Data Center Transfer Switches and Switchgears Market Size, Share & Industry Analysis, By Type (Transfer Switch Type and Switchgear Type), By Application (Colocation Data Centers, Hyperscale Data Centers, Edge Data Centers, and Others), and Regional Forecast, 2024-2032

The global data center transfer switches and switchgears market size was valued at USD 3,208.6 million in 2023. The market is projected to grow from USD 3,504.2 million in 2024 to USD 7,447.4 million by 2032, exhibiting a CAGR of 9.9% during the forecast period.

Power outages caused by extreme weather events have increased significantly, with a 67% rise according to a Climate Central study. These occurrences highlight the need for reliable backup power systems to maintain continuous operation for mission-critical facilities, such as data centers, businesses, and homes, during such disruptions. Transfer switches are crucial in data centers, ensuring uninterrupted power to protect devices, such as critical servers and equipment from outages. A transfer switch transfers electrical loads between power sources, such as utility power and generators, during outages. It connects electrical loads to a backup source, typically a generator.

Similarly, a data center switchgear plays a vital role in safeguarding the infrastructure within data centers by facilitating an efficient and reliable distribution of electrical power to various components. This equipment typically includes electrical switchboards, circuit breakers, transformers, and other protective devices, all designed to control the electrical supply.

Moreover, transfer switches prevent generators from feeding electricity back into the grid, enhancing safety. For example, the National Electric Code mandates a permanent switching method to connect contingent power sources in facilities with a single generator. When paired with a connection panel, this practice ensures quick connections and minimizes downtime, offering reliable emergency power to businesses.

The COVID-19 pandemic significantly expanded the global market for data center transfer switches and switchgears. The national lockdowns and shift to remote work led to increased internet use, which put data centers at risk of frequent outages. As a result, governments and commercial entities ramped up their investments in new data centers.

Furthermore, the market is driven by the increasing need to control the electricity supply in data centers.

Data Center Transfer Switches and Switchgears Market Trends

Increasing Artificial Intelligence (AI) Workloads to Fuel Product Demand

AI workloads place significant demands on data center resources, including space, power, cooling, and data/power port connections. According to the International Energy Agency, in 2023, data centers consumed about 1% of the global electricity. By 2030, data centers are projected to reach an annual power consumption of 35 gigawatts, up from 17 gigawatts in 2022.

Moreover, data centers form the backbone of the AI ecosystem, and with the rapid growth of generative AI and Graphics Processing Units (GPUs), AI-related electricity consumption is expected to rise sharply, particularly within data centers. Industry experts predict that data centers may account for 25% of the U.S. power consumption by 2030, driven by increased demand for AI chatbots and AI training. Also, industry research analysts estimate that AI may contribute to an overall increase of 200 terawatt-hours per year in data center power usage between 2023 and 2030. By 2028, AI will represent around 19% of the total data center power demand.

To support and manage these substantial workloads, an uninterrupted power supply is essential. Data center transfer switches and switchgears are crucial in ensuring this continuous power supply. Additionally, power management strategies, such as high voltage power supply and Dynamic Voltage and Frequency Scaling (DVFS) can enhance the energy efficiency of data centers.

While AI requires vast amounts of energy, AI-driven data analytics can help move data centers closer to net-zero goals and play a pivotal role in addressing sustainability challenges. By leveraging AI-powered automation, data analytics, and machine learning, data centers can identify opportunities for efficiency improvements and decarbonization.

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Data Center Transfer Switches and Switchgears Market Growth Factors

Increasing Number of Data Centers to Drive Market Growth

Growing construction of new data centers due to the rising demand for data storage by organizations across the globe is driving the market growth. According to Edge Delta 2023 statistics, in December 2023, there were nearly 10,978 data centers globally and data storage has been rapidly increasing across the world, with 64.2 zettabytes of logged data recorded in 2020. This amount of data will reach 180 zettabytes by 2025.

The rapid growth in data volumes can be attributed to the rising number of edge devices and loT sensors. The increasing demand for storage owing to the COVID-19 pandemic, which prompted more people to work remotely, is also a factor contributing to the high sales of data center transfer switches and switchgears.

Uninterrupted power is essential for data centers to meet the demands of today's ever-increasing connected world as downtime can be extremely costly. The average cost of downtime can exceed USD 7,500 per minute, according to a study carried out on 67 data centers (average area of 232 sq.m).

Moreover, data centers are often owned either by large companies, such as banks, cloud vendors, telcos, or by co-location companies. They are big energy consumers, and a hyper scaler's data center can use as much power as 80,000 households. This high energy consumption has increased the pressure on sustainability, with regulators and governments imposing stricter sustainability standards on new data centers, contributing to the demand for data center transfer switches and switchgears.

RESTRAINING FACTORS

Strict Adherence to Safety & Compliance Regulations to Create Challenges in Market Growth

The substantial upfront cost of advanced switchgear technologies, coupled with the challenges of integrating diverse power systems within data centers, will slow the data center transfer switches and switchgears market growth.

Additionally, regulatory factors, such as the need to adhere to safety standards and comply with regulations governing the installation and operation of transfer switches and switchgears in data centers, can further restrain the market expansion.

Data Center Transfer Switches and Switchgears Market Segmentation Analysis

By Type Analysis

Rising Need for Continuous or Near-Continuous Uptime Drives Demand for Transfer Switches

Based on type, the market is divided into transfer switches and switchgears.

The transfer switch segment holds the largest global data center transfer switches and switchgears market share. Transfer switches enable the transition of electrical loads between normal and emergency power sources with either open or closed options. They facilitate critical load connections between primary and backup power sources. Data centers, which require continuous or near-continuous uptime, typically rely on an emergency power source, such as a generator or backup utility feed when the primary power source becomes unavailable. The introduction of Automatic Transfer Switches (ATS) has significantly improved power efficiency in data centers as ATS units automatically and almost instantaneously switch the load circuit to a secondary power source.

The switchgear segment is expected to experience the highest CAGR during the forecast period. This segment’s growth is driven by the increasing demand for reliable and high-performance electrical systems to support the data center operations of modern AI applications. A low-voltage switchgear handles up to 1,000 volts of electric power, containing components, such as bus, breaker, and cable compartments to aid in energy delivery to a data center. A medium-voltage switchgear operates at 1,000 to 69,000 volts and includes types, such as metal-clad switchgear, gas-insulated switchgear, metal-enclosed switchgear, vault/subsurface switchgear, pad-mounted switchgear, and arc-resistant switchgear, depending on the specific energy delivery needs of the data center.

By Application Analysis

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Rising Volumes of Structured and Unstructured Data Boosts Development of Colocation Data Centers

By application, the market is categorized into colocation data centers, hyperscale data centers, edge data centers, and others.

The colocation data centers segment dominates the global market, driven by the rapid growth of structured and unstructured data, along with increasing demand for cloud computing. The high capital expenditure associated with owning and maintaining large-scale computing facilities is expected to further boost the development of colocation data centers. To support these needs, a continuous power supply is essential, which, in turn, will drive the global demand for data center transfer switches and switchgears.

The hyperscale data centers segment is projected to record the highest CAGR due to various factors. According to Data Center Dynamics, the number of operational hyperscale facilities worldwide grew to 992 by the end of 2023, with an additional 120 to 130 hyperscale data centers expected to come online each year over the next decade. The enormous computing power required for hyperscale data centers demands a vast amount of electricity. Data center transfer switches and switchgears play a crucial role in meeting all the electrical needs of power and networking equipment in these facilities.

REGIONAL INSIGHTS

The global market scope is classified into five regions: North America, Europe, Asia Pacific, the Middle East & Africa, and South America.

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North America leads the global market share. Data center operators in this region are increasingly investing in renewable energy sources and energy-efficient practices to control their power consumption. In March 2024, Digital Realty announced a USD 7 billion joint venture with Blackstone to develop hyperscale data centers in Frankfurt, Paris, and Northern Virginia. As business, commerce, and personal smart device usage continues to grow, data centers will need more storage and computing capacity. Also, research industry experts predict that by 2025, over 50 billion Internet of Things (IoT) devices will be connected.

Meanwhile, Asia Pacific is experiencing the highest CAGR in the market. According to Baxtel Analysis, in 2023, Asia Pacific hosted 799 data center facilities with a total area of 38,498,087 square feet and 7,031 megawatts of power capacity. The growing demand for edge data centers in the region is driven by the rapid deployment of 5G technology. Such increasing data traffic, data center construction, and server installations are driving the demand for power solutions across the region, thereby fueling the adoption of data center transfer switches and switchgears.

In Europe, the market is set for steady growth, supported by several factors. The rise in data centers across the region is increasing the demand for electricity, leading to the emergence of a new electricity-intensive industry. Post-pandemic, Europe has witnessed strong growth in efficient power infrastructure spending, with older, outdated data centers being upgraded to modern facilities. The European Union projects that by 2030, data centers in Europe will account for 3.2% of the EU's electricity demand.

The markets in the Middle East & Africa and South America are still in the emerging stages but show significant potential. The Middle East & Africa, in particular, are experiencing rapid changes in the data center landscape. The region is gaining importance for global data center operators due to its strategic location, favorable government policies, and growing demand for 5G networks, cloud computing, and other digital services.

KEY INDUSTRY PLAYERS

Strategic Partnerships and Collaborations to Boost Market Presence of Key Players

The key players operating in the global market are entering strategic partnerships and collaborating with other significant market leaders to expand their portfolio of data center transfer switches and switchgears and provide enhanced solutions to fulfill their customers’ application requirements. Also, through collaborations, the companies are gaining expertise and expanding their business by reaching a mass customer base.

List of Top Data Center Transfer Switches and Switchgears Companies:

• ASCO Power Technologies (U.S.)


• Cummins Inc. (U.S.)


• ABB (Switzerland)


• Caterpillar (U.S.)


• Eaton (Ireland)


• Vertiv Group Corp. (U.S.)


• Siemens (Germany)


• Legrand (France)


• Delta Power Solutions (India)


• Socomec (France)

KEY INDUSTRY DEVELOPMENTS:

• May 2024: Siemens secured a comprehensive agreement with Norway's national power grid operator, Statnett, to enhance sustainable and future-proof power distribution across the country. The six-year agreement focuses on upgrading Norway's power grid with Siemens' eco-friendly circuit breakers and switchgear technologies, which use clean air and vacuum insulation instead of the harmful SF6 gas.


• March 2024: Caterpillar became a member of the Africa Data Centres Association (ADCA) to strengthen its commitment to supporting the data center industry across Africa. Through this collaboration, Caterpillar aims to enhance its presence in the region and contribute to the growth and sustainability of Africa's data center infrastructure.


• January 2024: Legrand acquired ZPE Systems, a provider of data center and edge management infrastructure, to expand its capabilities in these markets. This acquisition aims to enhance Legrand's offerings and drive growth in the data center sector. Legrand’s Data, Power, and Control (DPC) Division will now consist of ZPE Systems.


• October 2023: Nature's Generator introduced the non-automatic transfer switch (12-circuit) for the Nature's Generator Powerhouse. This manual transfer switch kit features 12 circuits, 120V/240V, and 30 Amps, and is designed for indoor installation.


• May 2023: Schneider Electric unveiled its low-voltage switchboard, FlexSet. This advanced solution provides a streamlined, modular service model for installation, sourcing, switchboard design, and maintenance. It aims to help electrical professionals mitigate project risks while boosting construction efficiency.

REPORT COVERAGE

The report provides a competitive landscape of the market and focuses on key aspects, such as market players, product/service types, and leading applications of the product. Besides, it offers insights into the market trends and highlights key industry developments. In addition to the factors mentioned above, the market report encompasses several factors that have contributed to the growth of the market in recent years.

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