Palo Alto, CA, Nov. 1, 2005 — Power circuit breaker manufacturers in the high-voltage segment will soon have new rivals in the marketplace. Companies in the U.S. and around the world have taken note of the American electrical transmission system and the high cost to modernize it. As a result, new utilities from Asia and the U.S. intend to build presence in North America with the expectation that abundant opportunities are just around the corner, says new analysis from Frost & Sullivan.
The new analysis reveals that revenue in this market totaled $671.0 million in 2004 and expects to reach $926.1 million in 2011.
“Utilities are increasingly upgrading to mitigate outage risk that has been posed in the aftermath of the series of blackouts,” explains Frost & Sullivan strategic analyst Roberto Torres. “The upgrade projects typically involve the replacement of oil or air blast circuit breakers with sulfur hexafluoride (SF6) breakers because they are a significant improvement over the former, which constitutes much of the installed base in the utility sector.”
The North American circuit breaker market can be divided into two types of circuits – medium voltage (MV) power circuit breakers and high voltage (HV) power circuit breakers. In 2002 and 2003, the MV segment experienced two successive years of contraction, but in 2004, the segment indicated a 3 percent revenue growth over the previous year due to the country’s economic recovery.
The HV power circuit breaker segment is considered mature and capital intensive with only a handful of companies participating in it successfully, says the new analysis. This, however, is expected to improve in response to Government regulations dictating the use of specific circuit breakers in certain sub-segments, replacements due to ageing circuit breakers, and increased reliability of HV circuit breakers.
The analysis went on to claim the increased sales experienced in the circuit breakers market in 2004 indicate a rebounding of the economy rather than a structural shift toward greater demand. Sales were widely spread across much of the manufacturing sector, the steel, mining, and oil refining industries.
Nonetheless, the analysis says, with the need to increase production and improve capital and operations and maintenance (O&M) budgets, manufacturers have been upgrading or expanding power equipment, buoying circuit breaker sales. The market will, however, have to confront problems posed by a hike in raw material prices and low end-user awareness.
“Due to the increased prices of raw materials, manufacturers are forced to decide between raising prices and losing deals, or maintaining prices and cutting their profit margins,” explains Torres. “Manufacturers must aim to maintain current circuit breaker prices through cost reduction measures such as product design modifications, enhanced credit programs for customers, and shifting production to factories in lower cost regions.”
Educating end-users is also a priority as the progress in circuit breaker technology is outstripping the rate of end-user adoption. Breaker manufacturers need to work with utilities and government bodies to develop incentives for the acceptance and implementation of nascent technologies.
Overall, the new analysis sees the future of the circuit breakers market bright due to increased demand. End users are upgrading power circuit breakers due to improving capital, expanded O&M budgets, or reliability concerns. Moreover, improved financial conditions and investor confidence is motivating the expansion of transmission and distribution infrastructure investment thus paving the way for a brakeless circuit breaker market.