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According to Technavio latest report, analysts anticipates the global electrical equipment market for power distribution industry to grow at a CAGR of almost 9%  by 2020.

 

The research study not only covers the present scenario and growth prospects of the global electrical equipment market for the power distribution industry for 2016-2020, but also lists the distribution transformers, switch gear, power cables, and smart meters as the major electrical equipment used in the power distribution industry.

 

The following three factors highlighted by Technavio heavy industries contribution to the growth of the global electrical equipment market for the power distribution industry are

  1. Growing implementation of smart grid technology.
  2. Transformation of Indian electricity sector.
  3. Microgrid development projects in Southeast Asia and Africa.

 

Growing implementation of smart grid technology

 

The transformation of the energy sector from centralised generation systems to decentralised power generation systems is pushing the rise in installation of electrical equipment in the power distribution segment>This also results 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 photo voltaic (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.
 
 

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.

 
 

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.

 

Approximately 4 billion is planned to be invested by Indonesia 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.

A study in Britain has concluded that computer-assisted smart power grids reduce power generation shortfall, and result in improved delivery and more efficient billing on Sep 2016, London. “A smart grid is a complex modern electricity system which utilises sensors, monitoring, communications and automation, to improve the electricity system,” the researchers wrote in the study. “Smart grids fundamentally change the way in which we generate, distribute and monitor our electricity. They dramatically improve the efficiency, flexibility and reliability of the existing electricity infrastructure,” the researchers said.

 

Carl Chalmers, Michael Mackay and Aine MacDermott of Liverpool John Moores University, in England, published about the advantages of a smart grid over the traditional energy grid in the International Journal of Smart Grid and Green Communications. They said smart grids use a vast interconnected infrastructure that allows two-way communication and automation throughout the entire grid — from generator to consumer and back — striking out the possibility of a malicious manipulation into the metering system for the sake of sabotage, criminal or online military/terrorist action.

 

The research team noted that critical infrastructures present a tempting target for terrorists, military strikes and hackers wanting to cause disruption, steal information or incapacitate a country remotely.However, after knowing the possible worst-case scenario with regard to the smart grid and smart meters, countries must put in place security measures to protect the infrastructure – suggested by the researchers.

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

 The research study not only covers the present scenario and growth prospects of the global electrical equipment market for the power distribution industry for 2016-2020, but also lists the distribution transformers, switchgear, power cables, and smart meters as the major electrical equipment used in the power distribution industry.

The following three factors are highlighted by Technavio heavy industry analysts as the growth contributing factors 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

Indian electricity sector Transformation

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

The installed capacity of the country was slightly over 100 GW in 2003 and reached 300 GW in April 2016. These actions and regulatory policies in India have attracted private players and improved the industry scenario. The distribution sector is witnessing a sluggish growth rate even though the power generation sector of India has grown at a rapid phase. The country is facing unprecedented challenges to match the demand and supply gap as it is the second most populous country and one of the fastest growing economies in the world. India's transmission and distribution (T&D) and aggregate technical and commercial (AT&C) losses are among the highest in the world. Anju Ajaykumar, a lead analyst at Technavio for unit operations research says,“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.”

 

Smart grid technology implementation growth

Transformation from centralized power generation to decentralized distributed power generation is taking place in the global electricity sector resulting in transformation of customers into prosumers. A prosumer consumes as well as generates power, which will be supplied to the grid. Rooftop photovoltaic (PV) in recent times has emerged as one of the fastest growing renewable energy technologies in the world.

 State and federal level policies 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. The residential and commercial installations of renewable energy sources have increased worldwide under the distributed generation or the prosumer type generation.

 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.

Southeast Asia and Africa  - Microgrid development projects

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.

Approximately 4 billion is planned to be invested by Indonesia 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. At 43%, the region’s electrification rate stands 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.

Technavio analysts forecast a growth of close to 6% CAGR for the global automation solutions market in the power industry during the forecast period, according to their latest report.

The research study covers the present scenario and growth prospects of the global automation solutions market in the power industry for 2016-2020. To calculate the market size, the report considers revenue generated from sales and aftermarket services of automation solutions in the power industry.

The US is likely to shut down 41 coal-fired power plants in 2016, and is expected to build new clean power plants based on gas or solar-powered energy. In May 2016, India announced it would be shutting down coal-fired power plants with a total capacity of 37 gigawatts in a bid to protect the natural environment and reduce emissions.

According to a lead analyst, Bharath Kanniappan, at Technavio for research on automation, “The coal-fired plants may be replaced by natural-gas power plants equipped with critical safety units and innovative automation technologies. This represents significant greenfield opportunities for the global automation solutions market in the power industry.”

The three contributing factors that Technavio analysts highlight to the growth of the global automation solutions market in the power industry:

  • Rise in investments in smart power grids
  • Need for reducing T&D losses in power grid
  • Compliance with stringent government regulations

Rise in investments in smart power grids

Throughout the world smart grid are increasingly being deployed. Countries like India, the US, China, France, Spain, and Germany are implementing ambitious smart grid plans. Smart grids include grid applications such as SCADA solutions,smart energy meters information technology (IT), and other communication networks. These devices enable complete control and manage digital assets in the field.

In 2015, Iberdrola, the largest utility in Spain, claimed that it was able to cut down the outage time from 45 minutes during January-July 2014 to 38 minutes in the same period in 2015 following smart grid implementation. In Jamaica, the implementation of smart grids resulted in an average of 30% decrease in outages in 2015 compared with 2014. Florida Power & Light was able to avoid approximately 500,000 outages in 2014 due to smart grid systems and its power delivery diagnostic center. Thus, effective implementation of smart grids is required to counter the power crisis and increase grid reliability.

The top five list of countries with major investments in smart power grid by 2030:

  • China
  • India
  • Brazil
  • France

Need for reducing T&D losses in power grid

The total power generated by power plants does not reach the customers. This is because of flaws in long distance power transmission infrastructure. By the time the power reaches the end-user, approximately 10% of the power is lost due to technical and non-technical losses.

  • Technical loss: Attributed to leakages, open circuit losses, dielectric losses, joule losses in transmission lines, and overloading of distribution systems.
  • Non-technical/commercial loss: Involves theft, defective meters, and meter reading errors

Technavio expect a surge of the automation solutions market in the power industry in response to the need to reduce technical and non-technical losses incurred during power transmission and distribution (T&D).

Compliance with stringent government regulations

Power companies worldwide are looking at automation as an effective means to comply with stringent regulations in their geography and deal with the increased scrutiny of regulatory bodies. Regulatory authorities, especially in Europe and North America, have initiated strict regulations to reduce the carbon dioxide emissions from process industries such as power. “Power generation, especially by thermal power plants, results in the emission of harmful greenhouse gases, which harms the natural environment and increases the risk of serious health hazards,” adds Bharath.

To reduce the carbon dioxide emissions during plant operations, the power industry is striving to implement advanced technology processes and equipment and regulations such as the Kyoto Protocol have mandated the reduction of emissions worldwide. In response, the use of automation systems like SCADA has increased considerably in the power industry. These systems measure the emissions in plant operations accurately and help in real-time monitoring and controlling of power plants. There is a high likelihood that the power industries exhibit and increased preference for these systems during the forecast period.

 

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