The demand for switchgear and substations is growing rapidly in the country, driven by the expansion of the transmission and distribution (T&D) network and the increasing integration of renewable energy. Various government schemes have also been formulated for T&D network strengthening and modernisation. Transmission utilities are focusing on augmenting substation capacity to further strengthen the network and enable greater integration of renewable energy. The Revamped Distribution Sector Scheme (RDSS) also lays emphasis on network modernisation and upgradation in the distribution segment. These factors are driving the demand for switchgear and substations in the sector.
In order to meet the emerging requirements, utilities are adopting new switchgear and substation designs and technologies. They are also investing in solutions to reduce the environmental impact of the segment, and deploying digital technologies and internet of things (IoT) for automated operations, energy management and smart grid operations.
An overview of the switchgear and substation market…
Market size and overview
Substation capacity: In the Indian context, high voltage direct current (HVDC) substations comprise ±800 kV, ±500 kV and ±320 kV, while alternating current (AC) substations broadly range from 132 kV to 765 kV. In the case of distribution, substation voltages are typically lower at 33 kV and below. As per the Central Electricity Authority (CEA), AC substation capacity stood at 1,147 GVA as of March 2023. Between 2018-19 and 2022-23, AC substation capacity has grown at a compound annual growth rate (CAGR) of 6.9 per cent. HVDC substation capacity stood at 33,500 MW, growing at a CAGR of 10.5 per cent between 2018-19 and 2022-23. Meanwhile, in the distribution segment, as per India Infrastructure Research, nearly 902 GVA of transformer capacity was operational as of March 2022, at the 33 kV level and below, across 46 utilities in the country. Between 2017-18 and 2021-22, transformer capacity has grown at a CAGR of 7.6 per cent.
Switchgear market: The market for switchgears is categorised based on load-bearing capacity – low voltage (LV), medium voltage (MV) and high voltage (HV). The LV switchgear segment comprising switchgears rated up to 1 kV are deployed by distribution utilities, industries, residential and commercial buildings, original equipment manufacturers and agricultural consumers. Common LV switchgear products include air circuit breakers, moulded case circuit breakers, miniature circuit breakers, residual current devices, fuse gear products, thermal overload and protection relays, contactors, starters, distribution boards and factory-built assemblies.
The MV and HV segment consists of switchgear ranging from 6.6 kV to 1,200 kV equipment. MV and HV switchgears are often grouped together, owing to their similar usage and applications in power systems and are deployed extensively by transmission and generation utilities. Depending on the insulating medium, HV switchgear is classified into three major types – air-insulated switchgear (AIS), gas-insulated switchgear (GIS) and hybrid switchgear.
As per the Indian Electrical and Electronics Manufacturers’ Association (IEEMA), in 2021-22, the LV switchgear industry recorded a growth of 25.7 per cent, while the HV switchgear industry recorded a growth of 56.1 per cent. The growth of the LV switchgear industry is mainly due to sustained demand from realty, infrastructure and other manufacturing industries as well as exports. In contrast, the growth of HV switchgears is mainly from HV and extra-high voltage GIS and MV AIS segments, mostly from domestic demand coming from state utilities and central public sector undertakings for increasing the substation network.
Growth drivers
India’s power sector is witnessing significant investments towards the renewable energy segment, including wind and solar power, with the aim to cut carbon emissions. Renewable energy addition requires transmission network expansion, which will create demand for switchgears and substations. Increasing integration of renewable energy into the grid creates a need for automatic switchgear solutions that provide better monitoring and control capabilities.
As per the CEA’s report on “Transmission System for Integration” of over 500 GW RE Capacity by 2030, around 25,000 MW of HVDC transformation capacity is expected to be added at the interstate level up to 2030. Voltage-wise, the expected additions are 20,000 MW at the ±800 kV and 5,000 MW at the ±350 kV levels. Meanwhile, AC substation capacity of 408,575 MVA is expected to be added up to 2030, of which 274,500 MVA is expected at the 765 kV level and 134,075 MVA will be at the 400 kV level. Overall, the interstate transmission system will need an investment of about Rs 2.44 trillion.
In the distribution segment, the central government’s RDSS focuses in a big way on the distribution infrastructure strengthening and modernisation, which is expected to create demand for switchgear and substations. The infrastructure strengthening works envisaged under the scheme includes the construction of new substations and upgradation of existing ones. The scheme has a total outlay of Rs 3,037.58 billion, with an implementation timeline of five years (2021-22 to 2025-26). Meanwhile, the outlay for distribution infrastructure strengthening and modernisation works is Rs 1.51 trillion besides a government budgetary support of Rs 733 billion. The scheme also plans to fund 3,875 supervisory control and data acquisition projects to enable real-time supervision and controllability of substations, including opex for two years, besides other works. Schemes of Integrated Power Development Scheme, Deendayal Upadhyaya Gram Jyoti Yojana and the earlier Prime Minister’s Development Package-2015 for Jammu & Kashmir have all been subsumed in the RDSS. So far, around Rs 1.19 trillion has been sanctioned for distribution infrastructure/loss reduction works and tenders worth Rs 788.27 billion have been issued.
Other than in the power sector, the government also has plans for heavy investments in infrastructure development, including constructing new or augmenting existing airports and metro stations, which will drive the growth of the switchgear market. The infrastructure development schemes initiated by the government such as the Smart Cities Mission, Make in India, Digital India and Atal Mission for Rejuvenation and Urban Transformation, among others, have also significantly contributed to the growth of the switchgear market in India.
India is experiencing significant industrial expansion, particularly in manufacturing and construction, which will drive the demand for LV switchgear, as these industries require reliable electrical systems. Furthermore, implementing key safety mandates across multiple key states and digitalisation are important trends with strong business potential for the industry. Currently, energy-intensive industries such as steel, cement, paper, etc., are also exploring the implementation of digital switchgears for better visibility of the processes, which can lead to energy conservation.
New and emerging trends
In the switchgear market, technological innovations and digitalisation are accelerating the shift from traditional switchgears to digital and intelligent switchgears. There is a rising uptake of hybrid, digital and intelligent switchgears, driven by the increasing demand for electricity, growing implementation of smart grid technology and continuing investment in upgrading T&D systems. Further, increasing environmental awareness is leading to the development of environmentally friendly products. For instance, GIS is expected to dominate the market both in terms of volume and revenue generation in the country, owing to factors such as more reliability, environment-friendly, less installation time, and greater flexibility, compared to AIS.
Conclusion
Going forward, the switchgear and substation segment is expected to witness robust growth, driven by the pipeline of transmission projects as underlined in the CEA’s plan; as well as distribution system strengthening projects taken up under the RDSS. In addition, ageing grid assets would require upgradation with advanced switchgear and substation solutions. On the technology front, upgrades such as digitalisation and automation are expected to gain prominence in the near future.