Market Trends of Brazil Switchgear Industry
High Voltage Switchgear to Have Significant Market Share
- High-voltage switchgear is extremely popular in Brazil, comprising high-voltage components like circuit breakers and disconnectors. They are commonly used in city buildings, office spaces, offshore platforms, extensions, roofs, etc. High voltage switchgear is divided into two types, namely gas-insulated switchgear (GIS) and air-insulated switchgear (AIS). GIS is widely used in power transmission, railways, and integrating renewable energy-producing units into the grid.
- The demand for high-voltage switchgear is expected to be propelled by the country's potential to integrate renewable power generation units into the grid. Under the latest plan, Plano Decenal de Expansão de Energia (PDEE) 2027, Brazil is expected to increase its non-hydro renewable energy to 28% of its electricity generation mix by 2027, and utility-scale solar projects and wind generation projects are expected to be rolled out under various auctions. The demand for high-voltage switchgear is expected to remain high during the forecast period.
- Brazil's offshore wind energy sector is also expected to witness significant growth in the coming years, mainly driven by increasing investments in large-scale wind energy projects and favorable government policies. As of October 2022, 66 offshore wind energy projects were underway in the country at various stages of development.
- Further, the electricity generation of Brazil accounted for 677.2 terawatt-hours in 2022. With an annual growth rate of 3.2%, energy generation is expected to increase due to the increasing power demand, which, in turn, will drive the switchgear market in the forecast period.
- Therefore, owing to the above points, the demand for gas-insulated switchgear is expected to witness significant growth during the forecast period.
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Adoption of Renewable Sources of Energy to Drive the Market
- The Brazilian Energy Research Company's (EPE) Energy Expansion Plan (PDE) for 2019-2029 indicates that renewable sources will remain a priority for the country, aiming to achieve 48% renewables in Brazils energy mix in 2029.
- In June 2022, the National Electric Energy Agency (ANEEL) and the Electric Energy Commercialization Chamber (CCEE) commenced a new energy auction for 29 renewable energy projects, expecting an investment of around USD 1.33 billion. The projects are estimated to be around 947 MW, which will be connected to the National Interconnected System between 2026 and 2045 to meet the demand of three distributors (Cemig, Coelba, and Light) in the market.
- Brazil is the largest solar energy market in the South American region and is subsequently one of the largest solar PV inverter markets. According to the Brazilian Association of Photovoltaic Solar Energy (ABSOLAR), as of October 2022, solar energy reached 13.48 GW of installed capacity. It became the third-largest source of the Brazilian electricity matrix.
- Further, wind power in Brazil has proved to be the most competitive technology, with an average price of BRL 98.62/MWh (around USD 30/MWh), well below the prices of large hydropower plants. The Association (Abeeólica) also stated that Brazil is expected to have nearly 18.8 GW of installed wind capacity by 2024, considering 186 new wind farms that are scheduled to come online in the coming years.
- Moreover, in January 2022, Statkraft announced that the company is ready to start constructing its Morro do Cruzeiro large-scale wind energy project in north-eastern Brazil after closing a turbine supply contract with German wind turbine manufacturer Nordex. The project entails 2 wind farms, 14 turbines, and a total installed capacity of 80 MW.
- Additionally, in 2022, according to International Renewable Energy Agency (IRENA), Brazil's total renewable energy installed capacity accounted for 175.26 GW, with a growth rate of 8% from the previous year, 2021. the use of renewable energy is expected to increase. As switchgear is safe in the use of renewable projects, thus, demand for this segment is expected to grow in the forecast period.
