High Voltage Commercial Switchgear Market Trends

Growth Drivers

• Rising shift to renewable energy power sources: The global push towards adopting clean energy sources to mitigate the rate of climate change and achieve net zero goals by 2050 opens new opportunities for the global market as demand for high voltage commercial switchgear rises in solar PVs and wind turbines. For instance, the International Energy Agency (IEA) estimated USD 2 trillion will be invested in clean energy globally in 2024. The IEA’s report estimates clean energy investments to be currently higher than the global spending on gas, coal, and oil. The industrial expansion of renewable energy power sources is poised to continue boosting demands for high voltage switchgear to ensure maintenance of grid stability.
  
  Additionally, growing fiscal expenditure on infrastructure development provides market players with increased opportunities. For instance, in June 2024, the World Bank announced an investment of USD 35.0 million to enable solar power generation and increase access to electricity in Guinea-Bissau.
• Aging power infrastructure and investments in grid modernization: The power infrastructure in many nations is aging and requires modernization to meet the growing demands for electricity. Government increases in fiscal expenditure to upgrade power grids provide immense opportunities to manufacturers of high voltage switchgear. The U.S. Department of Energy has released statements on its commitment to grid modernization by adopting smart grids. For instance, in May 2024, the U.S. government released a joint grid modernization initiative with 21 states to upgrade 100,000 miles of existing transmission lines over the next five years.
  
  Large-scale projects such as the one by the U.S. raises demands for advanced connected switchgear. Additionally, reliable and efficient energy supports consumer price stability and reduces cost burden.
• Increasing investments in rural electrifications: The increase in investments in rural electrification projects increases the market scope for the high voltage commercial switchgear market. An increase in electrification projects boosts demands for high voltage switchgears. Governments across the world are actively seeking to provide reliable energy solutions to remote areas through the installation of remote microgrids, which require switchgear solutions. For instance, in September 2024, the United States Department of Agriculture (USDA) announced a USD 7.3 billion investment in rural clean energy, that is set to increase demands for high voltage switchgears.
  
  Emerging economies are set to provide market opportunities with growing investments in rural electrification supported by the national government and international organizations. For instance, in May 2024, the European Union and Nepal announced the 28 km extension of Chilime-Trishuli 220 kV double circuit electricity transmission line and sub-stations to support electrification in rural areas of Nepal.

Challenges

• Volatility of raw materials & supply chain disruptions: The global market is susceptible to disruptions in supply chains for raw materials such as steel, copper, and aluminum. Increase in import/export tariffs and fluctuations in producer prices can adversely affect production and increase manufacturing costs. Additionally, geopolitical issues and trade restrictions in regions can stymie the market’s growth.
• Regulatory hurdles and environmental concerns: Sulfur hexafluoride (SF6), a potent greenhouse gas, is widely used in switchgear. The use of SF6 is heavily scrutinized by environmental and regulatory bodies. For instance, the European Commission proposed the ban of SF6 from most new electrical equipment by 2026. This can slow the market’s growth as manufacturers are under pressure to seek alternatives to SF6, which can increase costs and require additional funding for research and development.