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South and East Asia – driving growth in the Electrical Equipment Market
The global electrical equipment market was adversely impacted by the economic downturn, experiencing decline of almost 9% in 2009. It recovered strongly in 2010 and has since grown to exceed pre-recession levels.
The global electrical equipment market grew by 4.4% in 2011 to reach a value of $202.0 billion, representing a compound annual growth rate of 1.1% for the period spanning 2007-2011.
Growth in this market is being driven primarily by increased demand in the growth markets of South and East Asia. The region is home to more than 55 per cent of the world’s population, with a sizable portion of these people living in rural areas that currently have very limited access to electricity. This creates excellent growth opportunities. Furthermore, robust economic growth in developing Asian countries such as China and India, combined with rapid urbanization and growth in fixed investment spending (especially in electricity generation), is boosting demand for electric power equipment in the region.
Energy companies are increasingly seeing sustainability as a driver of their business planning and a global push to change the way electricity is generated is forcing big electrical equipment makers, such as General Electric, Alstom and Siemens, to rethink their strategies. These companies see environmental responsibility as desirable, providing advantages through reduced costs and an improved corporate image.
Incumbents have therefore invested significant capital in renewable energy generation and this has been seen in increased generation from such sources. For example, research conducted by the European Wind Energy Association (EWEA) estimates that 9,616 MW of new wind energy capacity was installed in the EU-27 in 2011. This new focus also presents opportunities for new entrants to the market. Power-equipment makers that can find a new niche to thrive in – whether gas, wind, or transmission – may fare better than those too reliant on carbon intensive energy sources, such as coal. With further emphasis on carbon efficiency and energy security, alternative energy generation is likely to continue to grow and will require investment in suitable generating infrastructure for the foreseeable future.