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Feature | October 2016

Switchgears on upswing

High volume, low voltage switchgear and controls will continue to dominate the markets in the coming years, given the infrastructural growth in the country.

The demand for electricity is ever increasing in India. urbanisation, infrastructure additions, growth in real estate, and of course the rural electrification project is spiralling the electricity demand. In 2008-09 it stood at 734 kWh and has touched 1,075 kWh in 2015-16. There is an increase of 46 per cent in the last eight years. And this momentum in per capita consumption is expected to continue atlas for another decade as India is way behind the global leaders in this category. If we go by the experts opinion, they electricity demand in India on a climbing path, owing to large scale industrialisation, capacity additions in projects (infrastructure, power and real estate), and increased foreign investment in different sectors including manufacturing.

Generation, transmission and distribution segments in the country have ramped up their capacity addition programmes in the last two years with ambitious targets for each segment. In addition, all stakeholders are analysing ways to improve efficiency, with efforts especially on to bring down T&D losses below 15 per cent. It is also necessary on the part of utilities to address other issues like load management for a better grid stability. One should appreciate the concentrated effort from utilities part to ensure a) the quality of power, b) stability in transmission, and c) load management. India´s precept electricity consumption was on steady rise in the last decade.

For this, the stakeholder largely depends on a group of electrical equipments which are complementary to each other. switchgear and controls falls under this category. These are a combination of devices (switches, circuit breakers) which are an integral part of the any electrical circuit. These devices monitors, controls, regulates and protects the electrical supply lines.

The deployment of switchgear and controls on the various levels of transmission or distribution purely depends on the capacity of the supply line. The technological innovations have reduced the size of these electrical items and has tremendously improved the efficiency. This group of equipments ensures steady flow of electricity and safeguards the end users against overload, short circuit, and insulation failures.

Type of Switchgear & controls
On the basis of the load-bearing capacities, it is mainly classified into three segments:
a) Low-voltage (LV) switchgear (below 1.1 kV),
b) Medium-voltage (MV) switchgear (3.3 kV - 33 kV), and
c) High-voltage (HV) switchgear (above 33 kV).

Predominantly the Indian switchgear market comes under first two categories - the LV switchgear and MV switchgear. This classification is based on the products available in the domestic market. The decade between 2000-2010 saw major developments when the market was opened up for foreign players, allowing 100 per cent FDI.

Interestingly, many known players in the segment also opened their R&D centres in India. This has taken the industry to a level where the domestic market gets is supplied products suitably designed for India´s geographical and climatic conditions.

Demand is seen from new as well as old projects areas. As part of the initiatives to ensure better load management and energy efficiency, many industries, especially in the T&D segment, old switchgears are being replaced by technologically advanced ones. New products have an edge over older ones in terms of efficiency and design. This replacement market, according to analysts, are also as big as the new market.

According to Energy & Environment Practices, Frost & Sullivan have brought in improvement in the low voltage switchgear industry in terms of betterment in product life cycle, safety, reliability etc. It also enabled products that are digital intelligent systems with displays, and multi-functionality.

Kshitij Batra, Director Marketing, Partner Projects Business, Schneider Electric India was quick to add, ´the single largest change we have seen in the power distribution and motor control space in the last five years has been the dramatic evolution of the concept of connected devices under the umbrella of what is broadly called the ´Internet of Things´ or ´Industry 4.0´, in the industrial space.

Growth Rate
The electrical equipment segment´s growth rate for the last couple of years was a concern for manufacturers, owing to both domestic and global factors. However, the mood is upbeat as they feel that there is a revival in demand, after infrastructure projects started picking steam. According to some recently published reports, this upswing will fuel growth of switchgear and control segments, especially in developing markets like India.

Research report published by Markets and Markets projects that the switchgear market is expected to grow from an estimated $89.40 billion in 2016 to $144.41 billion by 2021, at a CAGR of 10.07 per cent from 2016-2021. Increasing investments in the T&D network and growing need for efficient and reliable power are driving the global switchgear market.

The LV and MV switchgear markets in India to grow at a CAGR of 12.05 per cent over the five year between 2013 and 2018. And Value Notes, estimates that the size of the Indian switchgear industry will touch the Rs.215 billion mark by 2017; and also be highly organised with 15 out of 25 player dominating 90 per cent of the market share.

The Drivers
High volume, low voltage switchgear and control system will dominate India´s market for at least for the next five years time. Currently, in the power sector, transmission segment dominated the demand for switchgear and controls and it is expected that it will continue to hold the maximum demand in the coming years. Followed by the generation segment. Implementation of Smart Grid application may pull the share of distribution segment demand. Other than power sector, other segments like manufacturing and processing industry would see an increase for switchgear and control application followed by commercial and residential real-estate segments.

Batra Pointed out that buildings, OEMs and renewables will be the three major segments which would drive the growth, and segments like data centres, utilities, hospitals/healthcare and industries like pharma, F&B and automobiles also will see sizeable demand. Today, in a technologically advanced era, people prefer switchgear and controls over fuses, which were more widespread. This is slowly changing, as fuses requires replacement after every circuit failure, however in the case of switchgear replacement is not required. There is huge potential seen in the replacement of old and redundant systems. Replacement is mainly promoted to ensure safety and efficiency. If government initiates this through a directive, there could be a sudden spike in demand for switchgear and control.

According to Frost and Sullivan, the segment is highly competitive, especially for volume-driven products such as MCB, MCCB, and HRC fuses, making it difficult for large MNC suppliers to sustain their market share with dipping profit realization. That means even if the companies record top-line growth, the bottom line growth will remain stagnant. A large number of local market players, coupled with fluctuating raw material prices and imports from other Asian countries and the pressure on market players to reduce prices to sustain business, deter it from growing to its actual potential.

Besides, another challenge the industry has long been facing, is inadequate budget allocation for electrical equipment products. With constrained budgets, end-users tend to choose low-technology, low-priced switchgear components, thus challenging organised players from offering technologically superior products and solutions.

Timely implementation of various government projects is what needs to be addressed at this point of time. Uncertainty and delays in implementation of various power reform programs/initiatives have led to artificial demand which resulted in overbooking at the manufacturing lines. Industry demand in the past couple of years have dropped significantly, leading to lower capacity utilisation. Both these have to be addressed to revitalise the industry.

The Indian switchgear and control markets is a well established segment expected to register sizeable growth rate in concurrence to the power sector reforms being rolled out. Majority of public and private discoms, have acted to improve distribution. The challenge here now, is to develop advanced products that are suitable for the domestic market at a competitive price. That also means the new products should have a synergy with the existing products.


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