Cover Story

Switchgear and Control Panels Industry Matures Owing to Complex Demand

"The international market showing the price hike by 2024 for low voltage switchgear industry, further the growing in demand for electrical and power sector in addition to the urbanization have increases the demand of the electrical products and electrical protection equipment. Here we are presenting the current situation of the modern and upgraded switchgear globally."


Indian Electrical Equipment Sector…

India is well on its way to becoming a global supplier of goods and services. An efficient power supply system is the key ingredient for a country’s economic growth and quality of life; unfortunately, shortage of electricity is one of the foremost constraints in the ramping up and sustaining our growth momentum. At present, India has an installed generating capacity of over 305.5 GW, however the peak demand gap has increased to about 16% recently due to coal shortages. The GoI had set an ambitious goal in its 12th plan for generation capacity addition of about 88537 MW. Indicating significant growth in the power transmission sector, the CEA has estimated an investment of Rs 2.6 lakh Cr till 2022. These and other estimates form the base for a draft National Electricity Plan-Volume II, which would be the basis for investment and policy planning in the sector. Inter-regional capacity addition during the 13th plan (2017-22) is estimated at 45,700 Mw, from the present 63,650 Mw by the plan end, said CEA in the draft. The investment figure, it said, included an estimate of Rs 30,000 crore in transmission systems below 220 kv. About Rs 1.6 lakh Cr would come from states and the other Rs 1 lakh crore from Power Grid Corporation of India. The govt is planning to increase the size of projects and scope of work in transmission. Inter-state lines with capacity of around 56,000 Mw are being planned by the end of the 13th plan. In the first volume, CEA had said more more thermal power generation capacity wasn't needed but supply needed to be more accessible and affordable. And, that renewable energy generation would be 20.3% and 24.2% of the total energy requirement in 2021-22 and 2026-27, respectively. CEA says the already planned transmission corridors between regions is sufficient to cater to variable dispatches at peak times, with provisos. The estimate is that India would need 100,000 ckm of transmission lines and 2,00,000 MVA transformer capacity of substations at 220 kv and above voltage was expected to be added in the 13th plan. It has suggested that investment be invited through competitive bids. Various high capacity transmission corridors are in various stages of implementation and most are likely to be commissioned by 2021. 
Current installed transmission capacity for evacuation is an emerging bottleneck, further outdated distribution system with huge AT&C losses is a cause of serious concern, hence there is an urgent need for enhancement and upgradation of the T&D infra to evacuate additional power across the country. The govt has pulled out all the stops to attract investment in this sector and has taken various steps to make the sector attractive for investors. The Electricity Act 2003 has provided impetus to the power sector. It has also catalyzed the much needed reform in the EBs with many of them turning profitable after unbundling into independent entities and managed as SBUs. CERC and SERCs too are playing an important role in regulating the sector. Public Private Partnerships are on the increase and the Electricity Boards are opting more & more for turnkey solutions from EPCs. The govt had also initiated the Accelerated Power Development and Reform Programme (APDRP) in order to minimize aggregate technical and commercial (AT&C) losses at the distribution level, with the objective of improving the financial health of state electricity boards (SEBs), The APDRP is now well on in it’s second avatar R-APDRP correcting the IT & Metering side of the distribution. Equipment demand from Rural Electrification programme (RGGVY) and expansion of Generation, Transmission & Distribution networks too is expected. Ultra mega power projects (UMPPs), nuclear power program, JVs by public & Private sector for manufacture of plant equipment including supercritical 800 MW turbines & boilers and Balance of Plant (BOP) equipment etc too are under progress to help debottleneck the power generation program. Renewable/Alternative energy initiatives like wind, solar-thermal, biomass, mini/micro hydel etc are gathering steam. This scenario presents a huge opportunity to the Indian electrical Equipment industry including Transformers & Switchgears.

Switchgears...

Switchgear is a generic word used for all equipments that are used for the control of electricity and the protection of electrical devices. Electricity is the primary form of power used in the modem world. Switchgear of all sizes and types get used for switching, controlling and for carrying the different electrical loads. Switchgear is first differentiated based on the voltage of operation. The differentiation is
  • HT or HV (above 3.3 KV)
  • MT or MV, (between 1KV & 3.3KV)
  • LT or LV (less than 1 KV)
Low tension switchgear can be of various current capacities. It could be suitable for certain frequency of start-stop operations. It starts with applications which are immediately after the secondary side of a transformer and could continue to the actuators of loads. Switchgear which is used upstream has higher current ratings, and usually lesser frequency of operation. Devices used downstream need to be used more often, but have lesser current ratings. The in-built protection is higher and more automated for upstream devices. 

Switchgear products...

There is a wide range of switchgear that gets used in low tension distribution. A few common types are - Powergear Products Air circuit breakers, Moulded case circuit breakers, Switch-disconnector fuses. Controlgear Products Contactors, Starters, Timers and other panel accessories. Distribution products for 240 V segment miniature circuit breakers, earth leakage and other residual current circuit breakers. Energy metering and protection products meters, relays. Reactive power management products capacitors, harmonic filters. Powergear products are those that are most often used to control the incoming power and in the distribution of these products further downstream. Controlgear products are typically used close to the load and are for the control of load devices. The 240V segment products are used for the commercial and residential establishments. Products are needed for metering of the energy consumed by users. This is necessary so that one may bill a user for the energy he consumes. Apart from single phase meters, three phase meters, demand controllers and trivector meters, there is also a need for relays to protect the electrical installations and circuits. Quality of power and the control of reactive power is a growing concern in the industry. Products for reactive power are growing in importance. 

Switchgear users...

Some common types of switchgear have been considered in brief. Wherever there is the presence of electricity one has to have switchgear. All industries, commercial establishments and residential complexes have them. These users of switchgear may be considered under three broad headings
  • Users in the agricultural sector
  • Users in the industrial sector.
  • Users in the building sector(commercial and residential)
Users in the agricultural sector are primarily the farmers, who use pumps for irrigation. These pumps are energised with starters. Occasionally some other switchgear gets used along with starters.The dealers in semi-urban and rural areas generally supply to this sector. Once in awhile, the farmers combine the purchase of starters with some other activity, and do both of these in a common visit to the nearby city. The agro based industries in the rural and semi rural areas are considered in this sector. Rice mills could be one such example.
In the industrial sector there are users of switchgear in the industrial load applications. These are in steel, cement, power, paper, textile, sugar, pharmaceutical, mining, telecom, oil & gas, sugar, paints, glass, brewery, fertilizer, petroleum and many other industry types. The government and utility buyers are users with special needs. These are all actual users of switchgear. hi the commercial establishments, the use of power could be as much or higher than industrial loads. Large commercial establishments have been seen to use even 7 MW of power. There are examples of commercial loads with larger planned use of electricity. This is much more than the power needs of medium sized industries. With more usage of power, there would be greater use of switchgear. The residential establishments use specialized switchgear for the needs of the domestic consumers. The actual users in all the above sectors often get their switchgear from value adding intermediaries. Some of the intermediaries are 
Panel builders are the largest users of switchgear among the intermediaries. They put the switchgear together in an enclosure or the panel and then get the circuit wired up as per the control scheme needs of the user. Panel builders are usually concentrated in the large cities. Occasional ones are available in the semi urban and rural areas, catering largely to the local needs of that area
OEMs, manufacture machines or different applications. These machines have switchgear. The requirement of an OEM is for standardized switchgear products, which go along with the machines they manufacture. Manufacturers of plastic moulding machines, air conditioning plants, telecom equipment, paper machinery , stone crushing plants, elevators, cranes, battery chargers, DG sets, packaging machines, windmills, fire fighting machines, furnaces, textile machinery and industrial laundry machines are some of the many, many types pf OEMs.
Contractors are another important intermediary. The contracts that are taken by them, need switchgear. These products could be for isolated use or could get used in a panel manufactured by a panel builder or along with the equipment supplied by a OEM. Apart from the users and the intermediaries, this industry has a lot of influencers. As the name suggests, these are not actual users or buyers of the product, but they have a say in what products need to be bought and used. Consultants are the major influencers. They advise the users and help them to decide the specifications, makes and sizes of the equipment that need to be used. While any, of the segments could use any type of switchgear, there are some typical usage patterns associated with them. The panel builder segment is the largest. The usage of ACBS and MCCBs is more when the panel manufactured is a power control centre. When the panel is a motor control centre it will have more contactors and relays. The switchgear market is growing and the most rapid growth is in the construction segment.

International Market…

In the international market one may study both growing as well as developed markets of switchgear. India is a developing market, and this helps us understand the direction that the distribution channel will take as the economy gets more mature. 
Europe is a developed market. Schneider is the market leader in France and some other countries. The other two major players are Siemens and ABB. Both hold the position of leadership in their home country and some other countries. The market has consolidated, with generally three major players in each territory. These countries have very different price structure for trade and non trade. The distribution channel has got more specialized and strategically important customers are direct accounts of the manufacturers. Panel builders are associated to large houses as franchisees. This market has seen low growth for both controlgear and powergear. Manufacturers have to look out for export. 
China is a developing market. They have progressed fast and the switchgear market there is many times larger than the market in India. China has allowed many multinationals to operate in their country. However, there have been strong barriers to trade in the form of certification requirements and tariffs. However, the market is gradually opening up, and multinational firms have started building there channel to capitalize on the emerging opportunities. There are manufacturing set ups of all important multinationals and some local players. The distribution channel has strong similarities to the Indian scenario. However, the consolidation of trade has progressed further. 
Malaysia is one of the developing economies of southeast Asia. The development in infrastructure makes it a large powergear market. There are local, European and Chinese manufacturers competing for the controlgear market. The powergear market prefers the European manufacturers and L&T from India. The distribution channel is in a state of flux. Most orders need to be routed through it. However trade is losing out on its functions of inventory carrying, after sales service and promotion. There are increasing numbers of orders where trade works as a one-time commission agent. 
Middle East has seen a booming construction segment. There is lesser manufacturing in the countries of middle-east. However, there are large warehouses for distribution to the nearby countries. Schneider and other European manufacturers dominate the market. Trade is in the development stage. The distribution channel goes through its process of development as the economy develops. There are some unique characteristics of each territory, however there would be some parallels that could be drawn in the stages of development of the distribution channel of a country.

Switchgear Industry in India…

The Indian power sector has an investment potential of Rs 15 trillion (US$ 225 billion) in the next 4–5 years, thereby providing immense opportunities in power generation, distribution, transmission, and equipment. The govt’s immediate goal is to generate two trillion units (kilowatt hours) of energy by 2019. This means doubling the current production capacity to provide 24x7 electricity for residential, industrial, commercial and agriculture use. The GoI is taking a number of steps and initiatives like 10-year tax exemption for solar energy projects, etc., in order to achieve India's ambitious renewable energy targets of adding 175 GW of renewable energy, including addition of 100 GW of solar power, by the year 2022. The govt has also sought to restart the stalled hydro power projects and increase the wind energy production target to 60 GW by 2022 from the current 20 GW. The Indian electrical equipment industry comprising of multinationals, large medium & small players is fully geared up producing, supplying and exporting a wide variety of electrical equipment including switchgear and controlgear items needed by the expanding industrial and power sector on which we focus in this article. This industry sector in fact manufactures the entire voltage range from 240V-2800KV. The current technology level in India is Contemporary. Currently, the MV & HV segments are suffering from overcapacity due to lack of orders. Inadequate demand could be due to insufficient planning by the users and delay in finalizing tenders. Unfortunately bunching of orders also creates supply delivery problems, and L1 (lowest quoted price) procurement system followed by all utilities i.e. procuring products at lowest price creates a hurdle for bringing good quality material in the system. Further insistence on repeated type testing of products in spite of inadequate type testing laboratories poses additional delays and harm to the equipment. 

Market Opportunity…

HV and EHV demand majorly derives from the utilities. The govt is focusing on increasing the penetration of Electricity in villages. Schemes like R-APDRP and RGGVY are providing an excellent opportunity for the LV and MV switchgear market with large number of villages yet to be electrified. 
Industrial Segment India's industrial sector accounts for about 30.0 percent of GDP, with most of the industrial divisions reporting growth in output in the fiscal. An increase in process automation levels observed which support push-buttons, contactors and switching relays, as well as the protection relays market, which finds application extensively for motor control. Investment in new infrastructural setup is set to increase the market for ISGs, RMUs, MCCBs, ACBs and C&Rs. Another indicator of sustainable growth is the increasing gross assets of organisations.
Commercial and infra infra sector is one of the most important thrust sectors in the Eleventh & Twelfth Five Year Plan of the GoI with an estimated investment of $475 billion over next five years upto 2017; An average GDP growth of about 7.6% and massive investments from the private and public sector are expected to drive the growth in infra segment. This includes modernization of crucial economic and social infra, such as new hospitals, commercial complexes, IT Parks, Shopping Malls, Ports, railways, Metro, roadways and schools etc infra development is expected to benefit the Ring Main Units(RMUs), Intelligent Switchgear, Air insulated and Moulded Case circuit breakers market for switching, control and general protection applications.
Residential Segment In the residential construction sector, the market has picked up in 2010-11 post recession and with support from the govt. The prices of real estate are firming up and projects which were on hold have restarted Continued growth of the residential sector is likely to drive the MCBs, ELCBs and MCCBs market which has already clocked a growth of more than 20% over last fiscal. Recently the revised National Building Code NEC 2011 in line with the latest IEC code has been launched. This will help improve both Electrical & fire safety for the common man. 
Power Plant Modernization and Refurbishment As in other parts of the world, numerous power plants in India are nearing the end of their service plan, thus requiring overhauling and modernization. This includes replacement of existing transformers, which are on average over 30 years old and the replacement of LV, MV and HV switchgear. Power plant modernization and refurbishment is expected to additionally support growth of the switchgear market. 
Alternative Energy Sources The India govt continues to research and invest in renewable energy sources such as wind, solar-thermal and hydroelectric power. The renewable energy market has grown by about 2400 MW to 20,100 MW the growth in this segment is likely to sustain at current/higher levels percent over the next 4-5 years. The increase in investment in alternative energy sources is also expected to support market growth, as LV and MV switchgear products are required for general protection as well as switching. The MCCB and MCB markets are expected to benefit considerably from alternative energy expansion. 

New trends…

LV Switchgear-Increased acceptance of electronic releases in circuit breakers; Embedded Intelligence and communication enabled; Improved materials for cost saving, environmental reasons and ROHS; Movement from motor starters to submersible pump controllers; Soft Starters; Increased use of modular device in building electricals; Vacuum contactors for higher ratings; More use of magnetic actuators; Field for Life-Maintenance free (IEC- M2 duty-10000 Operations); Shift from Electromagnetic to Numerical relays; Shift from Electrical sensors-CT/PT to electronic sensors; Ring Main Units; Intelligent switchgear; VCBs with higher ratings. [HV and EHV Switchgear]-Compact GIS; Compact AIS; Compact switchgear; Controlled switching; Solid State switchgear; Intelligent switchgear; VCBs with higher ratings (50kA-4000 Amps); 800-1200KV Ckt Breakers under development; Substitute for SF6 gas; Harmonisation of protocol IEC:61850--Package substation; Polymer of HV equipment-Smart grid

Issues and Challenges...

  • The industry has to largely depend on the financially weak Electricity boards for its sales, whose condition has increasingly worsened over the years.
  • Uncertainty & slow pace of reforms
  • Increasing Competition from unorganized sector and Chinese imports
  • Macroeconomic challenges which constrain public & private funding and High Interest rates
  • Low investments in R&D, Lack of Innovation 
  • Integration of new technologies into development of new products in the sector needs improvement 
  • L1 procurement system in utilities i.e. procuring products at lowest price creates a hurdle for bringing good quality material in the system. 
  • Underutilization of installed capacity 
  • Lack of HV switchgear test facilities in the country 
  • Increasing competition from unorganized sector in low end/low tech items/imports in LV seg. & project imports. 
  • One sided contracts by the user industries/ Price Variation contracts not accepted by many users 
  • Improper procurement planning/bunching of orders, 
  • Entry of unproven contractors/sub-contractors with minimal technical knowledge. 
  • Lack of standard specification and design parameters clubbed with increasing trend of customisation is adversely impacting the delivery schedule as well as taking away benefits of economies of scale. 
  • The new Clause of consequential damages which in short means an organisation supplying an equipment is not only responsible for the supply but also for the damages arising out of the equipment. 
In LV products, it is increased digitalisation and connectivity, wherein the customer wants access at all times, from anywhere. They also want value-for-money, which is another front where development is on. A new trend has come out of smart panel for the LV Switchgear market, which is fully communicable, and monitoring, control, measurement and notification is possible from any open protocol/ethernet or even from the smartphone of the user. These are fully communicable to monitor the status and control of the devices. Even operating and tripping problems can be eliminated via a dedicated LAN network/protocol. There will be a considerable amount of demand for switchgears wherever electrical appliances or equipment are used. Looking at the complete mix, the demand will be more for final distribution level products, i.e., RCDs. However, on the commercial side, the growth will be primarily driven by power circuit breakers. Thus, the potential growth will be in higher single digits. In the time to come, we feel that due to increased investment from the govt in improving the macroeconomic outlook in India, the growth rate should go up. All of the govt.’s growth drivers i.e. infra, smart cities, etc. will lead to increased demand for electrical energy, and hence the segment will grow accordingly. The growth of this segment is directly linked with the economic growth of the country. Although there is a lot of positive vibes about growth, but when talking about the actual consumption at ground level, the opportunities are quite low. Also, even though digitalisation is well talked about, when it comes to actual execution, this is implemented in only selective cases. People are inquiring about it, but conversion into actual implementation will take more time. Another thing is that price remains an important driver in determining what the customers buy. The only thing that decides the growth of the country is the concept of value-based selling. So, each person involved-right from the manufacturer-should add value in such a way that the end consumer sees the incremental benefit. If this is done, then there can be good growth. India is on par when it comes to the products. In fact, we are far better than many countries in terms of resource availability. 

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