proactive measures to prevent failures and optimize the grid's efficiency. Investments in these solutions are crucial to ensuring a reliable and resilient electricity supply in the face of increasing demand and evolving climate conditions.

Restraints: Downturn in residential property market

The COVID-19 pandemic severely impacted the new residential real estate sector, with global GDP dropping by 3.1% in 2020 due to pandemic-related measures. The economic crisis spurred by the pandemic was predicted to result in global unemployment surpassing 200 million by 2023, according to UN data. Widespread job losses and subsequent inflation in various economies have hampered the new residential real estate market. For example, US Census figures show a 118% increase in home prices since 1965, while income only rose by 15% until 2021. Given the connection between the switchgear market and residential real estate growth, the slowdown due to credit shortages and the emergence of COVID-19 and its variants has negatively impacted the real estate sector, potentially affecting the switchgear market.

Opportunities: Advancements in smart technologies and digital transformation

Some emerging technologies in the switchgear industry focus on environmental friendliness and energy efficiency. Vacuum, hybrid, and intelligent or smart switchgear are among the notable advancements.

Traditionally used in medium-voltage applications, vacuum switching is now being considered for high-voltage applications due to its eco-friendliness compared to SF6 switchgear, a greenhouse gas. This shift is motivated by a growing emphasis on environmentally responsible solutions. Hybrid switchgear combines air-insulated and high-voltage gas-insulated switchgear. This innovation reflects a desire for more sustainable and efficient options. The hybrid approach is particularly relevant as investments in smart grid infrastructure increase, accommodating the integration of fluctuating renewable energy sources into the grid.

Challenges: Intense competition from unorganized sector

Prominent switchgear manufacturers face formidable competition from the unorganized sector, which includes local and gray market entities that offer inexpensive, low-quality products. Local players produce their goods in-house and market them under their brand names, while gray market players import and distribute products through unauthorized dealers. These unorganized market participants outcompete larger companies with their pricing competitiveness and the localized distribution networks they establish, which can be challenging for global firms to replicate. The rise in sales from both local and gray market players can undermine the reputation of leading brands if subpar products are sold under their names. The increased sales from these entities reduce the opportunities for global players to expand their revenue and market share.

Switchgear Market Ecosystem

The market for switchgear is marked by the participation of leading companies that are firmly established, financially robust, and possess substantial expertise in the production of switchgear and related components. These companies hold a significant market presence and provide a wide array of product offerings. They harness advanced technologies and maintain extensive global sales and marketing networks. Among the notable players in this market are Eaton (Ireland), ABB (Switzerland), Siemens (Germany), Mitsubishi Electric (Japan), and Schneider Electric (France).

Medium voltage segment, by voltage, to grow at highest CAGR from 2023 to 2028.

Switchgears with a voltage rating of 2-36 kV are classified as medium-voltage switchgears. Widely employed across various end-user sectors, especially in manufacturing, process industries, and Transmission & Distribution (T&D) utilities, these switchgear encompass equipment like circuit breakers, paralleling switchgear, AIS (Air-Insulated Switchgear), main ring units, motor control centers, railway & marine switchgear, and surge arresters. Their role involves safeguarding industrial equipment such as generators, motors, compressors, HVAC & air conditioning systems, heating & lighting equipment, providing overload current protection, and supporting T&D sub-stations. Medium-voltage switchgear are integral to railway AC & DC traction power supply substations. The railway sector is witnessing a shift from diesel-electric locomotives to electric or battery-electric ones to curb emissions, particularly notable in the Asia Pacific region, thereby stimulating the growth of the medium-voltage (2-36 kV) switchgear market share.

Air-insulated segment, by insulation, to emerge as largest segment of switchgear market.

In 2022, the AIS segment dominated the switchgear market size with a 69.9% share. This growth was fuelled by increasing demands from expanding distribution networks, industries, as well as commercial and residential sectors. AIS, a prevalent type in low and medium-voltage switchgear, integrates electrical disconnector switches, circuit breakers, and earth switches. These components are essential for controlling, isolating, and safeguarding electrical equipment, utilizing air as the insulating medium. AIS is known for its cost-effectiveness, pollution-free nature, and straightforward construction when compared to GIS.

DC segment, by current, to grow at highest CAGR from 2023 to 2028.

DC power, in contrast to AC power, flows in a single direction and lacks the sinusoidal waveform characteristic of AC. It's predominantly generated directly from renewable sources such as photovoltaic solar cells, wind turbines, and batteries. Historically, generating AC has been more straightforward and cost-effective due to the mechanics of generators, making AC systems cheaper to operate. AC power can also be converted into DC through rectifiers. The limitation of DC transmission over long distances due to the absence of mechanisms for adjusting voltage without converting to AC is changing with the introduction of high-voltage direct current (HVDC) systems. These systems now enable efficient long-distance transmission of electrical power using DC. Additionally, the rapid global growth of renewable energy sources, driven by substantial investments, is increasing the demand for DC switchgears. These switchgears are also prevalent in railway traction substations, and as railways electrify, the DC switchgear market is poised for further expansion.

The Asia Pacific Switchgear market is poised to achieve the highest CAGR throughout the forecast period.

In 2022, the Asia Pacific region secured the highest market share of the switchgear market, with China taking the lead, succeeded by India and Japan. This dynamic region comprises significant economies such as China, India, Japan, Australia, and other Southeast Asian nations, including South Korea and the Association of Southeast Asian Nations (ASEAN) states. The region's rapid development, particularly in major economies, is a driving force behind growth across diverse sectors, including power transmission, distribution, industries, commercial and residential applications, and transportation.

The manufacturing industry, benefiting from cost advantages, is a key factor in the escalating demand for switchgears. With a concurrent rise in power generation demand due to population growth, there are concerted efforts to transition towards clean energy, as reflected in ambitious targets for natural gas and renewable power generation in countries like China, Japan, and India. The robust marine industry in Japan, South Korea, and China, particularly in the maritime trade sector, further amplifies the need for switchgears to safeguard electrical equipment on marine vessels. Anticipating an upswing in maritime trade, driven by increased demand for LNG tankers and commercial vessels, switchgears play an indispensable role. Moreover, the surge in population intensifies the necessity for housing infrastructure, prompting economies to prioritize the expansion of public housing, consequently boosting the demand for switchgears in the Asia Pacific region.

As maritime trade is projected to grow, driven by increased demand for LNG tankers and commercial vessels, switchgear play a crucial role. Additionally, population growth intensifies the need for housing infrastructure, prompting economies to focus on expanding public housing, further stimulating the demand for switchgear in the Asia Pacific.

Key Market Players

ABB (Switzerland), General Electric (US), Siemens (Germany), Schneider Electric (France), Eaton Corporation (Ireland), Mitsubishi Electric (Japan), Hitachi (Japan), Legrand (France), Hyundai Electric (South Korea), Fuji Electric (Japan), and Toshiba (Japan).

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Scope of the Report

The switchgear industry is classified in this research report based on installation, insulation configuration, voltage, current, end-user, and region.

Based on installation:

• Indoor
• Outdoor

Based on insulation types:

• Air Insulated
• Gas Insulated
• Others

Based on voltage:

• Low
• Medium
• High

Based on current:

• AC
• DC

Based on end-users:

• Transmission & Distribution Utilities
• Industries
• Commercial & Residential
• Others

Based on regions:

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

Recent Developments

• In October 2022, ABB has completed the acquisition of ASKI Industrie Elektronik GmbH (ASKI Energy) in Austria, a move that significantly enhances ABB's digital energy management portfolio. This acquisition plays a vital role in advancing ABB's ecosystem of digital energy services, emphasizing the company's commitment to innovation and expansion in the energy sector..
• In April 2022, Siemens Smart Infrastructure was contracted by EWE NETZ GmbH, which operates highly efficient power grids in Germany. EWE NETZ installed fluorine gas-free blue GIS medium-voltage switchgear from Siemens.
• In October 2021, Schneider Electric launched the next-generation BlokSeT LV switchboard with enhanced safety features that include a real-time thermal monitoring solution.

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