DC Distribution Network Market

Market Overview

The global DC distribution network market size was valued at USD 17.17 billion in 2023. It is estimated to reach USD 34.14 billion by 2032, growing at a CAGR of 7.5% during the forecast period (2024–2032). Renewable energy has gained popularity recently due to its negligible environmental impact. Renewable energy mandates the battery energy system to meet the energy demand during peak hours. This battery is charged using DC current, driving the global DC distribution network market for efficient current distribution.

The DC power distribution network was first proposed for small-scale applications, like lighting purposes, and was patented by Thomas Edison in 1883. Since DC technology hasn't progressed very far, AC distribution networks are used since they are more efficient and better suited for long-distance power transmission. However, the advent of the semiconductor industry in the 1960s resulted in the introduction of power electronic converters (PECs), which could improve the performance, efficiency, size, and cost of a DC distribution network compared to an AC distribution network.

DC distribution networks have numerous advantages over AC distribution, including increased efficiency and dependability, low power loss, good transient stability, simpler integration of renewable energy and energy storage systems, and lower costs. Furthermore, DC distribution networks are gaining importance due to the wide range of applications in data centers, the telecommunication sector, the residential sector, electric vehicles, aircraft, EV charging equipment, etc.

Market Dynamics

Global DC Distribution Network Market Drivers

Increasing Adoption of Battery Energy Storage and Distributed Renewable Energy Generation

In the past ten years, there has been a consistent upward trend in the global installation capacity and generation of renewable energy sources. The storage of energy generated by intermittent and varying renewable resources, such as solar and wind, is crucial to meet the demands of peak consumption periods. Therefore, the incorporation of modern energy storage systems (ESS) is increasingly imperative in the context of renewable energy initiatives.

Battery energy storage systems, or BESS, are becoming increasingly common for storing energy produced from renewable energy sources because of the geographical restrictions on pumped hydro storage, their enormous land footprint, and their falling costs. DC distribution systems are perfect for distributing low-voltage DC power produced by renewable energy sources like solar and wind since batteries are charged using DC. Similarly, coupling renewable energy sources such as photovoltaic (PV) panels and BESS to a DC distribution system directly or through power electronic converters (PECs) is convenient. It also has high efficiency, thereby driving the market growth.

Higher Operational Efficiency and Power Quality Than AC Distribution Systems

A DC distribution network has a set of unique characteristics, including the absence of reactive power flow, frequency regulation, and a lesser number of electricity conversion stages than an AC distribution network. Moreover, on a residential scale, DGs and loads are placed close to each other, minimizing a substantial amount of transmission power loss. DC distribution systems offer higher efficiency and reliability at an improved power quality rate. It has lower installation costs because fewer power conversion stages, less copper, and less floor space are required.

DC power distribution avoids inefficient harmonic filters and other forms of power-quality conditioning hardware by its inherent lack of reactive power and skin effect. This also ensures lower operational and infrastructure costs due to lesser power and heat dissipation and reduces vibrations and noise compared to AC distribution systems. Due to such technical factors, DC distribution systems have higher operational efficiency and provide better power quality at lower costs. As a result, the demand for DC distribution systems is predicted to grow steadily during the forecast period.

Global DC Distribution Network Market Restraints

Safety Concerns Regarding High Voltage DC Distribution Systems

Despite their higher operational efficiency and lower component costs, the primary concern regarding DC distribution systems is the operational safety of DC microgrids. The two primary concerns associated with DC distribution systems are the risk of electric shock and the protection of equipment from damage that can also result in electric fires. Since breaking an AC current circuit is much easier than breaking a DC circuit, there is a higher risk involved with DC distribution systems in case of malfunction. Such technical drawbacks are expected to restrain the growth of the global DC distribution market, especially in developing and underdeveloped nations during the forecast period.

Global DC Distribution Network Market Opportunities

Strategic Initiatives by Key Players

The key players in the market are taking several initiatives like product launches, mergers, and acquisitions to enhance their market presence, creating opportunities for market growth. For instance, in October 2021, VPT announced the launch of its SVLFL, SVLHF, SVLTR, and SVLSA Series of 50-volt DC-DC converters. The new series of DC-DC is Characterized by Total Ionizing Dose (TID) performance and enhanced Low Dose Rate Sensitivity (ELDRS) up to 60 krad. The DC-DC converter series is appropriate for use in low Earth orbit (LEO), medium Earth orbit (MEO), geostationary orbit (GEO), deep space missions, and launch vehicle programs because it can operate over the entire military temperature range (-55 °C to +125 °C) without power derating.

Additionally, in January 2021, Schneider Electric acquired DC Systems BV, a Netherlands-based company specializing in active AC/DC microgrids, DC power conversion, and a comprehensive range of DC solutions. The company was leading in developing hybrid AC/DC electrical distribution systems for microgrids. It was among the first organizations to develop a 100% DC-electrified building. Moreover, the company also provided DC electrical solutions for more than 300 km of public road lighting in Europe. The company also offers' DC electrical solutions for commercial buildings in Europe.

Regional Analysis

Europe Dominates the Global Market

Based on region, the global DC distribution network market is bifurcated into North America, Europe, Asia-Pacific, South America, and the Middle East and Africa. 

Europe is the most significant global DC distribution network market shareholder and is expected to grow significantly during the forecast period. Factors like supportive government policies, competitive market prices, and a surging shift toward clean energy sources are expected to affect the European DC distribution networks market positively. For instance, the government of the United Kingdom is investing more than USD 4 billion in low-carbon innovation, as the country aims to end its contribution to climate change fully by 2050. Such investments are likely to boost the market growth. In addition, Europe is one of the world's biggest renewable energy markets, accounting for approximately 21 percent of the globe's total installed renewable energy capacity in 2021. About 28.7% of the region's total renewable energy installed capacity was solar power. Europe is also anticipated to be amongst the largest markets for DC distribution networks because of the high amount of renewable energy deployment and the growing shift toward distributed power generation and energy storage.

North America is a highly industrialized economy with the highest per capita power consumption and demand worldwide. North America has one of the largest installed renewable energy capacities globally, especially solar energy. Distributed solar photovoltaics (PV) is predicted to contribute more yearly capacity to renewable energy sources than wind and hydropower combined throughout the next five years. The cost of solar PV dropped by more than 80% between 2010 and 2021 on a global scale, and similar trends were observed in North America during the same period. In addition, the continuous technology cost reductions and the increasing growth in the United States, owing to favorable policies and a growing focus on achieving various capacity targets, are expected to contribute to the increasing adoption of solar PV among residential and commercial consumers. Therefore, factors such as declining prices of solar PV panels and associated systems are leading to the soaring adoption of solar PV systems in the region. Since solar PV generates electricity in DC, this is expected to provide a significant opportunity for the DC distribution network market in the region as there would be no need to convert solar-generated DC to AC.

In the Asia-Pacific region, DC distribution networks are anticipated to be in high demand, primarily due to the region's increasing demand for electricity and the resulting need for electrical infrastructure. Asia-Pacific nations, such as China and India, are among the largest emitters of greenhouse gases. Environmental pollution is one of the world's most pressing problems. Therefore, government agencies throughout the Asia-Pacific region have initiated numerous strategies to reduce carbon emissions gradually by increasing R&D expenditures on renewable energy sources. The installed solar capacity in Asia-Pacific increased from 96.2 GW in 2015 to 501.6 GW in 2021. The rapid increase in solar energy adoption is attributable to the declining cost of solar energy equipment, which continuous R&D initiatives and the expansion of production activities in the region have boosted.

The South American region has substantial potential for renewable energy electricity generation from solar, wind, geothermal, green hydrogen, and hydropower sources. In 2020, the countries in South America collectively announced that they had set a target of producing 70% of their electricity from renewable energy sources by 2030. It is anticipated that the shifting emphasis on renewable energy will increase the demand for DC distribution networks and balance the energy demand and supply from multiple distributed energy resources in the region.

In the Middle East and Africa, the energy markets have witnessed a significant shift in recent years, from oil price drops to a sharp decline in renewables pricing. Underpinned by these changes, the oil-led economies in the region have scaled up their economic diversification policies. Economic diversification strategies and climate change initiatives also support the growth of other energy sources (solar technology holds a significant share). This scenario is expected to increase the growth in the DC distribution networks owing to the need for distribution networks during the forecast period.

Segmental Analysis

The global DC distribution network market is segmented by end-user.

Based on end-users, the global DC distribution network market is bifurcated into remote cell towers, commercial buildings, military applications, data centers, EV fast charging systems, and others. 

The DC distribution network market has witnessed significant growth in recent years due to surging demand for uninterrupted power supply in remote cell towers. The remote cell towers are increasingly replacing their conventional diesel generator-based power backup systems with battery-based power backup systems. This has led to a huge demand for battery systems used to manage these power backup systems globally. The global telecom sector has been growing rapidly due to the rise in subscribers along with the high penetration of 5G services. In addition, secondary batteries are used in telecom towers, mostly in remote locations with huge power fluctuations. Diesel generators are alternatives for secondary batteries. However, due to unregulated diesel prices and carbon dioxide emissions, the use of diesel generators is decreasing in the telecom sector. Moreover, the cost of diesel amounts to 30% of the operational expenditure of telecom towers. Therefore, the companies are leveraging high-efficiency secondary batteries coupled with renewable energy at several sites, which requires the presence of DC distribution networks.

Low voltage DC (LVDC) distribution networks are generally implemented for commercial buildings. The LVDC distribution network for commercial buildings can be made with two basic implementations: unipolar and bipolar. The unipolar system has one voltage level through which the energy is transmitted. All commercial buildings are connected to this one voltage level. In September 2020, the US Department of Energy invested approximately USD 1.8 million to assess the DC power market, understand DC distribution network opportunities and technical and analytical gaps for residential and commercial buildings, and inform the planning analysis and design teams about the capabilities of these loads. The team will likely perform equipment characterization and model validation using various facilities that can inform electrical system designers and energy consultants. Such investments will likely increase the demand for DC distribution networks during the forecast period.

AC distribution systems are predominantly utilized in data centers worldwide. However, there has been a growing interest in DC distribution networks in data centers. Leading telecommunication companies like Comcast and Verizon already run their data centers on DC power. According to ABB, as of January 2020, the global installed base of DC data centers was estimated to account for 10 MW, only a small fraction of the entire sector. DC distribution networks are utilized due to their unique characteristics, which makes them suitable for data centers. One of the primary advantages of DC distribution grids is that it does not need power conversion from AC to DC. According to estimates made by ABB, in a typical data center using an AC distribution grid, nearly half the power is either lost in the form of power conversion and distribution or used to manage the heat released by these losses and the IT equipment itself. Cooling becomes a significant challenge with growing rack densities, reducing energy efficiency. All these factors drive the market growth.

Recent Developments

• February 2023- Mitsubishi Electric Corporation announced that it entered a share transfer agreement on February 16 to acquire the Swedish developer of direct current circuit breakers Scibreak AB (DCCBs).
• May 2023- Microsens, a prominent German manufacturer of network switches and smart building systems, urged device manufacturers to adopt its DC distribution systems to avoid material waste and save up to 26% on energy costs. The company invested throughout Indian markets to make India a hub for advancing product innovations, technical support, and software development.