Market Trends of Europe Low Voltage Switchgear Industry
Distribution Segments to dominate the market
- The distribution system includes a network of power lines, substations, transformers, and other equipment that is used to transport and deliver electrical power to the end users. The distribution system is divided into two categories primary and secondary distribution. The primary distribution refers to the transmission of high-voltage electricity from the power plant to the local substations. The secondary distribution refers to the delivery of lower-voltage electricity to end-users.
- In recent years, Europe has witnessed a surge in industrialization and urbanization, leading to the emergence of numerous commercial and industrial entities. This has resulted in substantial growth in sectors such as manufacturing, data centers, and various other industries. It is anticipated that this trend will persist throughout the forecasted period.
- With this increasing industrialization and urbanization, the demand for electricity has increased consequently. Increasing the demand for distribution systems in various countries such as Germany, France, the United Kingdom, Spain, etc.
- According to Eurostat, electricity consumption in Europe was on the rise again after 2020. The electricity consumption in Europe was 3205 TWh which was a rise of 4.53% compared to 2020. The consumption is further expected to increase during the forecasted period owing to increasing investments by companies to expand their business in Europe.
- For instance, in February 2023, BYD Company, a leading Chinese battery manufacturing company, announced their plans to build their own manufacturing plant in Europe and shortlisted various locations in Germany and the United Kingdom in order to expand in the European region and improve their market shares.
- Therefore owing to the above-mentioned points, the distribution system is expected to hold a significant market share during the forecasted period.
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Germany to Witness Significant Growth
- Germany is one of the largest consumers of electricity in the European Union and globally. According to the Federal Ministry for Economic Affairs and Energy, the gross electricity consumption in Germany in 2022 was around 293.02 Terra watt-hours (TWh), which is a slight decrease from the previous year's consumption of 319.6 Terra watt-hours (TWh).
- The decrease was mainly due to recent geopolitical developments like the Russia-Ukraine conflict, which significantly affected the natural gas supplies, thus reducing electricity production in the country.
- Therefore, the country has prioritized energy security in the country and has started expanding renewables in the country. According to the International Renewable Energy Agency (IRENA), Germany witnessed a 7% rise in the overall installed capacity of renewable energy in the year 2022, with an installation of almost 9.81 GW. The country is predicted to witness a remarkable increase in installed capacity for onshore and offshore wind as well as solar power, making it a crucial market for EPC (engineering, procurement, and construction) services for solar and wind projects.
- In June 2022, Vestas AS secured a contract to provide EnBW's He Dreiht offshore wind project with 64 V235-15.0 MW wind turbines, generating a capacity of 900 MW. Additionally, Vestas has inked a deal with Cadeler for the transportation and installation of the turbines, slated to begin in the second quarter of 2025.
- Moreover, according to the German federal network agency, the country's existing transmission and distribution system does not offer operational flexibility efficiently. The agency expects the German government to invest around USD 58 billion by 2030 in order to match the transmission and distribution network capacity with the increasing adoption of renewable energy.
- These developments in the renewable energy sector will increase the investments in the substations and distribution systems which will increase the demand for low voltage switchgear in the country during the forecasted period.
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