Global Market Insights predicts the low voltage switchgear market will surpass a remuneration scale of $80 billion by 2025.
The research firm looks at the factors impacting on the market.
The power industry has traditionally been held as one of the most crucial components in ensuring social welfare and economic advancement of communities across the globe.
Energy is a significant input for sustained growth and the power sector is an indispensable vertical in any economy.
While there exist numerous sub-verticals of the global power sector, it can be said that the criticality of low voltage switchgear market has only increased in the recent past owing to growing expenditure towards infrastructural expansion.
Although it can be termed as a gradual shift, the energy generation mix is undergoing a drastic transformation due to the roll out of diverse electrification programmes, digitalisation, growing inclination towards renewable energy sources, ageing electrical grid infrastructure, changing regulatory norms, and the emergence of disruptive technologies.
These factors have enabled the global low voltage switchgear industry to undertake a new path of expansion and growth that is quite unprecedented.
1. Ensuring seamless energy access for all: The centrality of low voltage switchgear industry in vital electrification programmes aimed at realising the seventh Sustainable Development Goal (SDG).
Carving out an ambitious roadmap for the next 15 years, the United Nations General Assembly approved 17 SDGs in 2015 to achieve a better and more sustainable future worldwide.
Out of these global goals, the seventh SDG calls for access to modern, affordable, reliable, and sustainable energy for all. According to the “Tracking SDG7: The Energy Progress Report 2018”, the world is not on track to meet the predefined targets for 2030 and about one billion people still live without electricity.
Apparently, the formulation of right policies and a commitment to undertake extensive grid modernisation programmes and electrification drives is the only way forward to ensure that the seventh SDG is realized.
In this regard, various regional governments are making rapid progress in attaining universal access to electrification and grid modernisation programmes which has invariably benefited the low voltage switchgear industry.
With an aim to achieve universal household electrification in the nation and provide electricity connections to all the underserved households in rural hinterlands and urban regions alike, the Indian government has been implementing two of the most vital electrification programmes on a war footing.
The ‘Pradhan Mantri Sahaj Bijli Har Ghar Yojana’ and the ‘Deen Dayal Upadhyaya Gram Jyoti Yojana’ have a combined budgetary allocation of more than INR 50,000 crores which would ensure reliable electricity to all by last mile connectivity.
Elaborating further on the objectives of both the schemes, the electrical grid network of the nation would be revamped to efficiently meet the surging demand for uninterrupted and reliable electricity supply.
Modernising the grid infrastructure is crucial as the current grid network is not keeping pace with increased power generation abilities, especially in the rural areas and regions where the electricity penetration has not reached satisfactory levels. This makes installation of microgrids and mini grids an important piece of the energy puzzle and would increase the demand for low voltage switchgears across India in the upcoming years.
The United States
Changing the existing energy grid network and infrastructure is increasingly perceived as an unavoidable necessity in the world’s most advanced and developed economies. The US Department of Energy (DOE) has been proactive in pursuing its Grid Modernisation Initiative to enhance the security, reliability, and resiliency of the electricity delivery system of the nation which is in line with the demands of the 21st century and beyond.
According to a report quoted by DOE's Grid Modernisation Multi-Year Programme Plan in 2015, the electric utility sector of the nation would require spending about $1.5 trillion to $2 trillion from 2010 to 2030 just to maintain the reliability of the existing electricity service. Needless to mention, the US grid infrastructure not only needs maintenance but also a total revamp to ensure that it works in ways that optimise and build upon integrating new technologies with the existing grid network. Regardless of the way it is achieved, it can be stated that the rising investment in transforming the old and creaky electrical grid infrastructure would prove to be crucial in propelling the revenues of low voltage switchgear industry.
Although wide-ranging and intensive programmes are being rolled out to strengthen the transmission and distribution electrical networks along with massive electrification initiatives, there is still much work to be done to meet the SDG target for electrification.
Apparently, the aforementioned government-backed initiatives across emerging and developed nations alike is leading to increase in the demand for smart switchgears, offering immense opportunities for the low voltage switchgear market.
2. Digitalisation: The next disruptive force set to transform the manufacturing processes currently followed in low voltage switchgear industry
Digitalisation is impacting the global low voltage switchgear industry in two prominent aspects – in devices becoming increasingly intelligent and the way manufacturing of the product is carried out. With the growing need to simplify the increasing process complexity, utilizing automation technologies to reduce production time, and the necessity to adapt in an ever-changing industry, the low voltage switchgear manufacturers are developing a different breed of switchgears that would be suitable for smart grid operation.
In addition to this, power utilities across the world would be required to deploy intelligent switchgears to keep up with the pace of renewable energy integration in the energy generation systems. Therefore, the development of compact, environment-friendly, and reliable switchgears which require minimum installation and commissioning time is the need of the hour. Bearing this in mind, a few major electrical equipment makers are utilizing digital manufacturing tools to improve efficiency, shorten production time, minimize manufacturing defect, and achieve economies of scale.
For instance, Siemens India’s latest switchgear manufacturing facility in the nation is able to produce over 180 variants at the rate of one product per nine seconds which would amount to around an annual output of five million low voltage switchgears. The new facility, which is the firm’s first fully digitalized switchgear production facility in India, is merging the real and virtual worlds to design tools and equipment with a very high degree of precision, master data management, and process simulation at par with global standards.
In an era where each country is mindful of formulating development policies that are centered around decarbonisation, the integration of renewable energy sources in the conventional power generation systems appears an inevitable prospect. The incorporation of advanced technologies in production facilities by switchgear makers defines the establishment of a true digital manufacturing factory which would lead the power sector on the path of much needed transformation. Additionally, as more regional governments take up extensive and long-term electrification programmes and grid modernisation initiatives, the low voltage switchgear industry would register a substantial growth in the forthcoming years.