September 14, 2016 - 12:43 PM EDT
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Global Electrical Equipment Market for Power Distribution Industry to Witness Robust Growth Through 2020, Owing to Implementation of Smart Grid Technology: Technavio

Technavio analysts forecast the global electrical equipment market for power distribution industry to grow at a CAGR of close to 9% during the forecast period, according to their latest report.

The research study covers the present scenario and growth prospects of the global electrical equipment market for the power distribution industry for 2016-2020. The report also lists distribution transformers, switchgear, power cables, and smart meters as the major electrical equipment used in the power distribution industry.

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Technavio heavy industry analysts highlight the following three factors that are contributing to the growth of the global electrical equipment market for the power distribution industry:

  • Transformation of Indian electricity sector
  • Growing implementation of smart grid technology
  • Microgrid development projects in Southeast Asia and Africa

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Transformation of Indian electricity sector

India is the third largest electricity generator and sixth largest electricity consumer in the world. The country generated 1,208 TWh of electricity in 2014, registering a growth of 9.6% from the previous year. India's installed capacity increased three-fold since the introduction of the Electricity Act in 2003 (EA 2003).

The country’s installed capacity that was slightly over 100 GW in 2003 reached 300 GW in April 2016. Such robust acts and regulatory policies in India have attracted private players and improved the industry scenario. Though India's power generation sector has grown at a rapid phase, the distribution sector is witnessing a sluggish growth rate. Being the second most populous country and one of the fastest growing economies in the world, the country is facing unprecedented challenges to match the demand and supply gap. India's transmission and distribution (T&D) and aggregate technical and commercial (AT&C) losses are among the highest in the world. “The country's aging power infrastructure and increasing AT&C losses have compelled policymakers to implement reforms in the distribution sector. Many reforms and grants are being implemented in the country to reduce these losses, which augurs well for the growth of the market,” says Anju Ajaykumar, a lead analyst at Technavio for unit operations research.

Growing implementation of smart grid technology

The global electricity sector is transforming from centralized power generation to decentralized distributed power generation. This has resulted in transformation of customers into prosumers. A prosumer consumes as well as generates power, which will be supplied to the grid. In recent years, rooftop photovoltaic (PV) has emerged as one of the fastest growing renewable energy technologies in the world.

Policies at state and federal levels have encouraged widespread deployment of distribution systems. Rise of net metering, smart meters, and targets for renewable energy installations have compelled policy makers to implement initiatives that will transform consumers to prosumers. Under the distributed generation or the prosumer type generation, the residential and commercial installations of renewable energy sources have increased worldwide.

The advanced metering infrastructure (AMI) is being implemented in smart grid networks in European countries such as Germany, Norway, and Sweden, thus increasing the scope for smart grid-based equipment in the region. In APAC, Australia has made significant advances in the smart grid technology and has installed smart meters across various states. China and India are among the top three power generation countries in the world, and the distribution sector in both countries needs to be reformed. These countries have already planned massive resurrection programs that will increase the demand for electrical distribution equipment. Equipment related to smart grids, such as AMI, will see a high demand from these countries.

Microgrid development projects in Southeast Asia and Africa

Microgrid development projects are being deployed at a rapid phase in Southeast Asia. The region is home to a group of islands that has poor electrification rates. Microgrids can be constructed at reduced costs and integrated with renewable energy, as these grids can effectively withstand the variations in renewable energy power generation.

Indonesia is planning to invest approximately 4 billion in microgrid projects. The country is likely to improve its electrification rate to 90% by 2020. Indonesia hosts more than 18,000 islands, thereby reducing the feasibility of a national grid. In order to improve the electricity access to villages, the country has identified microgrids as a feasible way to improve electrification rates.

Africa is another region with the lowest electrification rate and poor energy access. The region’s electrification rate stands at 43%, which is the lowest in the world. Countries such as Tanzania have poor electricity access and depend on other sources such as kerosene lamp, dry cells, firewood, and charcoal for their daily energy requirement.

Kenya has identified microgrids as an ideal solution to meet its energy needs, owing to the presence of abundant solar and wind energy sources. For example, Kenya-based microgrid solutions company, Steamco, installed its first microgrid in 2013, and within three years the number increased to 25 in 2016. “The lack of energy access in the country offers a large scope for microgrid deployment, which will, in turn, drive the electrical equipment market in the power distribution industry,” says Anju.

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About Technavio

Technavio is a leading global technology research and advisory company. The company develops over 2000 pieces of research every year, covering more than 500 technologies across 80 countries. Technavio has about 300 analysts globally who specialize in customized consulting and business research assignments across the latest leading edge technologies.

Technavio analysts employ primary as well as secondary research techniques to ascertain the size and vendor landscape in a range of markets. Analysts obtain information using a combination of bottom-up and top-down approaches, besides using in-house market modeling tools and proprietary databases. They corroborate this data with the data obtained from various market participants and stakeholders across the value chain, including vendors, service providers, distributors, re-sellers, and end-users.

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Source: Business Wire (September 14, 2016 - 12:43 PM EDT)

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