The global substation automation market size was worth US$ XX million in 2021 and is estimated to reach US$ XX million by 2029, growing at a CAGR of XX% during the forecast period (2022-2029).
Substation automation is a system that uses data from intelligent electronic devices (IEDs) to control & automation capabilities within the substation and control commands from remote users to control power system devices. Substation automation components conform to IEC 61850, the international standard for intelligent electrical substations. Remote terminal units, reclosers, programmable logic controllers, V meters, video for security or equipment status assessment, metering, switching, volt / VAR, waveform, event data and management systems are essential components of substation automation. By outfitting primary equipment with modern sensors and digitizing traditional copper-based analog transmission with secure, seamless, stable and open standard base fiber-optic connection, significant cost savings, performance enhancements and safety benefits can be achieved.
The demand for substation automation is mainly driven by the increasing global investment in smart grid infrastructure. The high installation and maintenance costs involved in substation automation are a key challenge in limiting the growth of this market.
Increasing global investment in smart grid infrastructure
Advanced technologies and substation automation can assist cut operational and maintenance costs while also increasing plant output. It also ensures high performance, reliability and safety of the electrical power network by performing interlocking and smart load shedding operations.
Given these advantages, smart grid development is receiving significant funding worldwide. Natural Resource Canada, a government body, for example, made a US$ 10 million investment in a next-generation smart grid project in May 2020. The grid project promotes renewable energy sources and the installation of technology to integrate new clean energy sources without jeopardizing the stability and dependability of existing grids.
The German government is pursuing measures to fully digitalize certain railway activities, such as the automatic operation of trains on the mainline network via automated substations. According to the International Railway Journal, the German government has committed US$ 80 million to create digital applications to boost network capacity. The Build Back Better (BBB) plan envisaged massive investments to stimulate U.S. economy after the COVID-19 pandemic downturn. The plan allocated more than US$ 100 billion for the up-gradation of the energy infrastructure, including for digitization and automation of power grid components. The increasing global investment in smart grid infrastructure is a key factor in driving growth for the global substation automation market.
High installation and maintenance costs
The first phase of substation automation is highly capital-intensive, necessitating various advanced devices, components and equipment. The expanding demand to integrate numerous intelligent electronic devices (IEDs) in substations and the increasing use of modern technologies like microprocessors and service-oriented architecture (SOA) have increased the costs of automating substations. Smart substation deployment also necessitates strong collaboration beyond traditional organizational boundaries, major process change and strict governance to ensure high quality throughout service life.
High investments in smart substation deployment could add to the government's financial burden. Utility providers are also concerned about high operational and maintenance expenses following deployment. A drop in revenue can severely impact the ability of utility providers to maintain substation automation, given the considerable expenses involved. Substation automation's high installation and maintenance costs limit their wider adoption and present a key challenge for the market's growth.
The global substation automation market experienced severe impacts on revenue streams in 2020 due to the COVID-19 pandemic. Manufacturing of substation automation components such as intelligent electronic devices (IEDs) was disrupted due to government-imposed lockdowns and movement restrictions. The pandemic delayed the deployment and field testing of new products and technologies. Substation automation is a market where growth is derived from innovating new products. The pandemic, thus, affected the revenues of various companies involved in the market due to reduced manufacturing and delayed product launches.
The COVID-19 pandemic lockdowns also led to a massive depression in electricity demand, as many transportation and industrial enterprises closed or scaled back to comply with government restrictions. The reduced electricity demand impacted the revenues of utility companies. Utility companies, therefore, cut back on capital expenditure and canceled new investments, thereby reducing demand for substation automation. The global demand for substation automation is not expected to recover until late 2021.
The short-term impact of the COVID-19 pandemic has been relatively severe for the substation automation market. Governments are making a significant investment in energy infrastructure as a part of a wide-ranging economic stimulus to kickstart growth and recover from the economic downturn caused by the pandemic. As the effects of the pandemic gradually wear away, demand for substation automation technologies will increase and the market is expected to grow gradually in the coming years.
The substation automation market is segmented into component, installation type, communication, end-user and region. The substation automation market is further segmented into new installation, retrofit installation and others based on installation type.
As demand for new power stations and smart grids in various industries develops, so does the need for automation, IEDs, advanced communication technologies, HMIs and SCADA systems. The market for new substation automation installations is dominant within this segmentation. Furthermore, modern installations improve operational safety and reliability while needing less maintenance. Leading companies in the substation automation industry have unveiled several new installation projects to increase power flow, improve electric dependability, improve energy supply quality and upgrade power infrastructure.
The North American region dominates the global substation automation market. U.S. accounts for the biggest market share within the region due to massive energy infrastructure upgrades in various parts of the country. Various projects are currently underway to automate substations and power distribution services.
Pacific Gas and Electric Co.'s (PG&E) comprehensive and cost-effective microgrid designs were recently accepted by the California Public Utilities Commission (CPUC). The plans are intended to limit the number of consumers affected by Public Safety Power Shutoff (PSPS) occurrences while also mitigating the consequences for those who are still affected.
PG&E's microgrid solutions for 2020 focus on improving grid resilience and keeping the lights on for customers in communities with a high probability of encountering a future PSPS event. PG&E will also employ temporary generation at safe-to-energize substations during PSPS events to help safe-to-energize customers and areas affected by transmission line outages. During PSPS events, it is preparing 63 substations to connect temporary generators as needed, subject to operational logistics and generator availability.
Moreover, several industrial enterprises are growing their substations through new development and collaboration ecosystems, leveraging the market's expansion. For example, BASF Agriculture Products North America and its herbicide plant in Beaumont, Texas, automated and enlarged its onsite electrical supply, distribution and control systems in May 2020.
North America is home to several prominent engineering firms that cater to automation systems due to the culture of high-tech innovation and ease of business. U.S. is generally the first to commercialize new emerging technologies. North America is expected to retain a leading position in the global substation automation market in the coming years.
The global substation automation market is competitive due to the availability of a wide variety of substation automation services that cater to different client requirements. Some of the major players contributing to the growth in the segment are Hitachi Energy Ltd., Siemens Energy, General Electric, Cisco Systems, Inc., Schneider Electric, Eaton, NovaTech LLC., Honeywell International Inc., CG Power and Industrial Solutions Ltd and Schweitzer Engineering Laboratories, Inc. The major players in the global substation automation market adopt several growth strategies such as launching new innovative products, joint ventures and collaborations, contributing to global growth in the industry.
Hitachi Energy Ltd.
Overview: Hitachi Energy Ltd. is a multinational engineering and technology services company specializing in designing and manufacturing energy equipment and services. The company’s business is segmented into product systems, design services, engineering and energy consulting. The company supplies its products and services to many global companies in the utility, energy, transportation and engineering sectors. The company’s facilities are located in more than 140 countries globally. Hitachi Energy Ltd. was founded through a joint venture between Hitachi and ABB and is headquartered in Geneva, Switzerland.
The global substation automation market report would provide access to an approx.: 65 market data tables, 76 figures and 238 pages.
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