China accounts for the largest share in the world’s switchgear market and this is expected to increase at a compound annual growth rate (CAGR) of 10.8% between 2013 and 2020, reaching a share of 19.2% by 2020. According to research and consulting firm GlobalData, the global switchgear market grew from US$46.8 billion in 2008 to US$58.6 billion in 2012.
The Chinese switchgear market increased from US$7.7 billion in 2008 to US$9.9 billion in 2012, accounting for a share of 16.9% in 2012. Low-voltage switchgear had the highest share of global revenue with 49% in 2012, while medium and high-voltage switchgear accounted for 36% and 15%, respectively. This is because, for a single high-voltage installation, multiple medium-voltage switchgears are deployed.
Sowmyavadhana Srinivasan, GlobalData’s senior analyst covering power, says, “Growing installed capacity is a major driver of this market, and we expect installed capacity worldwide to increase from 5,645 GW in 2012 to 7,671 GW in 2020, at a CAGR of 3.9%. Additionally, power is usually produced at a medium-voltage level and is then stepped up to a higher voltage for transportation over longer distances. As the number of generation units increases, the number of medium-voltage switchgear used also rises in generation as well as the distribution segment.”
Another boost to the switchgear market is the substantial investment in transmission infrastructure, which will demand high-voltage switchgear devices in the future. This would be followed by investments in both medium-voltage and low-voltage switchgear to ensure connectivity of the electricity to the end user.
“Developing countries such as China and India have introduced various initiatives to cater to the electricity demand that is being linked with rapid economic growth. Ultra-high-voltage grids are expected to be the core focus of investment for transmission and distribution. Furthermore, as urbanisation and industrialisation increase around the world, there is a substantial increase in infrastructure, which means heavier investment in the end-user segments for power which supports the growth of the low-voltage switchgear market,” Srinivasan says.
However, the growth in prices of raw materials, such as copper, aluminium and steel, has directly increased the costs of transmission equipment, including high-voltage switchgear. Additionally, the presence of a large number of companies, especially in India and China, has introduced competitive pricing pressure in the switchgear market.
“In the absence of much scope for product differentiation, pricing becomes an important criterion for gaining a market share. Multinationals are struggling to keep their costs and prices competitive in both emerging and developed markets to match competition from Chinese and Indian players,” Srinivasan concludes.