Power switching applications to spur growth in the low-voltage contactor market
Low-voltage (LV) AC & DC contactors can often be overlooked in terms of their significance in the total industrial automation product market. In fact, LV AC & DC contactors are essential to industrial systems yet receive relatively little industrial media coverage. The importance of these contactors is evident from their market size, which totaled $4.4 billion in 2013, according to a recent IHS report "The Global Market for Low-Voltage AC & DC Contactors and Overload Protection Devices."
The revenues of $4.4 billion included the general purpose AC, general purpose DC and definite purpose AC contactor markets, all rated under 1kV (1.5kV for DC contactors). Of these markets, the general purpose LV AC & DC markets accounted for the largest share with 96% of total revenues in 2013. The LV AC & DC contactor markets can be categorized into two industry segmentations: motor and power switching markets.
The contactor market
On a broad scope, the core applications for general purpose LV AC & DC contactors are in the motor markets; the contactors accounted for 53% of the total revenues of the combined motor markets in 2013, or $2.2 billion. Of these motor markets, Commercial HVACR and Food, Beverage & Tobacco accounted for the largest portions, at 36% and 13%, respectively. The performance of these two industries is dependent on key factors within each, which are discussed below.
The performance of the commercial HVACR industry sector is closely linked to construction; as construction has slowed in the United States, China, and the Eurozone, demand for commercial HVACR equipment has declined as well. However, while commercial HVACR sales have slowed, the addressable market for motor controls, including contactors, in this industry has expanded. In the past, control devices were installed in HVACR systems mostly in schools and universities, but now control components are being installed in big-box stores, data centers, semiconductor factories and other applications.
The commercial HVACR industry sector is the largest sector for contactors; consequently, fluctuations in commercial HVACR automation product sales have a large impact on the global contactors market. Over the forecast period, the commercial HVACR market for contactors is forecast to grow by a 6.8% compound annual growth rate (CAGR), which is higher than the global average of 6.6% CAGR for total the combined motor markets. The second-largest market for LV general purpose contactors is the Food, Beverage & Tobacco industry.
Within the Food, Beverage & Tobacco industry, traditionally strong ties to consumers continue to drive growth in the LV contactor market, as its products continue to experience stable or increasing demand from the general population and the growth of modular machine building. Modular machine building is a current trend in the machinery market that is providing growth opportunities for LV AC & DC contactors. In this context, modularity refers to a design technique in which a large machine responsible for multiple functions is built by combining smaller machinery subsystems, each responsible for a single task. When such a machine is designed modularly, each of the tasks are performed by an individual subsection of the machine that is capable of operating independently from a mechanical, electrical and software standpoint. Each of the modular sections can be viewed as a building block that when combined forms a complete machine, as long as there is a compatible interface between the sections.
In order to achieve a modular design, machine builders are using automation components that can be mounted directly onto each machine module. This decentralization of machinery control allows for additional installations of LV AC & DC contactors required for control, bypass or isolation of the electronic devices. Overall, the market for contactors within the machinery used in the Food, Beverage & Tobacco industry is forecast to grow by a 6.6% CAGR in terms for revenues from 2012 to 2018.
While the market for contactors in motor applications constitutes the largest share of the LV AC & DC market, IHS forecasts that the highest growth potential for applications within the market comes from non-motor applications within key power switching industries, such as photovoltaic (PV) inverter installations and electric vehicle (EV) charging stations. Within the general purpose contactor market, PV inverters accounted for the largest portion of the power switching market in 2013 with 31% of the revenues, followed by capacitor banks with 23% of revenues. From 2012 into 2018, PV inverters applications are forecast to grow the fastest with a 17% CAGR in terms of revenues, significantly higher than the power switching market forecast average with a 10% CAGR.
The projected growth of contactors in the PV inverter market stems from the expected growth of the solar energy market, wherein such growth will benefit the contactor market as contactors are a component of PV systems. In terms of capacitor banks, projected growth is also tied to the power switching market, namely the growth of the renewable energy markets and EV charging stations since they provide volt/VAR optimization for new energy sources such as wind and solar as well as power distribution used with EV charging stations. General purpose contactor use in EV charging station applications is forecast to grow significantly through 2018 with a global CAGR of 16% in terms of revenues. This projected growth is expected to be driven by increased sales of electric vehicles and investment in new commercial charging stations in the Americas, Asia Pacific and EMEA (Europe, Middle East and Africa).
In addition, a trend that is positively affecting the market for contactors is smart grids moving toward decentralizing power generation and enabling more parties to operate as electricity providers, creating more points of power switching and, therefore, contactor installations. Combined, these factors will create an impetus for LV AC & DC general purpose contactors in power switching applications. When compared to the overall contactor application market, including both motor and non-motor applications, power switching is forecast to outpace the market average by over 2%, with an 10% CAGR in terms of revenues from 2012 into 2018.
The LV AC & DC contactor market, including both general and definite purpose products, is projected to retain a significant portion of the industrial automation market as contactors are necessary components in automation systems and machinery. Both motor and power switching applications will play significant roles in the LV contactor market, but power switching applications are expected to be a main driver of growth and outpace contactor sales in the motor markets. Overall, the growth of the LV contactor market is projected to result in a market value of $6.5 billion by 2018.
Jared Kearby is an analyst with the industrial & medical technology group at IHS. Jared’s expertise includes integrated motors, medium voltage drives, medium voltage MCCs and soft starters. His most recent reports include coverage on the markets for wind converters and low voltage contactors. Jared also provides quarterly updates for the wind converters market through the Wind Converters Market Tracker service.
– Edited by Jessica DuBois-Maahs, associate content manager, CFE Media. See more Control Engineering energy and power stories.