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The South African Medium and High Voltage Switchgear Market
Frost & Sullivan, Dec 2010, Pages: 101
This report documents the South African switchgear market over the past five years in South Africa, with projections through to 2015. The market has been driven by large generation and transmission projects run by the state utility Eskom and various municipalities. As in many global markets, the medium voltage switchgear market has become increasingly competitive as the product has become commoditised. South African OEMs face increasingly stiff competition from BRIC imports, with some of the large established multinationals voicing concerns about a price war.
This research service titled The South African Medium and High Voltage Switchgear Market provides an analysis of the electricity transmission and distribution switchgear markets and opportunity analysis across various end-user industries. Frost & Sullivan's expert analysts thoroughly examine the following application sectors: infrastructure/construction, mining and manufacturing.
Market Overview:
Utilities and IPPs to Sustain Long-term Growth in the South African Medium and High voltage Switchgear Market
The medium voltage (MV) and high voltage (HV) switchgear market in South Africa holds high growth potential for manufacturers. Eskom will continue to implement its grid strengthening projects, boosting growth in the HV segment. The MV segment has become increasingly competitive and is threatened by decreasing margins and the ongoing lack of maintenance by various municipalities. “Eskom’s continued investment into grid strengthening projects will drive growth in the HV switchgear market,” notes the analyst of this research. “If the IRP2010 is implemented, the growth in both renewable energy and nuclear power plants over the next two decades will further support advances in this market.”
The MV segment has become increasingly competitive over the past five years. Underinvestment in distribution system maintenance is a continued threat to sustained growth in this segment, with increasing outages affecting the entire grid. “Rising electricity demand and a lack of timely investment into new generation capacity has led to an ambitious new build programme for South Africa,” states the analyst. “If implemented as planned, this plan offers the key to growth in both the MV and HV markets.”
Innovative Funding and Service Approaches Critical to Maximising on Growth Opportunities
The critical risks to growth in the MV and HV switchgear market are the failure to implement the IRP2010 new build plans and the inability to maintain investment in refurbishment and replacement of switchgear equipment in the distribution infrastructure. There is a significant maintenance deficit, which is not being addressed due to the inability of municipalities to earmark revenues from electricity for grid maintenance and the subsidisation of other loss-making municipal services. “The attempted establishment of the regional electricity distributors (REDs) has no doubt contributed to the lack of investment into the distribution infrastructure”, explains the analyst. “Equipment manufacturers and suppliers will need to find innovative funding and service approaches in order to unlock the current distribution system maintenance deficit.”
Investment in the distribution grid has stalled due to a lack of funding and skills at the municipal level. Suppliers and manufacturers need to offer municipalities turnkey supply and operational services with easy access to funding. Due to the need for municipalities to secure funding internally, equipment suppliers will need to find innovative service fee-based business models, which allow access to new equipment without incurring significant debt. Despite uncertainty regarding the implementation of new build generation and transmission projects and a lack of investment in maintenance, there are significant opportunities for switchgear equipment manufacturers. Multinational OEMs will find it easier to compete in the HV segment, as the MV segment continues to fragment. “Manufacturers will need to adopt a more flexible pricing and service model to maintain market share in the MV segment,” concludes the analyst. “There will probably be significant partnerships and M&A activity in the market as parallel players seek competitive advantages.”
Market Sectors
Expert analysts thoroughly examine the following market segments in this research:
- High voltage switchgears
- Medium voltage switchgears
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