Switchgears

Global Market Outlook on Switchgears 

Switchgear equipment are electrical products used in electric power systems to control and protect electrical equipment. Switchgear comprises switches, circuit breakers, or fuses. The circuit breakers used can be an air circuit breaker, vacuum breaker. An air circuit breaker operates in the air. The Gas circuit breaker or SF6 circuit breaker uses sulfur hexafluoride gas. A vacuum circuit breaker uses vacuum.

There are different types of switchgear that include Low Voltage Switchgear (LV Switchgear), Medium Voltage Switchgear (MV Switchgear), and High Voltage Switchgear (HV Switchgear). LV Switchgear, MV Switchgear, and HV Switchgear are used for different applications, including in electric utilities, industrial (electrical network in industrial plants), and residential (power supply system of buildings).

• 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 industrial (electrical network in industrial plants) and Residential (power supply system of buildings) electric utilities.
• In North America and Europe, growth is being driven by the increased proliferation of renewable energy projects.
• The Switchgear market is expected to grow as it is directly related to the demand for energy. Power production plants need switchgear, as do buildings. Industrial switchgear is needed by almost all types of industries. The demand for switchgear has been growing and is expected to continue to grow.
• T&D Equipment is needed for all power generation plants, whether they are wind-based, hydro-based, or solar-based. This is good news for the switchgear market. It is estimated that offshore wind investments will increase fifteen-fold up to a trillion dollars by 2040. This is a very positive trend that will benefit the global switchgear market.
• The growth of the residential and commercial sectors in developing countries of the Asia-Pacific region is one of the factors that would help drive the growth of the switchgear industry. Construction of industrial plants in countries like South Korea, China, and Japan are again positive factors for the switchgear market.  
• The switchgear market is segments based on criteria like insulation, installation, voltage, end-user, and region. In terms of insulation used, it is classified as air, oil, vacuum, or gas. In terms of installation, it is segmented as indoor and outdoor. By voltage, it is segmented as high, medium, and low. In terms of end-user, it is classified as residential, commercial, or industrial. The regions are North America, South America, Europe, Middle East & Africa, and Asia-Pacific.
• The key players in the market are ABB, Schneider, Fuji Electric Co, Hitachi, Kirloskar, Toshiba, Powell, L&T, Hyosung, and Lucy Electric.

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 up-gradation of aging substation equipment. This section of the report also illustrates the global switchgear market size growth by revenue as well as the switchgear market share by region and product.

• The APAC will continue to dominate the market, in terms of driving the demand for switchgears
• Growth of the power distribution equipment industry in developing regions is being driven by the upgrades and expansion of the electrification infrastructure and demand for electricity
• In North America and Europe, the growth is being driven by the increased proliferation of renewable energy projects
• 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 competition to the multinationals in terms of switchgear quality and price.
• In developed economies such as the US, Germany, France, and the UK, the switchgear market is expected to be driven by the growing demand for renewable energy..
• 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 up-gradation 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 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.
• Demand for low and medium voltage switchgear 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.

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 on cleaner energy sources in order to curb carbon emissions.

Constraints

• Volatility in steel, copper, and crude oil prices are expected to restrain the growth of switchgear globally. Such volatility in raw material prices has 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 the 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 LV switchgear, MV switchgear, and HV switchgear. 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.
• Other manufacturers in the segment manufacture components such as air circuit breaker, SF6 circuit breaker, hybrid circuit breaker, gas circuit breaker, T&D equipment, switches, and vacuum circuit breaker.

Regional Market Outlook

The regional market outlook section of this report details key facts and information about the regional switchgear markets. It includes market information as well as an analysis of the market maturity of each region. The rep[ort also categorises the countries within each region based on their different levels of demand and growth. These key insights provide a more detailed understanding of the current size, trends and growth rate of the regional markets.

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. The 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.

North America (N.A.)

• The US is the major growth market in North America. The growth in the switchgear market is expected to be driven by the up-gradation of the aging T&D infrastructure. Integration of the wind and other renewable energies is expected to increase the load flow, and thereby, increase the demand for switchgears.
• All major global suppliers have switchgear manufacturing facilities and a strong distribution network in this region.

Latin America (LATAM)

• The LATAM region is expected to witness high growth levels in the forecast period, primarily driven by a large number of emerging economies in the region. The majority of the economies in the region are driven by the growing industries, including oil & gas and mining.
• A large part of the MV switchgears manufactured in Brazil are exported to other Latin American countries, for instance, Siemens caters to the entire Latin American switchgear market through facilities in Brazil and Colombia.
• Most suppliers manufacture both air-insulated and gas-insulated switchgear.

Cost and Pricing Analysis

This section of the switchgear market report provides the cost and pricing analysis of the different aspects of the market. The pricing analysis includes the switchgear components as well as consumables. It also includes the forecast for the future pricing trends for the same. The pricing of switchgears is driven not only by the input components and materials but also by labor and electricity costs. The cost and pricing analysis of the price drivers for switchgears in the US, Europe, and China markets are studied individually. The price trends of electricity and labor are detailed with the projected pricing change forecast.

Procurement Best Practices

The procurement best practices section of this report details the different channels of procurement in the global switchgear industry. It helps one better understand the process flow of procurement through the suppliers both local and global. The procurement process for switchgears also depends on the contract model and their parameters. The different aspects of the typical contract models and their details are also illustrated in this section of the report.