Gas Insulated Switchgear Market

Market Overview

The global gas insulated switchgear market size was valued at USD 18.07 billion in 2022. It is estimated to reach USD 35.70 billion by 2031, growing at a CAGR of 7.86% during the forecast period (2023–2031).

The major factors driving the global gas insulated switchgear market include rising investments in the electrical transmission and distribution (T&D) infrastructure, upgrading T&D networks, surging adoption of renewable energy-based power plants, and supporting government initiatives. The gas-insulated switchgear uses SF6 gas, which offers several benefits, such as higher operational tolerance and a smaller land footprint, thereby boosting market expansion.

Gas-insulated switchgear (GIS) is a substation equipment that regulates and distributes electrical power. A gas-insulated switchgear is a composite device encased in a solid metal frame containing various electrical devices like circuit breakers, bus bars, transformers, earth switches, and surge arresters. These devices are submerged in sulfur hexafluoride (SF6) gas within shielded compartments surrounded by barrier devices.

This design offers several benefits over conventional air-insulated switchgear. A GIS unit requires only centimeters for effective insulation, whereas an air-insulated switchgear unit would require meters for the same function. All of these characteristics make GIS a more trustworthy device. GIS systems are available in various configurations, including single-phase, two-phase, and three-phase configurations, each tailored to specific voltage levels and applications.

Market Dynamics

Global Gas Insulated Switchgear Market Drivers

Higher Operational Tolerance and Smaller Land Footprint

The utilization of SF6 gas as an insulating medium in gas-insulated switchgear facilitates the reduction of mutual distance between current-carrying components to a significantly smaller scale. As a result, the unit's dimensions are significantly reduced compared to air-insulated stations. These systems also function smoothly in adverse environmental conditions, like snowfall or a corrosive atmosphere.

Moreover, due to their hermetic sealing and the isolation of internal components from the external environment, these switchgear units can be conveniently installed in dusty conditions within tunnels, exposed terraces, or underground basements. They also exhibit reliable performance and necessitate minimal maintenance. These benefits of using gas-insulated transformers are expected to significantly boost the global gas-insulated switchgear during the forecast period.

Increasing Renewable Power Generation

Increasing awareness of renewable energy has resulted in widespread adoption of this resource. This, along with supportive government initiatives for the development of renewable energy, are the primary factors driving the expansion of renewable energy generation. According to the International Energy Outlook 2019 study, the proportion of global electricity generated by renewable sources, namely wind, solar, and hydropower, amounted to 28% in 2018. The Energy Information Administration (EIA) projects that by 2050, renewables will account for nearly half, or 49%, of the world's electricity production. Thus, the increase in renewable power generation is anticipated to contribute to the expansion of this market over the forecast period.

Global Gas Insulated Switchgear Market Restraints

Strict Environmental Regulations and Concerns Regarding the Use of SF6 Gas

In gas-insulated transformers, sulfur hexafluoride (SF6) gas is widely used for insulation. SF6 is a powerful greenhouse gas with a global warming potential of approximately 23,500 times that of CO2. SF6 is considered one of the most potent greenhouse gases, as per the Intergovernmental Panel on Climate Change (IPCC). Hence, manufacturers and users must take all the necessary precautions to restrict the design and handling of leaks.

Several health and safety organizations, like OSHA, issue warnings regarding the formation of toxic compounds from the electrical discharge of SF6 gas. In February 2022, the German Social Accident Insurance (DGUV) published a document with instructions and information about occupational health and safety of work tasks performed in the sulfur hexafluoride (SF6) plants, systems, and especially for SF6 in gas-insulated switchgear equipment. Thus, the global gas insulated switchgear market is anticipated to face limitations due to the implementation of stringent environmental laws and the associated apprehensions over the utilization of sodium hexafluoride (SF6) gas. Non-compliance with these rules might lead to significant mishaps.

Global Gas Insulated Switchgear Market Opportunities

Increasing Investments in Transmission and Distribution Infrastructure

There has been a notable surge in electricity usage in developing economies in recent years. As a result, governmental bodies and power utility entities have implemented measures to mitigate power losses within the transmission and distribution infrastructure. These efforts involve adopting ecologically sustainable and efficient equipment for constructing transmission and distribution networks, as well as associated infrastructure.

Major energy users like China and India have also made significant investments in the T&D sector by building distribution networks, modernizing rural power grids, and creating new transmission lines. For instance, in February 2021, PowerGrid Corporation of India commissioned its 2GW-320kV, 165km-long Pugalur-Thrissur HVDC line, which was built at USD 700 million. Similarly, in December 2020, the Indian state of Maharashtra unveiled plans to build a USD 1.08 billion 800 kV underground HVDC project to supply an additional 1 GW of electricity to Mumbai. These projects are expected to require large power transformers, including gas-insulated switchgear, driving the market demand and creating opportunities for market expansion.

Regional Analysis

Based on region, the global gas insulated switchgear market is bifurcated into North America, Europe, South America, and the Middle East and Africa.

Asia-Pacific Dominates the Global Market

Asia-Pacific is the most significant global gas insulated switchgear market shareholder and is expected to expand substantially during the forecast period. The Asia-Pacific region is one of the most populated regions, and due to rapid growth in industrialization and urbanization, power demand has surged substantially over the past few years. Therefore, transmission and distribution (T&D) infrastructure investments also grew significantly. Moreover, the development of smaller substations and underground networks—for which gas-insulated switch gears are increasingly appropriate—makes long-distance T&D projects more environmentally benign.

Several major electrical and T&D equipment manufacturers, such as Hyosung, Meidensha, Mitsubishi, Toshiba, and Zheijhang, have their roots in the eastern Asia-Pacific region. This is where most of their production plants are situated. According to the Powergrid Corporation of India, equipment for the Thrissur-Pugalur HVDC line, such as gas insulated substations, was supplied by Indian factories as part of the Make In India Program. The close proximity of demand centers is expected to propel the gas-insulated switchgear market, given that Asia-Pacific has a strong electrical equipment manufacturing industry.

North America is the second-largest electricity market globally in terms of electricity generation. The region's electricity generation, transmission, distribution, and consumption processes have changed over the last decade. The electricity markets, particularly the transmission and distribution networks, have experienced significant restructuring, paving the way for the increasing demand for technologies, including gas-insulated switchgear (GIS). Furthermore, the government takes numerous initiatives to develop and revolutionize power transmission networks. For instance, in May 2022, the federal government released USD 2.5 billion in funds to modernize and expand the country's power grid capacity under the Transmission Facilitation Program (TFP) created by the Bipartisan Infrastructure Law. Therefore, the US Department of Energy (DOE) issued a request for information (RFI) to solicit public input on the structure of the new revolving fund program. Such initiatives by the government are likely to bring considerable developments in electricity transmission networks and increase the demand for GIS in the country during the forecast period.

Europe is one of the major regions inclined toward renewable energy over fossil-fuel-based power generation. In 2020, electricity generation by oil, natural gas, coal, and nuclear in Europe fell by 14%, 2%, 17%, and 10%, respectively, compared to 2019. Electricity generation by hydroelectric and renewables increased by 4% and 10%, respectively, in 2020, in which wind and solar energy significantly contributed to the European power market. In the coming years, the region will likely witness increasing integration of renewable energy on its central grid due to targets for decarbonization of energy systems. With the ongoing energy diversification in the region, several countries focus on investing in renewable technologies, such as solar photovoltaic and wind power, to lower their dependency on fossil fuels.

In addition, concerns over carbon emissions have prompted governments to undertake initiatives to promote the use of renewable energy sources. These policies provide a significant boost to the growth of the renewable energy market, integrating renewables into national grids, which is expected to drive the gas insulated switchgear market.

South America is home to various developing countries, such as Brazil and Argentina, which resulted in the region being one of the late entrants in the market, which has consequently reflected in the size of the market. Despite the conventional challenges in developing the power infrastructure, which slows down the progress of the region's power scenario, the potential for gas-insulated switchgear in the region is significant. The electricity demand in South America is huge and is increasing rapidly. Though a significant share of electricity generation is concentrated in Brazil, countries such as Argentina and Chile are working to substantially improve their power market in the coming years.

As per the International Energy Agency, by 2040, the region can expect to have almost double the electricity demand, indicating that the region can witness a considerable number of developments in the transmission and distribution segment to function under the projected electric load. Moreover, as the renewable energy scenario in the region evolves, South America can expect further growth in the demand for gas-insulated switchgear.

Segmental Analysis

The global gas insulated switchgear market is segmented by voltage level and end-user.

Based on voltage level, the global market is bifurcated into low voltage, medium voltage, and high voltage. 

The high voltage segment dominates the global market and is predicted to grow substantially over the forecast period. High voltage switchgear is the power system that handles voltages greater than 36 kV. The arcing generated during switching operations is extremely high due to the elevated voltage. Thus, it is imperative to exercise meticulous attention when designing high-voltage switchgear. A high-voltage circuit breaker is the primary component of HV switchgear; therefore, a high-voltage circuit breaker (CB) should have unique characteristics to ensure safe and dependable operation.

Additionally, these switchgear have multiple usages across various industries, such as wind turbines, electrical motors, generators, solar power generation, residential power distribution, power supply systems, environmentally sensitive installation, underground stations, steel, paper, and mining industries, and a growing number of marine applications. However, the main application of the segment comes from large transmission and distribution networks being modernized and built across the globe with especially high rates countries in the Asia-Pacific region.

Low-voltage gas-insulated switchgear is rated up to 1000 V and consists of low-voltage switches, earth leakage circuit breakers, fuses, electrical isolators, circuit breakers, molded-case circuit breakers, and miniature circuit breakers. These switchgear are used with electrical appliances to safeguard against short circuits and an electrical circuit breaker overload, but the operator is not protected against internal faults. An essential function of low-voltage switchgear is to provide electrical protection against external thermal and mechanical stresses of short circuit currents. This is critical in limiting the dangerous consequences of excessive currents and separating the defective current from the rest of the installation, and this becomes very effective in places where a high degree of voltage change occurs, such as backward areas or power plants with low reliability. These usages make the switchgear a must for almost all industries, especially new upcoming ones such as the renewable energy sector. Switchgear also forms a significant part of substations witnessing growth, mainly due to the increasing microgrid and nano-grid sectors.

Based on end-users, the global market is segmented into power utilities, industrial sector, and commercial and residential. 

The power utilities segment owns the market share and is predicted to expand substantially during the forecast period. Gas-insulated switchgear (GIS) consists of components such as circuit breakers and disconnectors, which can be operated in confined spaces. It is primarily used in power transmission and distribution infrastructure, especially in confined spaces, for instance, offshore renewable energy production platforms, hydropower plants, and power production systems in unfavorable environmental conditions.

Moreover, the growth of renewable energy in harsh conditions, such as offshore solar and wind energy systems, will drive the demand for the GIS market during the forecast period. For example, as per the Global Wind Energy Council, the new offshore wind energy installation increased significantly from 3.5 gigawatts in 2015 to 21.1 gigawatts in 2021. Overall, the power utilities sector for the gas insulated switchgear market is expected to boost significantly in the forecast period due to the growth of renewable energy globally.

Gas-insulated switchgear is present in various voltage ranges specific for residential and commercial applications and various form factors, making it suitable for indoor installation. Gas-insulated switchgear is more environmentally friendly and takes less space than air-insulated switchgear, making it an appropriate choice for residential and commercial facilities. For instance, Mitsubishi Electric provides Cubicle-type gas insulated switchgear with various capacities ranging from 24 kV to 72 kV for indoor installation, which occupies less footprint.

Similarly, gas-insulated switchgear has relatively lower noise pollution than air-insulated switchgear; GIS is completely enclosed, so the SF6 gas in the enclosure provides a very efficient sound absorber. In addition, in areas prone to seismic activities, gas-insulated switchgear is preferred to air-insulated switchgear, as air-insulated switchgear is more vulnerable due to individually installed structures and foundations. In contrast, GIS behaves more robustly, making it a preferred choice for residential and commercial switchgear markets.

Recent Developments

• February 2023- ABB India opened a new factory in Nashik (Maharashtra, India) to double its gas-insulated switchgear (GIS) production capacity.
• September 2023- Nuventura, a Berlin-based provider of SF6-free, medium-voltage (MV) gas-insulated switchgear (GIS) technologies, secured a Series A investment of €25 million. Mirova (which sponsored Zunder and Philippe Servant) led the round through its impact private equity fund Mirova Environment Acceleration Capital.