Volt/VAR Management Market Size, Share & Industry Analysis, By Component (Hardware and Software & Services), By Application (Distribution, Transmission, and Generation), and Regional Forecasts, 2024-2032

The global Volt/VAR management market size was valued at USD 662.16 million in 2023. The market is projected to grow from USD 710.43 million in 2024 to USD 1,143.23 million by 2032, exhibiting a CAGR of 6.13% during the forecast period.

Volt/VAR management is a technique used to regulate & control voltage levels and reactive power to optimize grid performance. This approach helps lower energy consumption, decrease peak demand, reduce energy losses, and enhance the performance of the power infrastructure. By utilizing voltage control equipment, such as tap changers, voltage regulators, and shunt capacitors, at substations and along circuits, the voltage drop from the substation to the end users can be minimized. This ensures that service voltage stays within acceptable limits for consumers.

The outbreak of the COVID-19 pandemic negatively impacted the Volt/VAR management market due to the temporary halt in the expansion of electric utility projects and manufacturing industries. The implementation of stringent government regulations such as lockdowns and supply chain restrictions urged the factories and industrial sectors to limit their production processes. The requirement for electricity in these sectors diminished further, negatively impacting the market’s growth.

Volt/VAR Management Market Trends

Grid Modernizations to Drive Volt/VAR Management Market Growth

The growing efforts by the government to set up smart grids or modernize the power grids with advanced technologies for limiting energy wastage and promoting renewable energy integration are playing a key role in the global Volt/VAR management market growth. For instance, in May 2024, twenty-one U.S. states joined the Federal-State Modern Grid Deployment initiative to upgrade the U.S. energy grid. The program brings together states, federal agencies, and power sector stakeholders to modernize the grid, preparing it for future challenges and opportunities. As grids are upgraded with advanced technologies such as smart meters, sensors, and real-time monitoring systems, Volt/VAR management is becoming a necessity for optimizing their performance. Modern grids incorporate sophisticated communication networks such as load tap changers, capacitor banks, and distribution automation that enable precise voltage regulation and reactive power management. In addition, the adoption of Volt/VAR management leads to effective management of power fluctuations, real-time monitoring, ensuring stable voltage levels, and reducing the risk of outages. Furthermore, modern grids are designed to handle higher energy loads and complex power flows, making it essential for Volt/VAR management to provide real-time insights and automated responses to maintain grid stability and efficiency.

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Volt/VAR Management Market Growth Factors

Rising Energy Demand Globally to Positively Impact Market Growth

The increasing energy demand across the globe has led to the expansion in the power grid infrastructures, substations, transmission lines, and others, which is positively impacting the development of the Volt/VAR management market. According to the International Energy Agency, the demand for energy increased by 2.3% in 2023.  In addition, the growth in energy demand is attributed to the surging global population, industrialization, and urbanization. The rise in energy consumption is leading to an increase in energy generation. It causes higher stress to the distribution networks, making it crucial to manage voltage levels and reactive power effectively to maintain grid reliability and efficiency. Volt/VAR management results as an optimum solution for managing voltage and reactive power flows, thereby reducing losses and preventing overloads of transformers and other grid components. They also support infrastructure upgrades by maximizing the use of existing assets while new developments are underway. Therefore, the expansion in demand for energy in the coming years owing to the surging of the global economy will result in the Volt/VAR management market growth.

Rising Integration of Renewable Energy Sources in Electricity Production to Enhance Market Growth

The growing adoption of renewable energy sources, such as wind and solar power, significantly impacts voltage stability and introduces new challenges for power grid management. Unlike traditional power sources, which provide a steady and predictable flow of electricity, renewable sources are often intermittent and variable. This variability causes fluctuations in voltage levels across the grid as the power factor from renewable sources changes rapidly due to factors such as weather conditions, time of day, or season. In addition, the integration of renewable energy sources in power generation is growing at a very fast rate owing to the government's stringent initiatives, regulations, and growing investments.  According to the International Renewable Energy Agency (IRENA), the global renewable energy capacity reached a record 3,870 Gigawatts, with renewables making up 86% of new capacity. Thus, the adoption of Volt/VAR management is gaining traction among utility companies for catering to situations such as fluctuations and maintaining grid stability.

RESTRAINING FACTORS

Presence of Aging Infrastructure in Power System Hinders Market Growth

Many power grids rely on outdated equipment and systems that were not designed to handle the demands of modern voltage and reactive power management. Thus, the aging infrastructure cannot integrate advanced Volt/VAR technologies or respond effectively to the dynamic requirements of contemporary power systems.

Older infrastructure also needs help with issues such as limited capacity for real-time monitoring, inadequate control mechanisms, and insufficient adaptability to handle fluctuations caused by renewable energy sources. Upgrading these systems to support advanced Volt/VAR solutions becomes a costly and complex procedure. It involves replacing outdated equipment, ensuring compatibility with new technologies, and integrating them into existing grid operations. Hence, the presence of aging power grids, transmission lines, and distribution systems acts as a restraining factor for market expansion.

Volt/VAR Management Market Segmentation Analysis

By Component Analysis

Hardware Holds Dominating Share Owing to its Mandatory Installations

Based on component, the market is segmented into hardware and software & services. The hardware segment, which includes load tap changers, capacitor banks, voltage regulators, and other products, holds the major share in the market owing to their mandatory installations in the power grid and substations. Additionally, the cost of deploying hardware is also high compared to software, which results in a higher market share for hardware.

Software & services hold a considerable share in the market due to the development and penetration of advanced software. Additionally, the emphasis on digitalization and advanced analytics, coupled with the software's ability to provide data collection, analysis, and visualization to support the hardware's functioning and performances, leads to the segment's growth in the market.

By Application Analysis

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Distribution Accounts for Major Share of the Market Due to Large Requirement in Substations

Based on application, the market is divided into distribution, transmission, and generation. The distribution segment holds the dominating share as it includes the management of voltage and reactive power in local and regional networks that deliver electricity to end-users. In addition, as the integration of Distributed Energy Resources (DERs) such as solar panels and wind turbines increases, there is a growing need for effective VVM solutions in distribution networks to manage voltage fluctuations and maintain stability.

The transmission segment also holds a remarkable share of the market due to the Volt/VAR requirement for managing voltage and reactive power across high-voltage transmission lines that transport electricity from generation sources to distribution networks. Moreover, the demand for Volt/VAR management solutions in transmission networks is driven by the need to boost transmission capacity, improve voltage stability, and integrate large-scale renewable energy. Growth trends show increased investments in upgrading and expanding transmission infrastructure to handle higher energy flows and renewable energy integration.

REGIONAL INSIGHTS

Geographically, the market is studied across North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa.

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North America holds the dominant Volt/VAR management market share, driven by its advanced grid infrastructure, widespread adoption of smart grid technologies, and increasing renewable energy integration. The ongoing grid modernization in the U.S. and Canada, the growing need for voltage control due to high wind and solar energy use in California and Texas, and strict grid reliability standards enforced by organizations such as FERC are contributing to the region’s market growth.

Asia Pacific is witnessing the fastest growth for Volt/VAR management, owing to the major investments in grid infrastructure and increasing energy demand. Rapid industrialization and urbanization in countries such as China, India, and Japan are among the major factors attributing to the market growth in the region. The region's large-scale renewable energy projects, especially in China and India, require advanced voltage and reactive power control.

Europe also holds a considerable share of the market, owing to its renewable energy goals and focus on sustainability. The EU's commitment to decarbonization, coupled with the government's stringent initiatives in the regional countries, is supporting the market growth. With the rise of offshore wind and solar, utilities invest in Volt/VAR management to maintain grid stability. Additionally, strong investment in smart grid technology supports Volt/VAR management adoption across Europe.

Latin America's Volt/VAR management market is experiencing steady growth due to renewable energy adoption, grid upgrades, and efforts to improve energy efficiency and reduce power losses. In addition, the governments of Brazil, Chile, and other nations are implementing stringent regulations to increase the deployment of renewable energies further, leading to market growth.

The Middle East & Africa is expected to grow at a moderate rate in the coming years due to rising investments in renewable energy and grid infrastructure. The UAE and Saudi Arabia are driving demand for solar and wind projects. At the same time, African nations focus on grid expansion to meet energy demand and integrate renewables, boosting Volt/VAR adoption for improved grid reliability and reduced power losses.

KEY INDUSTRY PLAYERS

Leading Players such as GE Vernova, Hitachi Energy, Eaton, and Others are Introducing Long-duration Volt/VAR Management Systems

Hitachi Energy is one of the major players active in the Volt/VAR Management industry, catering to the oil and gas and offshore renewable energy sectors.

Hitachi Energy offers comprehensive Volt-VAR management solutions to optimize power grids, improving efficiency and sustainability. Their Volt-VAR Management Software (VVMS) optimizes circuit voltage and VAR flow, minimizes losses, and integrates with pole-mount capacitor banks. Volt-VAR optimization and control reduce energy losses, control voltage, and integrate distributed energy resources, boosting power quality and grid efficiency. The OPENVQ system combines grid data and external factors, such as weather, to forecast conditions and reduce transmission losses, enhancing grid reliability. Deployed in Thailand, OPENVQ helped cut over 200 tons of CO2 emissions by March 2023.

LIST OF TOP VOLT/VAR MANAGEMENT COMPANIES:

• GE Vernova (U.S.)


• ABB (Switzerland)


• Eaton (Ireland)


• Hitachi Energy (Japan)


• Schneider Electric (France)


• Siemens AG (Germany)


• S&C Electric Company (U.S.)


• Survalent Technology Corporation (Canada)


• Landis+Gyr (Switzerland)


• Beckwith Electric (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• January 2024: Manila Electric Co. (Meralco) installed a 115-kilovolt (kV) capacitor bank at its Duhat Substation in Bocaue Bulacan, Philippines, to enhance power quality for over 7 million customers. The project also included a 50-megavolt-ampere reactive (MVAR) circuit breaker. This installation improves voltage regulation, reduces system losses, boosts efficiency, and lowers the risk of power interruptions in Bocaue and nearby areas.


• November 2023: Hitachi Energy announced that it received an order to upgrade the Garabi High-Voltage Direct Current (HVDC) converter station for Taesa, one of Brazil's largest private electric energy transmission companies. The station can transmit up to 2,200 megawatts, making it one of the world's most powerful "back-to-back" HVDC systems.


• April 2023: GE Renewable Energy's Grid Solutions won five FACTS projects, demonstrating confidence in its technology for enhancing AC grid power transfer and control. Contracts include an FSC project for the Public Service Company of New Mexico and a STATCOM project for the Saudi Electricity Company.


• February 2023: The New Energy and Industrial Technology Development Organization (NEDO) and the Ministry of Energy of Thailand (MoEN) began a demonstration project aimed at reducing carbon emissions and improving power system operations. Hitachi, in collaboration with the Electricity Generating Authority of Thailand (EGAT), installed the OPENVQ system, which optimizes voltage and reactive power (Volt/VAR). The system was integrated with EGAT's SCADA system in northeastern Thailand for monitoring and controlling the power grid.


• June 2022: Hitachi Energy developed a compact tap-changer from its T-Sync platform, which EthosEnergy installed in a transformer for a major Polish energy producer. EthosEnergy, specializing in power generation equipment, produces transformers up to 500MVA and 400kV. Hitachi’s VUCLRN 380/1600 tap-changer was produced quickly, helping secure the contract with its package of bushings and tap-changers.

REPORT COVERAGE

The report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product 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 above, it encompasses several factors that contributed to the growth of the market in recent years.

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Report Scope & Segmentation