Market Trends of Australia Switchgear Industry
High Voltage Switchgear to Have Significant Market Share
- High-voltage switchgear is extremely popular in Australia as it comprises 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) (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. For instance, according to the Australian Energy Market Operator (AEMO), the Australian grid could derive 75% of its electricity from renewables, mainly wind and solar, in the next five years.
- Furthermore, the Australian Energy Market Operator (AEMO) introduced a 30-year roadmap to ramp up the transition to renewables with investments in the National Energy Market (NEM) in its Integrated System Plan (ISP) 2022. The step change scenario forecasts annual electricity consumption from the grid doubling by 2050 as transport, cooking, heating, and industrial processes are electrified, and 60% of current coal generation will exit by 2030.
- According to the Electricity (Network Safety) Regulations, Western Australia, an electricity network operator or electrical contractor who intends to design, construct, commission, operate, maintain or decommission an electricity network must comply with the Australian Standard AS 62271 for high voltage A.C. switchgear and control gear.
- The major factors driving the growth are the rising energy demand and the extension/replacement of old switchgear at sub-stations. Due to its space optimization, low maintenance, and protection against external elements, the demand for switchgear in Australia is expected to rise during the forecast period.
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Adoption of Renewable Sources of Energy to Drive the Market
- The Australian government is implementing reforms to foster the security of supply, including a retailer reliability obligation, adjustments to system operation, and planning for market design post-2025 at higher levels of variable renewables. This is expected to propel the demand for switchgear during the forecast period.
- According to the Department of Climate Change, Energy, the Environment, and Water (DCCEEW), renewable energy sources accounted for 8% of Australian energy consumption in the previous year. 29% of Australia's total electricity generation came from renewable energy sources, such as solar (12%), wind (10%), and hydro (6%). The share of renewable energy in total electricity generation was the highest on record the previous year.
- Further, as per Rystad Energy, rooftop solar PV installations are expected to increase to a total capacity of 94.7 gigawatts (GW) in the next five years. This growth is in an upward trend for the rooftop solar market due to government regulations and policies, especially feed-in tariffs (FiTs) that guarantee an above-market price for producers. Such development is expected to boost the demand for switchgear in the market during the forecast period.
- According to Rystad Energy, between 8 and 9 GW of renewable energy capacity changed hands in Australia in 2021, rising from 2 to 3 GW in 2020. The country saw various developments propelling the demand for switchgear. For instance, in March 2022, the Queensland Government announced that its State-owned transmission company, Powerlink, would connect the MacIntyre Wind Precinct to the grid as part of an AUD 170 million (~USD 114.1 million) agreement. Construction of the MacIntyre Wind Precinct was expected to start in the second quarter of 2022.
- In October 2021, the Federal Government released its long-awaited Australian Long-Term Emissions Reduction Plan, designed to achieve the now agreed, but not legislated, net zero emissions by 2050. Such initiatives taken by the government to achieve carbon neutrality further boost the demand for the market.
