The demand for medium voltage (MV) and high voltage (HV) switchgears in the GCC is at an all-time high due to the rapid expansion of the power, oil and gas infrastructure, and construction sectors, a report said.

Further investments over the next decade by several countries preparing for landmark events such as the 2022 Fifa world cup in Qatar and 2020 Expo in the UAE will ensure that the market maintains its upward growth trajectory, added the GCC Medium and High Voltage Switchgears Market analysis from Frost & Sullivan, a growth partnership company.

The report highlighted that the MV switchgears market earned revenues of $1.10 billion in 2014 and estimates this to reach $1.64 billion in 2020.

Revenues for the HV switchgears market stood at $1.81 billion in 2014 and are expected to reach $2.46 billion in 2020. Saudi Arabia contributes the largest share of revenue with 45 per cent, followed by the UAE and Qatar. Overall, the MV and HV switchgears market in this region is anticipated to grow at a compound annual growth rate of 5.8 per cent between 2014 and 2020.

“The interconnected power grid project is expected to be the backbone for the deployment of high-voltage grids in the GCC, drawing huge investments from countries in the region,” said Frost & Sullivan energy and environmental research consultant Mohammed Faraz Khan.

“With the first phase alone bringing in a capital of around $1.1 billion, this project will rejuvenate the MV and HV switchgears market in the region.”

Adoption in Oman and Bahrain is not likely to be as widespread as in Qatar and the UAE due to the lack of large-scale infrastructure plans by these governments. In addition, restrictions by the Organization of the Petroleum Exporting Countries (Opec) have led to a surplus of oil production in Saudi Arabia, and the ensuing cap on extraction creates a vacuum in the demand for switchgears.

Further, limited success in the exploration of commercially viable non-associated gas reserves, and unstable economic conditions that compel end users to defer or cancel projects will dampen the market pace slightly.

“MV and HV switchgear suppliers need to reconsider their pricing strategy against the backdrop of the recent fall in raw material prices,” said Khan. “Emphasis on best practices to improve production efficiencies and achieve economies of scale will be critical to overcome price challenges and reap significant profits in the GCC market.”- TradeArabia News Service