Global Digital Substation Market: Ongoing investments toward the grid development along with repair and maintenance of electrical infrastructure will propel the digital substation market.

Published Date: 12/05/2021

The digital substation market is projected to reach USD10.3 billion by 2027 from USD 6.1 billion in 2020; it is expected to grow at a CAGR of 7.8 % during the forecast period. The growth of the digital substation market can be attributed to growing infrastructure development in smart cities, increasing power demand with limited space availability, increasing demand for replacing traditional substation infrastructure, and increasing interoperability and safety. Rising demand for renewable energy projects and for battery technology to generate electricity is creating ample growth opportunities in the market.

In the power industry, the discussion of smart cities revolves around smart buildings, smart energy, and smart meters. A smart city is enabled with multiple hardware and software systems, which communicate with each other to deliver data in real time. Energy generation and transmission are carried out by the use of technology. Utilities have long been dependent on workers to read meters, examine equipment, and manage the daily operations of the electrical grid. Today, utility systems use smart meters to monitor status across the grid, accessing consumption data in homes, connecting with substations to manage load distribution, and analyzing demand curves and production forecasts to balance renewable generation with traditional power sources. A digital substation is a critical part of the entire distribution system. As every device in the substation is upgraded to communicate using digital signals, substations are connected with fiber-optic communication networks.

Technological advancements in the transmission infrastructure segment are expected to play a vital role in efficient network upgrade and expansion. This is expected to help in meeting the government’s objective of 24×7 power for all, maintaining a congestion-free transmission network and ensuring grid stability. Because of this technological advancement, the initial cost required for setting up a digital substation is high. This is due to the increased number of intelligent electronic devices (IEDs) used in substations, which increases the purchase cost of substations. The increasing use of technologies such as the microprocessor and service-oriented architecture (SOA) technologies, as well as the rise in the number of embedded IEDs in substations, have increased the purchase costs of these substations.

The renewable energy industry is primed to enter a new phase of growth driven largely by increasing customer demand, cost competitiveness, innovation, and collaboration. The renewable energy sector saw significant demand in different markets. One of the major factors driving the growth of renewable energy projects is the declining generation cost of renewable energy sources, rising capacity factors of renewable energy sources, and increased competitiveness of battery storage. Moreover, concerns over a carbon-constrained future have also increased the focus of companies on renewable energy projects. According to the International Energy Agency (IEA), the generation of renewable energy is expected to expand by 50% in the next 5 years.

The key players of global digital substation market are ABB Ltd. (Switzerland), Siemens AG (Germany), General Electric Company (U.S.), Schneider Electric (France), Honeywell International Inc. (U.S.), Cisco Systems, Inc. (U.S.), Eaton Corporation plc (Ireland), Emerson Electric Co. (U.S.), NR Electric Co., Ltd. (China) and Larsen & Toubro (India)

Asia Pacific (APAC) is projected to be the fastest-growing market for digital substation, in terms of electricity consumption and rural electrification. The modernization of industrial infrastructure in APAC is growing at a high rate for a few years, and the same trend is expected to continue in the future. The digital substation market in this region is expected to grow at the highest rate among all other regions due to rapid industrialization, modernization of grid infrastructure, and entry of many private companies in the power sector, increased spending by governments to boost the utility sector, and increasing number of power utilities. Digital substations provide cost-effective solutions, which help in meeting the rising demand for electricity in countries such as China, India, and Singapore.