Digital Substation Market by Type, Component, and Geography - Forecast and Analysis 2023-2027

Digital Substation Market Forecast 2023-2027

The digital substation market size is forecast to increase by USD 2.92 billion, at a CAGR of 7% between 2022 and 2027. Market expansion hinges on various factors, notably the escalating requirement for streamlined automation solutions, the surge in digital substation adoption within renewable energy generation, and the necessity for Programmable Logic Controllers (PLCs) in cutting-edge smart factories. These trends underscore a shift towards compact, efficient automation technologies capable of enhancing productivity and sustainability across diverse sectors. The demand for compact automation solutions reflects an industry-wide emphasis on space-saving efficiency, while digital substations in renewable power underscore a broader commitment to advanced, environmentally friendly infrastructure. Additionally, the integration of PLCs in smart factories aligns with the ongoing digital transformation, facilitating agile, data-driven operations in modern industrial settings

What will be the size of the Market During the Forecast Period?

To learn more about this report, Download Report Sample

Market Segmentation

This report extensively covers market segmentation by type (transmission and distribution), component (hardware, fiber-optic communication networks, and SCADA systems), and geography (APAC, North America, Europe, South America, and Middle East and Africa). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.

Market Dynamics and Customer Landscape

The market is driven by the continuous evolution of electrical generation, transmission, and distribution systems. Key drivers include the adoption of SCADA systems and fiber-optic communication networks by electric utilities and various industries. The emphasis on secure and adaptable technologies by entities like the State Grid Beijing Economic and Technology Research Institute fuels R&D spendings and shapes the industry landscape. However, challenges such as electricity demand and competitive landscapes persist, necessitating innovative solutions to navigate these restraints and foster industrial development, digitization, and innovation. Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.

Key Market Driver

The increasing demand for compact automation solutions is a key factor driving the growth of the global market. With the advent of the Industrial Internet of Things (IIoT), which is also called Industry 4.0 in the context of automation, challenges related to designing at the control level have increased significantly. IIoT provides various benefits, such as real-time communication capability and higher reliability. It also increases the efficiency of industrial automation control systems. The use of IIoT for manufacturing and factory automation enables smart maintenance, distributed intelligence systems, and predictive analytics.

However, the rising adoption of IoT-enabled devices is leading to design challenges related to the reduction of prices and gaining the benefits of factory automation for manufacturers and system integrators. Moreover, Some companies have developed PLCs that can stack multiple PLCs and handle a large number of I/O points with a maximum number of analog I/O. companies are also swiftly upgrading the features of their products based on end-user requirements. All these factors enable a seamless transition from traditional automation to Industry 4.0 in the manufacturing industry. Therefore, the increasing demand for compact automation solutions is expected to drive the growth of the market during the forecast period.

Significant Market Trend

The increasing focus on expanding the capabilities of micro PLCs is the primary trend in the global market. Micro PLCs are rapidly becoming an indispensable solution for controlling standalone machinery in both process and discrete industries.  The initial versions of micro PLCs were specifically designed as a cost-efficient solution for controlling small machinery with basic serial communication. However, with increasing technological advances, companies have developed micro PLCs with high-speed communication capabilities to control larger machines while featuring large program memory and capabilities to support multiple communications. Moreover, some companies provide additional features, such as analog and temperature I/O expansion modules, to already launched or existing products to increase their efficiency.

Moreover, this helps micro PLCs expand their capabilities for machine and process control applications. Such PLCs also include communication capabilities with support for Modbus Remote Terminal Unit (RTU), Transmission Control Protocol (TCP), American Standard Code for Information Interchange (ASCII), EtherNet/IP, and other custom communication protocols. Such developments are aimed at increasing product features and providing effective and compact PLCs as a cost-effective option for various process control applications, including data logging. Such product expansions and developments in micro PLCs will increase their demand in process and discrete industries. This is expected to have a positive impact on the growth of the global market during the forecast period.

Major Market Challenge

The concern over cyber threats is a major challenge to the growth of the global market. Data hacking and theft are major concerns for industries, particularly oil and gas, power, and water and wastewater treatment, which involve critical infrastructure. In the last few years, several cyberattacks targeting the energy sector have occurred worldwide. As the number of connected devices increases and the dependence on web-based communication increases, networks will become more vulnerable to cyberattacks.

Cyber threats are also evolving constantly, with hackers devising new means to gain access to critical information by carrying out ransomware and distributed denial of service (DDoS) attacks. Even as companies are trying to improve the security of power monitoring and control software, the constantly evolving nature of cyberattacks has put the use of power monitoring and control software at risk, which may hinder the growth of the global market during the forecast period.

Market Customer Landscape

The report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.

 Market Customer Landscape

Who are the Major Market Players?

companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.

ABB: The company offers digital substation solutions such as Smart substation control and protection SSC600. Also, the company offers control room designs and operator workspaces.

The report also includes detailed analyses of the competitive landscape of the market and information about 15 market companies, including:

• Cadillac Automation and Controls
• Cisco Systems Inc.
• Eaton Corp. Plc
• Efacec
• Emerson Electric Co.
• General Electric Co.
• Honeywell International Inc.
• iGrid T and D
• Larsen and Toubro Ltd.
• Locamation
• Netcontrol Group
• NovaTech LLC
• NR Electric Co. Ltd.
• Open Systems International Inc.
• Schneider Electric SE

Qualitative and quantitative market growth analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.

What is the Fastest-Growing Segment in the Market?

The Market is at the forefront of electrical generation, transmission, and distribution systems revolution. Key players in electric utilities and various industries are adopting advanced technologies like SCADA systems and fiber-optic communication networks to enhance transmission and distribution infrastructures across different voltage segments. Institutions such as the State Grid Beijing Economic and Technology Research Institute are driving the development of secure and adaptable technologies, reshaping the industry landscape and leading to substantial R&D spendings. This trend is reflected in the offerings of manufacturers and suppliers, who are expanding their product offerings and deploying sophisticated technological platforms to facilitate product adoption.

The market share growth by the transmission segment will be significant during the forecast period. In the power industry, digital substations control and supervise power system automation. Digital substation devices, such as PLCs, find applications in transformer substations to detect transmission-related anomalies. One of the major application areas of digital substations is programmable sequential switching operations. Such fac tors will increase the segment growth during the forecast period.

Get a glance at the market contribution of various segments Request a PDF Sample

The transmission segment was valued at USD 3.42 billion in 2017 and continued to grow by 2021. In the power transmission industry, the need to reduce transmission and distribution (T&D) losses will drive the demand for digital substations. In this sector, digital substations are utilized to improve signal connectivity, server management, and data acquisition. The slow growth in nuclear and coal-fired power generation activities will be compensated for by the growing investments in renewable power generation during the forecast period.

Which are the Key Regions for the Market?

For more insights on the market share of various regions Request PDF Sample now!

APAC is estimated to contribute 34% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. The market in APAC is expected to grow significantly during the forecast period. Moreover, government initiatives for digitalization, rising standards of living, a strong industrial base, and increasing demand for automobiles in the region are some of the key factors that are leading to the growth of digital substations in the automotive industry in APAC. The demand for both passenger and commercial vehicles has been increasing in the region. Favorable government policies for the automotive industry are also expected to drive investments in APAC.

Segment Overview

The report forecasts market growth by revenue at global, regional & country levels and provides a market research and growth analysis of the latest market trends and growth opportunities from 2017 to 2027. 

• Type Outlook
  • Transmission
  • Distribution

• Component Outlook 
  • Hardware
  • Fiber-optic communication networks
  • SCADA systems

• Region Outlook 
  • North America
    • The U.S.
    • Canada
  • Europe
    • The U.K.
    • Germany
    • France
    • Rest of Europe
  • APAC
    • China
    • India
  • South America
    • Chile
    • Argentina
    • Brazil
  • Middle East & Africa
    • Saudi Arabia
    • South Africa
    • Rest of the Middle East & Africa

Market Analyst Overview

The Market is witnessing significant growth driven by advancements in electrical generation, secure technologies, and distribution systems. With increasing emphasis on smart grids and high-quality services, utilities are adopting secure, adaptable, and advanced technologies to modernize transmission and distribution infrastructures. Organizations like State Grid Beijing Economic and Technology Research Institute and Austrian Power Grid (APG) are at the forefront of this transformation, leveraging cybersecurity measures and technological platforms to enhance grid infrastructure. 

Moreover, the market is also influenced by factors such as renewable energy sector growth, R&D spending, and regulatory reforms promoting affordable and uninterrupted electricity. However, challenges like restrictions on movement and supply chain disruptions impact the implementation and commissioning of digital substations and Transformers. Despite these hurdles, the digital substation industry continues to attract continuous investments from major players like General Electric (GE), focusing on smart meters, smart control systems, and fault detection capabilities. This strategic approach aligns with the modernization of energy grid infrastructure and the ongoing transition towards smart and optimized electrical infrastructure.

Furthermore, the Market is experiencing significant growth driven by the evolution of electric utilities and the segmentation of voltage segments. Organizations like the International Energy Agency (IEA) are advocating for the adoption of secure and adaptable technologies in the industry. This has reshaped the industry landscape and accelerated the product adoption of digital substations. With increasing electricity demand and the need for affordable electricity, governments are implementing reforms and policies to drive industrial strategies towards more efficient and cost-competitive solutions. This has led to a surge in the implementation of digital substation projects despite challenges such as budget constraints and disruptions in the supply chain due to factors like social distancing measures.

In addition, the market is witnessing a shift towards smart energy infrastructure and rapid digitalization, incorporating technological advancements and communication technologies for improved feedback capabilities and timely failure corrections in substation units. Key players and technology providers are focusing on enhancing electrical transactions and supply-demand management, especially in load centers and the transmission application market. Moreover, initiatives aimed at modernizing energy grid infrastructure and enhancing service quality are driving business growth and fostering innovation in the industry. The Smart Grid concept and the utilization of the LV distribution network are contributing to resilience and future energy distribution. Additionally, advancements in Renewable energy projects and Battery technology are shaping the industrial development and digitization of transmission systems as per International Electro-technical Commission (IEC) standards.

Market Scope
Report Coverage	Details
Page number	159
Base year	2022
Historic period	2017-2021
Forecast period	2023-2027
Growth momentum & CAGR	Accelerate at a CAGR of 7%
Market growth 2023-2027	USD 2.92 billion
Market structure	Fragmented
YoY growth 2022-2023(%)	6.62
Regional analysis	APAC, North America, Europe, South America, and Middle East and Africa
Performing market contribution	APAC at 34%
Key countries	US, China, Japan, UK, and Germany
Competitive landscape	Leading companies, Market Positioning of companies, Competitive Strategies, and Industry Risks
Key companies profiled	ABB, Cadillac Automation and Controls, Cisco Systems Inc., Eaton Corp. Plc, Efacec, Emerson Electric Co., General Electric Co., Honeywell International Inc., iGrid T and D, Larsen and Toubro Ltd., Locamation, Netcontrol Group, NovaTech LLC, NR Electric Co. Ltd., Open Systems International Inc., Schneider Electric SE, Siemens AG, Tekvel, Tesco Automation Inc., and Texas Instruments Inc.
Market dynamics	Parent market analysis, Market forecasting, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period.
Customization purview	If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized.

Request PDF sample

What are the Key Data Covered in this Market Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the growth of the market between 2023 and 2027
• Precise estimation of the size of the market size and its contribution to the parent market
• Accurate predictions about upcoming trends and changes in consumer behavior
• Growth of the market industry across APAC, North America, Europe, South America, and Middle East and Africa
• Thorough market growth and forecasting analysis of the market’s competitive landscape and detailed information about companies
• Comprehensive market research report analysis of factors that will challenge the growth of market companies

We can help! Our analysts can customize this report to meet your requirements. Get in touch