Shunt Reactor Market Size, Share & COVID-19 Impact Analysis, By Phase (Single Phase and Three Phase), By Type (Oil Immersed and Air Core), By Product (Fixed and Variable), By End-user (Electric Utility and Renewable Energy), and Regional Forecasts, 2022-2029

The global shunt reactor market size was valued at USD 2.43 billion in 2021. The market is projected to grow from USD 2.55 billion in 2022 to USD 3.94 billion by 2029, exhibiting a CAGR of 6.4% during the forecast period. Asia Pacific dominated the global market with a share of 60.49% in 2021. 

The global COVID-19 pandemic has been unprecedented and staggering, with shunt reactor experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global shunt reactor market exhibited a decline of 1.2% in 2020 as compared to 2019.

These reactors increase power and energy system efficiency by absorbing and compensating reactive power in cables and long high-voltage transmission lines. They can be connected directly to the power line or the tertiary winding of a three-winding transformer.

COVID-19 IMPACT

COVID-19 has Moderately Impacted the Global Shunt Reactor Market Growth

The COVID-19 pandemic and related economic repercussions have significantly impacted almost every industry, and the shunt reactor industry is no exception. COVID-19 hampered the year-on-year market growth in 2020 due to lowered investments in the global power sector. The commercial and Industrial sector is the largest consumer of electricity, and factory/office closures during the lockdown impacted the electricity demand. This lowered collection and cash flow and severely impacted the transmission and distribution companies.

Some companies, including Adani Power Limited declared force majeure—a clause that sanctions contracts to be affirmed null and void caused by acts of God or other unexpected circumstances.

LATEST TRENDS

Exceptional Growth of the Renewable Energy Sector to Create Lucrative Opportunities

Growing demand for consistent and protected power supply globally combined with government initiatives to reduce carbon footprint is likely to promote the renewable sector growth substantially. The global energy sector has witnessed exceptional growth in the renewable energy industry since 2020 despite the pandemic. Renewable project deployments geared up in 2020 as policy deadlines in major markets expanded by 45% from 2019, according to the data published by International Energy Agency. Policy deadlines in China and the U.S. fueled an unprecedented boom in renewable capacity additions in 2020 despite the widespread pandemic. For instance, China alone added 137 GW of renewable capacity while the U.S. added 36.6 GW of renewable capacity. The rapidly expanding renewable energy sector will likely generate lucrative opportunities for the market. Considering the rising demand for these reactors from the renewable energy sector, companies are investing significantly to cater to the increasing demand. For instance, in October 2022, Hitachi Energy announced plans to expand and modernize Virginia's manufacturing facility to cater to the rising demand for transformers and reactors from renewable power generation.

DRIVING FACTORS

Upgrading Transmission Lines to Stimulate the Demand for Shunt Reactors

The rising number of transmission line development and modernization projects across the globe is expected to stimulate the demand for transmission and distribution equipment, including shunt reactors. These reactors compensate for the reactive power generated when a sudden drop in load occurs due to system failures. As grid complexity and renewables interconnection continue to rise, utilities are involved with deploying equipment such as transformers and reactors, to regulate voltage, stabilizing systems, and reactive power compensation. Hence, as the power demand and generation increases, transmission & distribution infrastructure needs to be modernized and upgraded.

Most countries, including the U.S., India, China, and Germany are engaged in upgrading and modernization of their aging transmission and distribution network. For instance, in January 2022, the U.S. Department of Energy (DOE) announced the 'Building a Better Grid' initiative to catalyze the nationwide upgradation and development of new high-capacity transmission lines. Under this initiative, the DOE will ascertain vital national transmission needs and support to build high-voltage transmission facilities. Moreover, recently in April 2022, Hitachi Energy India Ltd. was awarded a contract worth USD 19.7 million to reinforce the transmission system in the rural part of the Indian state of Madhya Pradesh. Such transmission upgrading and modernization projects and rising investments to cater to increasing energy demand are likely to drive the growth of the market in the upcoming years.

Rising Power Generation Capacity to Promote the Shunt Reactor Market Growth

The rapid pace of urbanization and industrialization led to the burgeoning energy demand in the last few years, especially in emerging economies. Hence, governments across the globe are aiming to increase their power generation capacity to maintain an uninterrupted power supply.

China, the U.S., and India are among the major countries that witnessed colossal power generation capacity additions in the last few years. India plans to add 27,000 circuit kilometers of power transmission networks by 2024, aiming to have 500 GW of power generation capacity from non-fossil fuels. Moreover, as per the draft the Central Electricity Authority (CEA) issued, India needs a capacity addition of 228,541 MW to fulfill the peak electricity demand by 2027. During 2021-2022, India added a capacity of 30,667.91 MW from conventional sources while a cumulative installed renewable energy capacity of 156,607.9 MW as on March 2022. Additionally, the European Energy Investment report is projected to have an investment of USD 295 billion and USD 290 billion in transmission and distribution infrastructure in 2021-2030 and 2031-2040, respectively.

However, the system needs adequate power transmission and a sub-transmission network to meet the swiftly rising energy power generation capacity. Shunt reactor, an integral component of the power grid system and essential for safe and efficient transmission distribution of power between different voltage systems, is expected to witness a significant increase in demand.

RESTRAINING FACTORS

Emerging Advanced Technologies to Limit the Use of Shunt Reactor

Flexible AC Transmission Systems (FACTS), HVDC systems, and other alternative technologies were developed due to a growing focus on grid stability and minimizing energy loss during transmission. Using devices such as capacitors and reactors in conventional grid stabilization techniques has inherent constraints in terms of performance and speed. These restrictions rapidly make way for more efficient technologies such as FACTS and HVDC systems.

Flexible AC transmission system devices are power electronic devices increasingly used in the power system transmission network. These devices can offer several features such as higher power transfer capacity, better grid stability, and provide fast reactive power/voltage support.

Reactive power transmission leads to significant voltage current drops and upsurges in the network, which can limit the active power transmission capacity and increase losses. Increasing the dynamic power capacity of an existing transmission line with Fixed Series Capacitors (FSC) will improve the efficiency of the plant as it has to produce less reactive power and reduce primary fuel consumption. As a result, more active power can be transferred via the transmission lines. The rising adoption of such advanced technologies will likely restrict the demand for conventional transmission and distribution equipment in the upcoming years.

SEGMENTATION

By Phase Analysis

Swift Pace of Industrialization to Stimulate the Three Phase Shunt Reactors Demand 

Based on phase, the market is segmented into single phase and three phase. Three phase segment emerged as the largest consumers of reactors across the regions. This is accredited to the rapid pace of industrialization, especially in the emerging economies in Asia and Latin America. Three phase settings are generally employed where high-voltage applications are necessary. However, three phase settings can also handle single phase applications; hence, the inclination toward three phase systems is growing globally.

Single phase shunt reactors will likely witness significant growth during the forecast period 2022–2029 owing to the swift pace of urbanization and the rising number of smart city projects worldwide.

By Type Analysis

Oil Immersed Reactors to Dominate the Global Market Due to their Compatibility with High-voltage Systems 

Based on type, the market is segmented into oil immersed and air core. Oil immersed reactors are expected to hold the major share of the global market. This is accredited to the compatibility of oil-immersed reactors with high-voltage systems. Traditionally, reactors are produced in oil-immersed design; however, a few companies have recently offered advanced air-core reactors gaining traction in the industry.

On the other hand, air core reactors are usually deployed where the system voltage is relatively low. However, companies such as Trench Group are investing considerably to improve the performance of air-core reactors. Trench Group has developed air-core reactors to sustain system voltages up to 500 kV.

By Product Analysis

Burgeoning Adoption of Variable Shunt Reactors to Catalyze Market Growth

The market is segmented into fixed and variable by product. Variable segment is anticipated to dominate the global market due to its flexibility across voltage fluctuations. The demand for variable reactors is directly proportional to the growth of the renewable energy sector, as renewable energy sources are considered to be a source of unpredictable and fluctuating active power.

Fixed reactors are relatively less expensive and are convenient to turn on/off. These reactors are deployed where a single unit of reactor is necessary for the grid.

By End-user Analysis

Immensely Growing Renewable Energy Sector to Stimulate the Reactor Demand

Based on end-user, the market is segmented into electric utility and renewable energy. Currently, the electric utility segment is the largest consumer of reactors globally while the renewable energy segment is expected to witness the highest CAGR during the forecast period 2022–2029.

With growing environmental concerns, rising geopolitical issues, and to alleviate dependence on petroleum resources, the global energy sector is moving swiftly toward adopting renewable energy sources, including hydropower, solar, and wind. Over the last three years, the global energy sector has witnessed immense growth in adopting renewable energy sources. The renewable energy sector is likely to witness the highest CAGR during the forecast period 2022–2029.

REGIONAL INSIGHTS

Asia Pacific dominates the global shunt reactor market share and is the largest producer and consumer of electricity. Additionally, the region also has the largest capacity for renewable electricity generation. The region also comprises a massive manufacturing industry; many global and regional manufacturers operate across Asia Pacific. An increase in electricity generation and renewable investment is the primary reason behind the growing demand for reactors across the region.

Europe is one of the major markets for reactors. Europe's market comprises developed nations with advanced power grid infrastructure. However, an increase in the grid infrastructure development in countries across the region, along with the growing demand for renewable electricity, is driving the product demand.

The growth of the North America industry is driven by growing electricity consumption across industrial, commercial, and residential sectors. The region also focuses on increasing power generation from renewable sources such as solar and wind. Also, the presence of leading manufacturers makes the region a prominent destination.

The Latin America and the Middle East & Africa markets are still at the nascent stage. However, leading manufacturers such as Siemens and GE are involved in several regional projects.

KEY INDUSTRY PLAYERS

Key Participants are Intent on Expanding their Product Capabilities and New Product Development

The global market comprises a few global players and numerous small and medium-scale players. New product development has been the major market strategy adopted by major players. For instance, in 2022 and 2020, Trench Group and GBE Spa extended/upgraded their reactor portfolio. Besides collaboration is another major strategy utilized by key players like Siemens, Hitachi, and GE.

Major players include Hitachi Energy, Siemens, General Electric, CG Power and Industrial Solutions, Hyosung Heavy Industries, and others. The major companies have more than half of the market share, and a large number of regional and local players for various end-use applications dominate the remaining market.

List of Key Companies Profiled:

• GE (U.S.)


• Siemens (Germany)


• Toshiba Corporation  (Japan)


• CG Power and Industrial Solutions Limited (India)


• Hitachi Energy (Switzerland)


• Hyosung Corporation (Korea)


• ABB (Switzerland)


• Nissin Electric Co Ltd (Japan)


• Fuji Electric Co., Ltd. (Japan)


• GBE SpA (Italy)

KEY INDUSTRY DEVELOPMENTS:

• September 2022- ABB announced that it signed an agreement with Hitachi Ltd. to divest its remaining 19.9% stakes in the joint venture Hitachi ABB Power Grids formed in 2020.


• March 2022- Siemens Energy divested its 35% stake in the joint venture Voith Hydro (formerly Voith Siemens Hydro Power Generation). Completing this transaction makes Voith Group a whole owner of the Voith Hydro Group Division.


• January 2022- Trench Group, owned by Siemens Energy, introduced a 500kV Dry-Type Reactor. The company claims that it is the world’s first 500kV Dry-Type Reactor, and they have technology that allows them to manufacture high-voltage dry-type reactors at up to 550 kV voltage.


• July 2021- Grid Solutions, a GE Renewable Energy business, announced a contract with Power Grid Corporation of India Limited (PGCIL), India’s largest state-owned transmission company, to supply 32 units of 765 kV reactors and 13 units of 765 kV transformers. These transformers and reactors will be installed in Rajasthan to evacuate 8.1 gigawatts (GW) of power from the state’s solar energy zones.


• April 2021- GE Renewable Energy’s Grid Solutions business and Hitachi ABB Power Grids Ltd. (now Hitachi Energy) announced a cross-licensing and non-exclusive agreement to use an alternative gas to sulfur hexafluoride (SF6) used in high-voltage equipment. This agreement will allow companies to use complementary intellectual property for their respective SF6-free solutions. 

REPORT COVERAGE

The research report presents a comprehensive industry assessment by offering valuable insights, facts, industry-related information, competitive landscape, and historical data. Several methodologies and approaches are adopted to make meaningful assumptions and views to formulate the global market analysis.

REPORT SCOPE & SEGMENTATION