POWER GRID SYSTEM MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)
The Global Power Grid System Market is estimated to be valued at USD 11.67 Bn in 2024 and is expected to reach USD 24.78 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 11.4% from 2024 to 2031.
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Factors such as increasing demand for clean and reliable energy and the deployment of smart grids along with the integration of renewables are providing opportunities for market growth. Governments and private players both are supporting the modernization of grids through investments. Also, demand for micro-grid solutions from industries and remote locations are surging. However, high initial costs remain a challenge. Nonetheless, with concerns rising for carbon emissions, the market is expected to grow steadily during the forecast period supported by ongoing infrastructure developments.
Market Driver - Increasing electricity demand due to industrialization and urbanization
With rapid industrialization taking place across major developing regions of the world coupled with growing urbanization, the demand for electricity has seen a consistent rise globally. Countries in Asia, Africa, and Latin America are undergoing major economic and infrastructure development which has resulted in the growth of manufacturing sectors and increased electric consumption of households. As more people migrate to urban centers for employment opportunities, livable spaces need reliable and quality power supply.
The increase in manufacturing activity has put electricity at the core of industrial growth. Sectors like automotive, consumer electronics, and chemicals require the heavy use of electric motors, machines, and tools in their production processes.
Rapid urbanization also presents a massive increase in electricity demand on the residential front. With millions entering cities annually in the developing world, the demand for housing, infrastructure, and civic amenities has been tremendous. From powering households to street lighting, commercial complexes, hospitals, and urban transport - electricity is integral to the functioning of urban localities. As populations consolidate in cities, per capita power consumption rises significantly compared to rural areas. Also, rising living standards and purchase power are enabling increased appliance and device usage in homes thereby augmenting domestic consumption.
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Government Initiatives and Investments in Power Grid Infrastructure
Governments all over the world recognize the critical role of power infrastructure in achieving overall development goals. They undertake massive investments and policy support to build resilient, robust and smart grid systems. This helps address issues of access, reliability while enabling integration of green sources of energy in the energy mix. Major economies as well as developing nations view electricity sector as a prime driver of economic growth and allocate substantial public finances towards its upliftment yearly.
International cooperation through development aids and financing also contribute significantly to grid investments. Multilateral development banks provide low-cost, long-gestation funds for transformational power projects recognizing their multiplier effect. Funds are also pooled through climate finance initiatives for building green transmission assets. Regional grid integration is supported to promote energy trade and ensure grid stability.
While short-term economic downturns may impact sectoral outlays, over the long-run - government thrust on grid infrastructure remains robust. This sustained focus and conducive policy environment creates multi-year business opportunities for grid equipment and solution providers. It allows them to pipeline large projects and invest in customized technology and talent requirements.
Key Takeaways from Analyst:
The growing demand for secure and reliable electricity supply across both developed and developing markets will be a key driver. Governments worldwide are focusing on integrating renewable energy into existing grids which is opening up opportunities for upgrades to transmission infrastructure. Adoption of smart grid technologies is also gaining momentum as they allow for better demand response and management of distributed energy resources.
Asia Pacific currently dominates the market and is likely to remain the fastest growing region given the massive ongoing investments in new T&V networks, particularly in China and India. Both countries face challenges in strengthening interconnectivity between their regional grids to support their ambitious targets for clean energy addition. Modernization of aging infrastructure in Western economies presents a major opportunity as well. However, high initial costs and regulatory hurdles could restrain faster deployment of advanced grid solutions.
Utilities will need to seamlessly incorporate greater levels of utility-scale and distributed solar and wind power while ensuring reliability & resilience. This is spurring innovative approaches like microgrids and blockchain-enabled virtual power plants. Providers must offer integrated solutions that leverage digital technologies, storage, and automation to enable the transition towards sustainable and flexible grids of the future. Partnerships will also be important for utilities to gain access to new capabilities and manage risks.
Market Challenge - Complex regulatory environment
As the power grid system spans across various regions and countries, it has to adhere to different regulatory frameworks. The guidelines around transmission, distribution and connection of renewable power plants vary significantly across jurisdictions. Ensuring compliance to the rules of each location adds an operational challenge for grid operators. They have to navigate an uneven regulatory landscape while seamlessly coordinating transmission across borders. Upgrades to existing infrastructure also require multiple approvals which extends project timelines. This complex regulatory environment hampers innovation in grid technology and integration of clean energy. Maintaining alignment between regulations and the evolving needs of a sustainable power system is a long-term effort that needs active participation from policymakers and regulators.
For instance, in November 2022, GE Renewable Energy, a GE business unit dedicated to sustainable energy solutions, unveiled the HYpact switchgear. This cutting-edge switchgear is versatile, suitable for diverse applications such as mobile (truck-mounted) substations and onshore wind substations. The HYpact switchgear improves the reliability of electrical grids while simultaneously lowering operational expenses for customers and decreasing their environmental footprint.
Opportunity: Integration of renewable energy sources into the power grid
The global commitment towards addressing climate change and transitioning to renewable energy presents a major opportunity for the power grid system market. As the share of solar and wind power increases significantly in the coming decades, grid operators can play a pivotal role in facilitating this shift. Upgrading transmission networks to accommodate two-way power flows from renewable energy plants will be a key priority. Investing in renewable integration solutions like utility-scale battery storage and modern monitoring technologies will help ensure the stability and reliability of national grids. This opens up a large market for grid modernization projects, allowing companies to leverage their expertise. As more interconnectors are built between countries, it will also foster the development of regional power pools. This can in turn promote efficiency, resilience and further renewable energy deployment across wider geographical areas.
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Insights by Grid Type - The Transmission Grid Segment Driving Growth Due to Powering Economic Development and Population Growth
In terms of Grid Type, the Transmission Grid segment contributes the 60.4% share of the market in 2024 owing to several key factors. As economies develop and populations expand in regions across the globe, the demand for power grows exponentially. Transmission grids act as the vital arteries that enable the bulk transfer of electricity from power generation plants over long distances via high voltage power lines. They facilitate the consistent and uninterrupted flow of electricity to fuel industrial and commercial centers. Rapid urbanization also results in more concentrated pockets of electricity consumption that require extensive transmission networks to efficiently deliver and distribute power. Government initiatives to electrify rural areas further drive investments in transmission grid expansion. Such as India's Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya) launched in October 2017, this initiative aims to provide electricity to all households in rural and urban areas. The program has led to significant investments in the transmission grid to ensure that electricity reaches every household efficiently, enhancing overall infrastructure and reliability. Additionally, cross-border power trading between countries relies heavily on robust transmissions infrastructures. With rising globalization and the increasing cooperation on energy security, upgrades to transmission grids remain a high priority.
Insights by Technology - The Conventional Grid Segment Leads as Digital Intelligence Drives Growth
In terms of Technology, the Conventional Grid segment contributes the 54.3% share of the market in 2024. However, the smart grid segment is gaining significant traction due to its transformative abilities. Smart grids leverage digital technologies like sensors, communications, and data analytics to modernize aging grid infrastructures. They enhance observability and control across transmission and distribution networks. Two-way communication enables better demand response capabilities and loss detection. Advanced metering provides more accurate billing and sustainability benefits. As utilities recognize the numerous efficiency and resiliency advantages of smart grids, many nations are actively pursuing ambitious modernization programs. This growing policy support and the declining costs of internet of things (IoT) solutions are propelling the Smart Grid technology segment to dominant heights over the coming years.
Insights by End User - The Utility Segment Dominates as Reliability is Pivotal for Core Operations
In terms of End User, the Utility segment commands the 58.1% share of the global power grid system market in 2024. Power generation, transmission, and distribution utilities rely extensively on robust grid infrastructures as the backbone for their core operations. Uninterrupted electricity supply across vast customer bases is crucial for maintaining consumer trust and ensuring regulatory compliance. Utilities also have enormous fixed asset investments in transmission assets like pylons and cables that require ongoing maintenance and life cycle replacements. Grid hardening measures gain significance in the face of increasingly frequent natural disasters too. With utilities accounting for the bulk of electricity consumption worldwide, grid reliability remains a top priority to minimize losses and disruptions across vast service territories. This cements the utility segment’s prominence in power grids spend.
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North America has established itself as the dominant regional market for power grid systems with 33.4% share in 2024. The region enjoys a strong industry presence from major players like GE, Siemens, and ABB who have their regional headquarters and manufacturing facilities located here. This allows them to cater to local demand as well as export needs efficiently. Utilities in the region spend vast amounts yearly to modernize their transmission networks and invest in innovative grid technologies. This has created a robust demand for solutions ranging from grid components, monitoring equipment to optimization and control systems.
Another key factor for North America's supremacy is its early focus on renewable integration into the grid. Several countries like Canada, U.S. have aggressive renewable portfolio standards that mandate sourcing a certain portion of electricity through cleaner resources like solar and wind. This has stimulated the requirements for ancillary services, energy storage, grid edge technologies etc. to ensure seamless accommodating of intermittent supplies. Power providers here are at the forefront of leveraging digitalization and decentralized solutions to achieve higher renewables penetration levels in a stable and cost-effective manner. All these trends continue to drive strong growth prospects for grid infrastructure equipment, software and management systems.
The Asia Pacific region has emerged as the fastest growing market for power grids. Rapid industrialization and urbanization combined with rising incomes have fueled power consumption exponentially across developing nations like China, India and Southeast Asian countries. Aging transmission infrastructure is unable to cope up, bringing utilities under pressure to modernize and expand networks. This represents a massive opportunity for grid technology exporters and service providers. Moreover, transmission projects involving establishment of national/inter-state links are coming up to efficiently transport power from resource-rich areas to load centers. Such initiatives similarly create abundant business potential.
Power Grid System Market Report Coverage
| Report Coverage | Details | ||
|---|---|---|---|
| Base Year: | 2023 | Market Size in 2024: | US$ 11.67 Bn |
| Historical Data for: | 2019 To 2023 | Forecast Period: | 2024 To 2031 |
| Forecast Period 2024 to 2031 CAGR: | 11.4% | 2031 Value Projection: | US$ 24.78 Bn |
| Geographies covered: |
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| Segments covered: |
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| Companies covered: |
ABB Ltd., Eaton Corporation, General Electric Company, Havells India Ltd., Hitachi Energy, Hyundai Electric & Energy Systems Co., Ltd., LS Electric, Mitsubishi Electric Corporation, National Grid plc, Nexans, Prysmian Group, Powell Industries, Schneider Electric SE, Siemens AG, and Toshiba Energy Systems & Solutions Corporation |
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| Restraints & Challenges: |
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*Definition: The global power grid system market consists of companies that develop and implement technologies used to transmit and distribute electricity across national and international borders through interconnected networks. This includes high-voltage direct current transmission systems that facilitate bulk transfer of power over long distances, as well as technologies that enable monitoring and management of cross-border energy flows to ensure grid stability, efficiency and reliability across interconnected transmission networks.
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About Author
Sakshi Suryawanshi
Sakshi Suryawanshi is a Research Consultant with 6 years of extensive experience in market research and consulting. She is proficient in market estimation, competitive analysis, and patent analysis. Sakshi excels in identifying market trends and evaluating competitive landscapes to provide actionable insights that drive strategic decision-making. Her expertise helps businesses navigate complex market dynamics and achieve their objectives effectively.
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