Power Factor Correction Market by Reactive Power (0-200 KVAR, 200-500 KVAR, 500 – 1500 KVAR, Above 1500 KVAR), Type (Fixed, Automatic), Sales Channel (Distributors, OEM Direct), Application, & Region - Global Forecast to 2030
[238 Pages Report] The power factor correction market is projected to reach USD 3.3 billion by 2030 from USD 2.4 billion in 2024, at a CAGR of 5.5%. The demand for power factor correction systems is increasing due to the surging need for energy-efficient products, rising focus on reduction in energy bills, and strict environmental regulations and policies. While industries and commercial establishments are seeking new means of optimizing their energy usage and reducing electricity costs, correcting the power factor is a crucial aspect for minimizing the loss of power and enhancing the overall quality of power. Nowadays, various industries deploy power factor correction solutions since these solutions allow them to lower electricity bills, reduce downtime, and also enhance equipment efficiency. Power factor correction systems also reduce stress on electrical equipment, which enhances equipment life and helps reduce maintenance costs.
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Power Factor Correction Market Dynamics
Driver: Increasing investments in clear energy projects
Global investments in energy transition technologies, including energy-efficiency products, are significantly driving the global power factor correction market. According to the International Renewable Energy Agency, global investment in energy transition technologies reached a record high of USD 1.3 trillion in 2022. These accelerated investments have been facilitated by the rising focus on using renewable energy sources and increasing awareness regarding the benefits offered by power factor correction systems.
Governments worldwide promote energy efficiency through stringent regulatory policies and initiatives, further fueling the demand for power factor correction systems. Companies from different industries are keen on deploying energy-efficient products and reducing power consumption and electricity bills. Power factor correction (PFC) systems are used globally by different sectors, including oil & gas, mining, and aerospace. Similarly, the increasing use of renewable energy sources is creating the need for power factor correction systems.
Restraints: High initial installation cost of PFC systems
Although PFC systems have numerous benefits with their reduced energy bills and efficiency of energy, overall high upfront cost of the system is hindering the deployment of PFC systems for many facilities. The PFC systems comprise of highly expensive components such as high-capacity capacitors and filtering inductors at low frequency. In addition to this, highly complex designing and engineering required to customize the PFC systems according to specific industrial applications would also drive up the costs. Therefore, industrial facilities carefully assess their power factor correction needs to mitigate the high initial costs and explore cost-effective alternatives such as active power factor correction systems that represents a similar functionality at a much-reduced initial cost also pose a threat to the market.
Opportunity: Government incentives and regulations promoting energy-saving technologies
Power factor correction is pivotal to improving energy efficiency and cutting electricity costs. A low power factor may lead to higher energy bills, add strain to electrical systems, and reduce equipment lifespan. Therefore, governments have introduced initiatives to encourage power factor correction and assist businesses in advocating sustainable energy practices.
Several energy-saving programs, such as the NSW Energy Savings Scheme (ESS), provide financial incentives for companies to invest in power factor correction projects. Through the ESS, organizations can earn energy-saving certificates (ESCs) based on the energy savings achieved by implementing PFC systems. These certificates can be traded, resulting in a financial return on investment in PFC systems.
Additionally, regulatory measures have been put in place to ensure adherence to power factor standards. Some utilities impose penalties on businesses with low power factors, incentivizing them to improve efficiency. Furthermore, building codes and energy efficiency standards may require a minimum power factor for new constructions or renovations, further promoting the use of PFC systems. For example, the US Department of Energy's voluntary Energy Star guidelines recommend computing equipment to maintain a power factor of at least 0.9 at full load.
Governments often invest in educational campaigns and programs to raise awareness of the benefits of power factor correction. By informing businesses about these advantages and the resources available to support its implementation, these initiatives encourage widespread adoption and facilitate the transition toward a more energy-efficient economy.
Challenges: Complexities associated with integrating PFC systems into existing infrastructure
Integrating PFC systems with existing infrastructure can be challenging due to several technical reasons. PFC systems might use data formats different from those of existing systems. This can lead to difficulties in interpreting and exchanging information, requiring data conversion or mapping processes that can be error-prone and slow. Existing systems might use specific protocols that the PFC system does not understand, creating a communication barrier. This can hinder real-time data exchange and potentially cause delays in critical financial processes.
Integration challenges arise if the PFC system adheres to different security standards from those of the existing infrastructure, making it challenging to ensure consistent security across the entire system. This could potentially create vulnerabilities for unauthorized access or data breaches. Diagnosing and resolving issues becomes more complex when dealing with interconnected systems. IT teams may need to troubleshoot problems across the existing infrastructure and the new PFC system, extending resolution times and increasing resource demands. Maintaining the PFC system might require specialized knowledge or skills beyond the expertise of existing IT staff, necessitating additional training or hiring new personnel, thereby increasing the overall maintenance burden.
Similarly, dependency on the PFC system vendors for ongoing maintenance and support might increase, introducing vendor lock-in and potentially inflating maintenance costs over time. Merging data from disparate systems can be another challenge, making data consistency and accuracy critical to avoiding errors and maintaining reliable financial operations. Integrating new systems raises security considerations, and network vulnerabilities might be introduced if proper security protocols are not implemented during integration.
Power Factor Correction Market Ecosystem
Notable players in this industry comprise long-standing, financially robust manufacturers of power factor correction systems and related components. These companies have a significant track record in the market, offering a wide range of products, employing cutting-edge technologies, and maintaining robust global sales and marketing networks. Prominent companies in this market include Eaton (Ireland), ABB (Switzerland), GE Vernova (US), Schneider Electric (France), and Hitachi Energy Ltd (Switzerland).
500–1,500 kVAr segment to account for third-largest share of power factor correction market by reactive power during forecast period.
The 500–1,500 kVAr segment is expected to account for the third-largest share of the power factor correction market, based on reactive power, during three forecast period. Power factor systems under this category find applications across large industrial and commercial spaces with substantial electric loads. Power factor correction systems ranging from 500 to 1,500 kVAr will efficiently meet operational requirements for managing reactive power, leading to efficacy and lower energy costs. The improved power quality also benefits industries, such as manufacturing, heavy machinery, and larger commercial complexes, through reduced electrical losses, encouraging growth and making this sector more relevant in the market.
Data centers to hold third-largest share of power factor correction market, by application, during forecast period.
Data centers, as an application segment, are expected to hold the third-largest position in the power factor correction market during the forecast period due to the increasing demand for reliable and efficient power management in these facilities. With the rapid growth of cloud computing, big data, and digital services, data centers are experiencing a surge in power consumption. Power factor correction solutions are essential in these environments to optimize energy usage, reduce operational costs, and prevent power inefficiencies that could lead to downtime or equipment damage. This critical need for energy efficiency and reliability boosts the demand for power factor correction solutions in data centers.
North America to be fastest-growing market from 2024 to 2030.
North America is expected to be the fastest-growing market during the forecast period. Grid reliability and efficiency concerns are rising in this region, thereby promoting investments in the modernization of energy infrastructure. Additionally, the need to comply with stringent regulations and policies on energy conservation and reducing carbon footprints is increasingly forcing industries to adopt PFC solutions. Moreover, the increased integration of renewable energy sources further supports the adoption of PFC technologies in North America.
Key Market Players
The power factor correction market is dominated by a few major players that have a wide regional presence. The major players in the Power factor correction market are GE Vernova(US), ABB (Switzerland), Schneider Electric (France), Eaton (Ireland) and Hitachi Energy Ltd. (Switzerland). Between 2019 and 2024, Strategies such as product launches, contracts, agreements, partnerships, collaborations, alliances, acquisitions, and expansions are followed by these companies to capture a larger share of the Power factor correction market.
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This research report categorizes the power factor correction market by reactive power, type, sales channel, application and region.
On the basis of reactive power, the power factor correction market has been segmented as follows:
- 0-200 KVAR
- 200-500 KVAR
- 500-1500 KVAR
- Above 1500 KVAR
On the basis of type, the market has been segmented as follows:
- Automatic
- Fixed
On the basis of sales channel, the market has been segmented as follows:
- Distributors
- OEM Direct
On the basis of application, the market has been segmented as follows:
-
Industrial
- Mining
- Oil & Gas
- Metals & Minerals
- Automotive
- Other Manufacturing Plants
-
Renewables
- Solar
- Wind
- BESS
- Others
- Commercial
- Datacenters
- EV Charging
On the basis of region, the market has been segmented as follows:
- Asia Pacific
- Europe
- North America
- Middle East & Africa
- South America
Recent Developments
- In May 2024, GE Vernova collaborates with TECO to enhance Taiwan's power grid by deploying advanced STATCOM technology. This technology plays a crucial role in maintaining the stability of the grid, particularly when integrating higher amounts of renewable energy sources such as solar and wind power. Renewable energy sources produce power intermittently, which can lead to voltage fluctuations and disrupt power supply. The STATCOM system, a type of Flexible AC Transmission System (FACTS), regulates voltage and reactive power to ensure the grid's sustained reliability and efficiency.
- In March 2024, Schneider Electric announced a significant investment of USD 140 million in 2024 to expand its US-based manufacturing base, focusing on supporting critical infrastructure, industries, and data center demand. This investment includes transforming and equipping an existing building in Mt. Juliet, Tennessee, and upgrading the Smyrna, Tennessee manufacturing operations to produce custom electrical switchgear and medium-voltage power distribution products. These upgrades will enable the company to better meet the growing demand for power factor correction (PFC) solutions, which are critical for ensuring efficient and reliable power distribution in data centers and other applications where high-power computing and artificial intelligence are prevalent.
- In August 2023, Eaton invested over USD 500 million to increase the manufacturing of electrical solutions and meet the surging demand for these solutions from North American industries. This substantial investment aims to expedite the energy transition and digitalization in utilities, commercial, healthcare, industrial, and residential sectors. This strategic initiative is also projected to significantly influence the power factor correction market, especially in North America. Eaton's improved manufacturing capabilities will play a key role in meeting the growing demand for efficient power factor correction systems in the region.
Frequently Asked Questions (FAQ):
What is the current size of the power factor correction market?
The current market size of global power factor correction market is USD 2.4 billion in 2024.
What is the major drivers for power factor correction market?
The global power factor correction is driven by Increasing investments in energy infrastructure development.
Which is the largest growing region during the forecasted period in power factor correction market?
Asia Pacific is a largest market the global region emerged as a notably expanding market for power factor correction market.
Which is the largest segment, by type during the forecasted period in power factor correction market?
Automatic dominate the power factor correction market by type segment due to increasing global adoption of automatic power factor correction across industrial and commercial sector.
Which is the largest segment, by sales channel during the forecasted period in power factor correction market?
Distributors is the largest segment of the power factor correction market since distributors have a wide range of networks and offers cost-effective solutions to end users. .
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The study involved major activities in estimating the current size of the power factor correction market. Exhaustive secondary research was done to collect information on the peer and parent markets. The next step was to validate these findings, assumptions, and sizing with industry experts across the value chain through primary research. Both top-down and bottom-up approaches were employed to estimate the complete market size. Thereafter, market breakdown and data triangulation were used to estimate the market size of the segments and subsegments.
Secondary Research
This research study on the power factor correction market involved the use of extensive secondary sources, directories, and databases, such as Hoovers, Bloomberg, Businessweek, Factiva, International Energy Agency, and United States Energy Association, to identify and collect information useful for a technical, market-oriented, and commercial study of the global power factor correction market. The secondary sources referred to for this research study included annual reports, press releases, investor presentations of companies, white papers, certified publications, articles from recognized authors, and various companies and association databases. Secondary research was conducted to obtain key information about the industry’s supply chain, the market’s monetary chain, the total pool of key players, market classification and segmentation according to industry trends to the bottom-most level, country-level markets, and key developments from the market- and technology-oriented perspectives.
Primary Research
The power factor correction market comprises several stakeholders such as power factor correction manufacturers, suppliers and distributors of power factor correction in the supply chain. The demand side of this market is characterized by the adoption of power factor correction across various end use industries. The supply side is characterized by products offered by various power factor correction manufacturers and mergers & acquisitions among big players. Various primary sources from both the supply and demand sides of the market were interviewed to obtain qualitative and quantitative information.
Following is the breakdown of primary respondents:
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Market Size Estimation
Both top-down and bottom-up approaches were used to estimate and validate the total size of the power factor correction market. These methods were also used extensively to estimate the size of various subsegments in the market. The research methodology used to estimate the market size includes the following:
- The key players in the industry and market have been identified through extensive secondary research, and their market share in the respective regions has been determined through both secondary and primary research.
- The industry’s supply chain and market size, in terms of value, have been determined through primary and secondary research processes.
- All percentage shares, splits, and breakdowns have been determined using secondary sources and verified through primaries.
Global Power factor correction Market Size: Top-down Approach
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Global Power factor correction Market Size: Bottom-Up Approach
Data Triangulation
After arriving at the overall market size from the estimation process explained above, the total market has been split into several segments and subsegments. The complete market engineering process is done to arrive at the exact statistics for all the segments and subsegments, also data triangulation and market breakdown processes have been employed, wherever applicable. The data has been triangulated by examining various factors and trends from both the demand- and supply sides. Along with this, the market has been validated through both the top-down and bottom-up approaches.
Market Definition
The power factor correction refers to the utilization of capacitor banks that are designed to improve the efficiency of an electrical power system by compensating for the lagging power factor caused by inductive loads such as motors, transformers, and other inductive devices. Capacitor banks are strategically installed to supply reactive power (KVARs) to the system, which reduces the amount of reactive power that needs to be supplied by the utility, thereby improving the power factor.
Key Stakeholders
- Suppliers of raw materials
- Technology investors
- Manufacturers of wide variety of power factor correction systems
- Integrator and service provider of power factor correction systems
- Component providers
- System integrators
- Consulting service providers
- Distributors, resellers, and traders
- Organizations, forums, alliances, and associations
- State and national regulatory authorities
- Venture capital firms
- Financial organizations
- Healthcare organizations
- Research Institutes and organizations
- Energy associations
- Environment associations
- Energy efficiency consultants
- State and national regulatory authorities
Objectives of the Study
- To describe and forecast the power factor correction market in terms of value and volume based on reactive power, type, sales channel, application, and region
- To provide detailed information about the key factors such as drivers, restraints, opportunities, and challenges influencing the growth of the power factor correction market
- To strategically analyze the subsegments with respect to individual growth trends, prospects, and contributions of each segment to the overall market size
- To forecast the market size for five key regions: North America, Europe, Asia Pacific, Middle East & Africa, and South America, along with their key countries
- To strategically analyze micromarkets1 with respect to individual growth trends, prospects, and contributions to the total market
- To study the complete supply chain and allied industry segments and perform a supply chain analysis of the power factor correction market’ landscape
- To study market trends, patent analysis, trade analysis, tariff and regulatory landscape, Porter’s five forces analysis, ecosystem mapping, technologies, investment and funding scenario, key stakeholders & buying criteria, case studies pertaining to off power factor correction market
- To analyze the opportunities for various stakeholders by identifying the high-growth segments of the power factor correction market
- To profile the key players and comprehensively analyze their market positions in terms of ranking and core competencies2, along with detailing the competitive landscape for the market leaders
- To analyze competitive developments, such as contracts, collaborations, expansions, product launches, investments, and acquisitions, in the power factor correction market
Available Customizations:
With the given market data, MarketsandMarkets offers customizations as per the client’s specific needs. The following customization options are available for this report:
Geographic Analysis
- Further breakdown of region or country-specific analysis
Company Information
- Detailed analyses and profiling of additional market players (up to 5)
Growth opportunities and latent adjacency in Power Factor Correction Market