Switchgears Market Intelligence

Industry Outlook & Drivers

Global Market Outlook on Switchgears 

• Asia Pacific will continue to dominate the market in terms of driving the demand for switchgears
• Growth of the power distribution equipment industry in the developing regions is being driven by the upgrades and expansion of the electrification infrastructure and the demand for electricity
• In North America and Europe, the growth is being driven by the increased proliferation of renewable energy projects

Global Switchgear Market Overview

Increasing demand for electricity in the emerging and developed countries, backed by increasing investment in infrastructure is expected to drive the switchgear market globally. However, intense price based competition is expected to affect the overall growth

Global Switchgear Market Size & Trend

The global switchgear market is expected to be driven by the increased investment in transmission and distribution infrastructure and the upgradation of ageing substation equipment

• The global switchgear market is estimated to be around $86.18 billion for the year 2019, and is expected to reach $96.83 Billion by 2021, growing at a CAGR of 6-7 percent in the forecast period
• Increasing demand for electricity in the emerging and developed countries backed by increasing investment in infrastructure is expected to drive the switchgear market globally. Also, initiatives taken to upgrade ageing substations with energy efficient solutions for better performance, especially in North America and Europe is further expected to drive the switchgear demand globally
• However, price volatility in key raw materials such as copper, aluminum, steel is expected to have a significant impact on the switchgear cost as they are raw material intensive
• Local companies have significant market share in emerging economies such as India and China and give tough completion to the multinationals in terms of switchgear quality and price
• Demand for low and medium voltage switchgears is being predominantly driven by the need for enhanced protection in power distribution equipment. It is also being driven by the rapid infrastructural development and urbanization being witnessed globally
• Power utilities form the largest end-use segment for medium and high voltage switchgears. The market growth for medium and high voltage switchgears is usually supported by the increased investment in the transmission and distribution infrastructure and upgradation of the old infrastructure
• Accounting for a dominant share of 47 percent, Asia Pacific has emerged as the largest market for switchgears globally. This is being driven by the emerging economies such as China, India, Vietnam and Indonesia which are witnessing rapid industrial and infrastructural development. In North America and Western Europe, the switchgear demand is being driven by the increased focus on renewable energy to curb carbon emissions

Global Switchgear Market Drivers & Constraints

Drivers

• Substantial investment in the emerging economies including China, India, Indonesia, Brazil on the transmission and distribution infrastructure is expected to be a major driver for the demand of switchgears
• With the rapid industrialization and urbanization across the globe, there is a substantial increase in the investment in the end-use segment for power, which is expected to support the demand for medium and low voltage switchgears
• In developed economies such as the US and other Western European nations, the switchgear demand is expected to be driven by the increased focus cleaner energy sources in order to curb carbon emissions

Constraints

• Volatility in steel, copper and crude oil prices is expected to restrain the growth of switchgear globally. Such volatility in raw material prices have created pressure on the manufacturers' profit margin, due to which, some of the global players in the industry have shifted their production facilities to regions that facilitate lower cost of manufacturing as well as, have a higher demand, like China, India etc.
• Intense price based competition, especially in the emerging economies between local players and established multinationals puts immense pressure on the revenue stream of switchgear manufacturers
• Furthermore, with the lack of substantial product differentiation, price becomes an important criterion for winning contracts

Global Switchgear Supplier Analysis

• The global switchgear manufacturers like ABB, Siemens, Schneider Electric, General Electric have significant manufacturing, sales and service capabilities across the globe. They have a wide product portfolio which includes low, medium and high voltage switchgears. In the medium and high voltage space, these manufacturers also offer air and gas insulated switchgears
• There are high entry barriers in the high voltage switchgear market (>33 KV) due to high technology and investment requirements. The market is dominated by global players such as ABB, Siemens, GE, Hyundai and Alstom

Regional Market Outlook

Asia Pacific (APAC)

•  Asia Pacific is the fastest growing switchgear market and has the presence of all major global players, primarily due to the lower manufacturing cost and higher end-use demand
•  China is the largest market for medium voltage switchgears and has over 50 medium voltage manufacturing facilities. Majority of the suppliers manufacture MV AIS, the market penetration of MV GIS is limited to 15 percent
• In China and India, established players, such as ABB, Siemens, Schneider Electric, face stiff competition from the local players. The domestic manufacturers in China and India hold significant market shares

Europe Middle East & Africa (EMEA)

• Switchgear demand in Western Europe is primarily driven by the increased spend on renewable energy infrastructure, coupled with replacement demand for the existing infrastructure
• In the Middle East, the interconnected power grid project is expected to be a significant driver in the growth of high voltage switchgear. Saudi Arabia, followed by the UAE and Qatar, is the largest market for switchgears in the Middle East
• Lower oil prices and oversupply have affected the top line of the oil and gas companies. This has resulted in a delay in capacity expansion plans, and thus, resulted in reduced demand for medium and high voltage switchgears