Transfer Switch Market Size, Share & Trends Analysis Report By Type (Automatic, Manual), By Application (Industrial, Commercial, Residential), By Transition Mode (Open, Closed, Delayed,, Soft Load Transition), By Ampere Rating (0-300A, 301-800A, 801-1600A, 1601A-4000A) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2022-2030

Market Overview

The global transfer switch market size was valued at USD 1610 million in 2021. It is estimated to reach an expected USD 2905 million by 2030, registering a CAGR of 6.6% during the forecast period (2022-2030). Factors like the rapid replacement of conventional generating technologies with sustainable energy sources and the escalating adoption of micro-grids drive market growth. As well as the upsurge in power requirements across various industries, particularly within the power and transmission sectors, has contributed to the growth of transfer switch market. The market's growth is further propelled by favorable government policies emphasizing operational safety.

Transfer switches provide a reliable way to transfer essential load connections between primary and alternate electrical power sources. A growing number of companies will likely seek to allocate the cost associated with increased safety regulations and the shift in the preference for more energy-efficient systems. Coronavirus has been affecting the economy, and consumers by its spread among people, causing temporary shutdowns in significant centers for electronics production. The component market has been disrupted by the lack of certain raw materials, increasing due to a shortage. Transfer switches are commonly found in homes and businesses to enable safe switching between various power sources so that a person is not left in the dark during an electrical outage.

Market Dynamics

Global transfer switch market drivers

Rapid replacement of conventional generating technologies with sustainable energy sources

The market for generating technologies is rapidly changing in the face of the rapid growth of sustainable energy sources such as solar, wind, and hydro. The increasing demand for these energy sources has led to the development of new methods that enable efficient conversion from conventional generating technologies to renewable ones. The increase in global population and industrialization has led to the rise in the output of greenhouse gases. Greenhouse gases, primarily carbon dioxide, are a crucial contributor to global warming and climate change. They also contribute to deforestation because they limit plant development by interfering with photosynthesis. As a result, less oxygen is released into the atmosphere, lowering its concentration and changing the earth's climate. This trend is cause for concern because human activities and industry predominantly emit greenhouse gases. Sustainable energy sources are becoming increasingly popular to combat this trend. This shift to renewable energy will considerably impact the power grid, creating a need for interoperability between conventional and renewable power generators.

Increasing demand for hvac networks across different sectors

The demand for heating, ventilation, and air conditioning (HVAC) networks has been observed in the industrial, commercial, and residential sectors. HVAC networks are a critical component in the operation of any building to control the temperature, ventilation, and humidity. The demand for this type of network is rising as more buildings are being constructed. Organizations need to invest significantly in these services due to the increase in global temperatures. The need for such networks has grown even more as human populations grow and more people live in urban areas. HVAC networks are introduced in various settings, including hospitals, schools, and other public spaces. Transfer switch systems are in demand because they assist in managing the power supply to HVAC networks, which are becoming more and more necessary to help control the environment's temperature.

Global transfer switch market restraint

Strict regulatory requirements

The primary factor limiting the growth of the market for transfer switches is the effect of regulatory regulations on Automated Transfer Switch (ATS) design. All ATS products introduced to the market must be tested and certified by Underwriters Laboratories (UL), a costly and time-consuming process. Numerous governing bodies for the transfer switch market include international and regional electrical commissions. Manufacturers must create diverse architecture to suit country-specific requirements and technical and manufacturing standards. Following UL 1008, each automatic transfer switch should have short circuit withstand and close-on ratings (WCR). The WCR (wire circuit breaker rating) continuously varies depending on voltage level, switch frame size, if it is bypassed, the number of poles, and the overcurrent protection of transfer switches. Therefore, the automatic transfer switch must be chosen suitably based on the Wiring Rules from UL 1008. Hence, such factors hinder market growth.

Global transfer switch market opportunities

Escalating adoption of micro-grids

Microgrids are small electric grids that can be used off-grid or as an addition to a home or business's primary grid. These are usually operated by renewable energy sources such as solar, wind, and water turbines. Microgrids are a more cost-effective and sustainable option implemented in more densely populated areas. According to the World Bank, approximately 1.2 billion people will need electricity to achieve universal access by 2030. The only way to accomplish this is by combining the main grid extension, mini-grids, and off-grid solar. One of the biggest hurdles for deploying microgrids has been the need for a connection to the primary grid. However, the demand for microgrids has been increasing in recent years. A solution for this problem is a "break button" that would disconnect the grid when it becomes necessary. The result is increased opportunities for transfer switches that enable a microgrid to connect and disconnect from the grid.

Regional Analysis

By region, the global market is segmented into North America, Europe, Asia-Pacific, South America, and the Middle East and Africa.

North America accounted for the largest market share and is estimated to grow at a CAGR of 6.4% during the forecast period. North America holds the largest share of the global transfer switch market. The growing demand for refurbishment of electric grid networks is driving the demand for transfer switches in North America. The need to switch power from one circuit to another or between two circuits is becoming necessary. The need for transfer switches has been continuously growing due to the deteriorating infrastructure in North America and the knowledge of these concerns.

Moreover, the modern-day electrical distribution grid uses advanced switching technologies like power electronic devices, microprocessors, and electronic control systems. These switches can rapidly and reliably transfer electricity from one substation to another. Installing transfer switches is essential for maintaining a reliable power distribution system.

Europe is the second largest region. It is estimated to reach an expected USD 830 million by 2030, registering a CAGR of 6.7% during the forecast period. There is a growing trend of installing transfer switches for European residential and industrial buildings. Many countries, like the UK, Germany, Russia, and others, are investing in microgrid infrastructure to enable renewable energy sources to produce more power. Micro-grid networks are taking over Europe as a solution to the old and inefficient electrical grid. The rapid expansion of these microgrids is driving the demand for transfer switches. These switches establish a strong link between several electricity sources, which is required to avoid blackouts or interruptions. The European Union revised its renewable energy directive in 2016. As per the directive, 27% of the region's final energy consumption will be from sustainable sources by 2030. This covers power produced by geothermal, solar, and wind energy sources. As a result, the demand for transfer switches in the region is anticipated to expand significantly to keep up with the need for renewable energy and microgrids.

The Asia Pacific is the third largest region. The Asia-Pacific region is expected to witness the highest growth in the transfer switch market during the forecast period. The introduction of large-scale renewable integration reform has increased demand for transfer switches in Asia-Pacific, as countries such as China and India acknowledge the necessity for a stable power supply to maintain their economies. The International Renewable Energy Agency (IRENA) and China State Grid Corporation (SGCC) signed a new Memorandum of Understanding (MoU) to make grid enhancements, system flexibility, and sector coupling in China. The MoU also includes IRENA's Clean Energy Corridor. By the agreement, IRENA and SGCC have been working on research projects that could improve the flexibility of power grids, speed up the development of solar power grids, and lower carbon emissions in urban energy systems.

Additionally, the increasing demand for electricity in developing countries is driving the need for transfer switches in the region. With rapidly increasing power demands and a power shortage, the region is straining to meet increased energy demands. As a result, numerous significant companies have increased their investments in infrastructures, such as project finance, renewable energy, and coal and natural gas.

Segmental Analysis

The global market has been categorized into type, application, transition mode, ampere rating, and regions.

Based on type

The global market is segmented into automatic and manual. Automatic segment accounted for the highest market share and is estimated to grow at a CAGR of 6.9% during the forecast period. An automatic transfer switch is a piece of electrical equipment that transfers the load between the utility source and an alternate source. The automatic transfer switch works when it senses a fault or problem on the primary source and transmits the load to the secondary source. The device is most commonly used on commercial and industrial buildings and is one of the critical parts of power distribution systems. Moreover, the segment’s growth is primarily due to the increasing demand for the automated technology industrial sector.

The manual segment is the second largest. A Manual Transfer Switch (MTS) is an electrical switch that transfers power from the utility source to a backup source. The power source is usually the utility grid but can be a generator. Manual Transfer Switches are used to help continue services during power outages and are installed in conjunction with a backup generator. The switches are placed in areas with a high concentration of equipment that requires power. This ensures that the equipment is not harmed during an outage. Hence, such benefits drive segment growth.

Based on application

The global market is segmented into industrial, commercial, and residential. The residential segment accounted for the highest market share and is estimated to grow at a CAGR of 6.8% during the forecast period. Effective domestic electrical systems can accomplish two objectives: assuring the electrical System's safety and ensuring a dependable power supply to various house portions. To achieve these objectives, finding the ideal transfer switch is crucial. A transfer switch makes it possible to quickly switch power flow to different circuits. Hence, such characteristics propel the market growth in residential applications.

Based on transition mode, the global transfer switch market is segmented into open, closed, delayed, and soft load transition. Closed segments hold the highest market share and are expected to witness the highest growth at a CAGR of 6.8% during the forecast period. A closed transition automatic transfer switch uses a "make before break" feature that uses modern electrical technology advancements. These systems lessen or eliminate the temporary power stutter that open systems occasionally produce by allowing the utility and generator/backup to overlap momentarily. Such features contribute to market growth.

The open segment is the second largest. An open transition switch is a "break before make" switch function. This means the generator establishes the connection before the utility is shut off. The switch is immediately performed after the reference has been securely found. Open transition switches are usually regarded as the most cost-effective and widely used systems because they are compatible and viable for most business operations and needs. Such factors drive segmental growth.

Based on ampere rating

The global market is segmented into 0-300A, 301-800A, 801-1600A, and 1601A-4000A. The 301A-800A segments hold the highest market share and are expected to witness the highest growth at a CAGR of 6.9% during the forecast period. 301A-800A has the highest market share due to the increasing number of transfer switch transition modes in malls and other retail sectors.

Recent Developments

• August 2022 - ABB announced the acquisition of Siemens's low voltage NEMA motor business to enhance its product offering, expand its supply chain relationships, and improve support to its North American customer base.
• March 2022 - Russelectric, a Siemens Business, provides its Paralleling System, which is ideal for ensuring that essential loads are not disrupted when switching between all power source assets in airports. Peak shaving and utility-sponsored load curtailment initiatives are also possible with the System. The Paralleling System also provides critical airports with high resiliency, power continuity, and security.
• May 2022 - Generac Power Systems introduced two new Powermate dual-fuel capable portable generators: the Powermate 4500-Watt Dual Fuel Portable Generator and the Powermate 7500-Watt Dual Fuel Portable Generator.
• August 2022 - General Electric announced a partnership with Sulzer EMS to Deliver 20% higher power capacity with synchronous motor.
• August 2022 - General Electric announced an alliance with EY to help organizations improve productivity through data-driven manufacturing.

Market Share By Top Players

The transfer switch market is led by key players, including DynaGen Technologies, Inc., Vertiv Holdings Co., Briggs & Stratton Corporation, Caterpillar Inc., Eaton Corporation plc, Cummins, Generac Power Systems, General Electric, Kohler Co., and Schneider Electric SE. These industry leaders are playing an important role in advancing the sector with their cutting-edge transfer switch solutions. DynaGen Technologies, Inc. stands out for its technological innovation, while Vertiv Holdings Co. specializes in critical infrastructure technologies, emphasizing system resilience and uptime. 

Briggs & Stratton Corporation, a renowned name in power generation, focuses on durable and high-performance transfer switch solutions. Caterpillar Inc., Eaton Corporation plc, Cummins, Generac Power Systems, General Electric, Kohler Co., and Schneider Electric SE contribute their extensive expertise in power management to develop efficient transfer switches catering to diverse sectors. As the global demand for reliable power distribution systems escalates, these key players are expected to drive market growth, fostering competition and continuous innovation.