• The economy of the Asia Pacific region has grown significantly over the last few decades and currently contributes a significant fraction to the global GDP.
• The MV switchgear market of APAC is driven by the deployment of renewables, an increase in electricity demand, an increase in energy intensive industries and the uptake of electric vehicles in the region.
• Power Technology Research expects MV switchgear in the APAC region to grow with a CAGR of 3% from 2022-2027.
The economy of the Asia Pacific region has grown significantly over the last few decades and currently contributes a significant fraction to the global GDP, 37% in 2021. With the growth in the economy, electricity demand has also increased, driving the switchgear market of the region as well.
Switchgear is an essential part of any modern electrical power facility and ensures safe and reliable operations for power generation, transmission and distribution. When it comes to Medium Voltage (MV) switchgear, Asia Pacific is by far the biggest market in the world accounting for around 50% of the global share in terms of revenue. As far as demand for MV switchgear, most of the demand in this region is generated from China, which accounts for 65%, followed by India with 10%. From the technology perspective, the APAC market is inclined towards Air Insulated Switchgear (AIS) technology while rapid adoption of Gas Insulated Switchgear (GIS) is also being observed due to the penetration of renewables and distributed generation.
Figure 1: Share of APAC MV switchgear with respect to global market.
Source: Power Technology Research
Figure 2: Technology split of MV switchgear market in APAC.
Source: Power Technology Research
Major Demand Drivers
The MV switchgear market of APAC is driven by the deployment of renewables, an increase in electricity demand, an increase in energy intensive industries and the uptake of electric vehicles in the region.
Penetration of renewables in electrical grid
More than half of the global energy is consumed in the APAC region with around 85% of the region’s energy demand met through fossil fuels. So, to achieve net neutrality in the long run, countries within APAC, including China, Japan, India, South Korea and Taiwan, are pushing for the deployment of renewables and are making huge investments in this regard. It is expected that investments over USD 1 trillion will be made by 2030 in the renewable sector. This will I drive the market of MV switchgear in the APAC region.
Increased electricity demand
The biggest demand center of switchgear is Asia-Pacific, primarily due to China and India which have a huge annual market demand driven by increasing urbanization and as the network expands, an increasing number of substations are being installed driving the legacy electrical equipment that includes switchgear.
The region has introduced programs for electrification:
• The Saubhagya Initiative under Power for All is an electrification program in India that has achieved 99.99% electrification (only 18,734 households are still without electricity).
• Similarly, Indonesia received USD 3 billion financing by the Asian Development Bank for distribution grid enhancements and grid strengthening to allow for additional renewable energy expansion to achieve the target of 23% renewable installed base by 2025.
Rise of energy intensive industries
APAC is continuing to be an attractive market for foreign direct investments due to the availability of cheap labor and high business opportunities. Many foreign investors are investing in SMEs (small and medium enterprises) in APAC contributing to the demand of MV switchgear. For instance, Vietnam is quite attractive market in terms of investments. In addition to expanding industry for domestic use, Vietnam is targeting increasing exports by developing itself as an alternative manufacturing site to China. Supply chain disruptions due to the Covid-19 pandemic and geopolitical tensions with China have resulted in Vietnam becoming more attractive for manufacturing.
Countries in the region have set ambitious targets in the region to promote electrification of the transportation sector. For example,
• China’s targets in the New Energy Vehicle (NEV) Technology Roadmap 2.0 for HD-NEV shares include 12% by 2025,17% by 2030. and 20% by 2035.
• Similarly, India through their EV 30@30 Campaign, aims for 30% of global vehicle sales share to be ZEVs by 2030.
Power Technology Research expects MV switchgear in the APAC region to grow with a CAGR of 3% from 2022-2027. Power Technology Research believes that investments made in the urbanization and industrialization followed by sustained growth in the installed capacity of renewables in the region particularly wind and utility scale solar is expected to drive the growth of the switchgear market in the region.
From the supply perspective, even though the MV switchgear market in the APAC region is highly fragmented with many panel builders present in the market. Most of the market share is still held by the Tier 1 players including ABB, SE, Siemens, Eaton and others. It is expected that in the next five years the local players that are mostly Chinese will start taking share away from the Tier 1 companies. appearing in the Tier 1 players category.
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