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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