Capacitor Bank Market Expected to Reach $6.8 Billion by 2033

According to a new report published by Allied Market Research, titled, “Capacitor Bank Market," The capacitor bank market size was valued at $4.3 billion in 2023, and is estimated to reach $6.8 billion by 2033, growing at a CAGR of 4.8% from 2024 to 2033.

Introduction

A capacitor bank is a collection of multiple capacitors that are connected together in series or parallel configurations to store electrical energy. These banks are used to improve power factor, reduce transmission losses, and enhance the efficiency of electrical power systems. Capacitor banks are widely utilized in various industrial and commercial applications where electrical energy is needed to be stored and released as required. They serve as vital components in power distribution systems by improving the power factor, stabilizing voltage levels, and supporting electrical system efficiency.

In an electrical network, the concept of power factor correction (PFC) is central to capacitor bank industry. The power factor indicates the efficiency of the electrical system in utilizing the power supplied. A low power factor results in excessive reactive power, leading to inefficient energy use, increased losses, and higher operational costs. Capacitor banks are connected to the electrical network to compensate for this reactive power, thereby improving the power factor and ensuring better energy efficiency.

One of the primary applications of capacitor banks is in the power distribution industry. In power grids, capacitor banks are used to regulate voltage levels, reduce transmission losses, and improve the overall efficiency of the system. By compensating for reactive power, capacitor banks help maintain stable voltage levels across the network, thus ensuring that consumers receive reliable and efficient electricity.

Market Dynamics

Increase in renewable energy integration is expected to drive the growth of market. Integration of renewable energy sources, such as wind and solar power, into the power grid has become a central component of global efforts to transition toward cleaner, more sustainable energy systems. Capacitor banks are particularly effective in addressing the issues arising from renewable energy integration. Capacitor banks allow grid operators to better manage fluctuations in renewable energy generation, especially during periods of high wind or solar activity, when power output suddenly increase or decrease. As renewable energy continues to play a larger role in global electricity generation, the demand for reactive power compensation solutions like capacitor banks is expected to rise, further driving the growth of the capacitor bank market. In Australia, the Clean Energy Finance Corporation (CEFC) allocated over a third of its $1 billion Household Energy Upgrades Fund to promote energy-efficient home upgrades, including the installation of capacitor banks to support renewable energy integration in 2024. Moreover, Larsen & Toubro's Digital Energy Solutions expanded its presence in India, the Middle East, and North America, implementing advanced technologies for renewable energy integration. Its solutions include Hybrid Energy Management and Control Systems (HECS) designed to monitor, regulate, and control hybrid plants consisting of solar, wind, and energy storage, thereby enhancing grid stability.

The availability of alternative technologies is expected to hamper the growth of market in future. The increasing adoption of power electronics-based solutions, such as Static VAR Compensators (SVC) and Static Synchronous Compensators (STATCOMs), is providing more advanced and dynamic reactive power compensation compared to traditional capacitor banks. These technologies offer real-time voltage regulation, faster response times, and greater adaptability to fluctuating power demands, making them highly effective in modern grid systems. The integration of digital control systems and smart grid technologies further enhances the capabilities of SVCs and STATCOMs, making them a preferred choice for long-term energy management. As a result, the growing competition from these alternative technologies poses a challenge to the conventional capacitor bank market, driving the need for innovation and advanced control mechanisms in traditional power factor correction systems. POWERGRID has significantly strengthened the nation's transmission infrastructure through major projects. One key achievement is the successful installation of a ±300 MVAR STATCOM at the 400 kV Lucknow Sub-station, completed as part of the "Provision of STATCOM at Nalagarh & Lucknow in Northern Region" initiative. This project received approval from the Central Electricity Regulatory Commission (CERC) in November 2023.

Segments Overview

The capacitor bank market is segmented on the basis of voltage, type, installation, connection type, application, and region. Depending on voltage, the market is segmented into less than 1kV, 1kV to10 kV, 10 kV to 69 kV, and more than 69 kV. On the basis of type, the market is categorized into externally fused, internally fused, and fuseless. On the basis of installation, the market is divided into pole mounted, open air substation, metal enclosed substation, and other. Moreover, on the basis of connection type, the market is categorized into star connection and delta connection. On the basis of application, the market is divided into power factor correction, industrial, harmonic filter, and others. On the basis of region, the market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.

On the basis of voltage, the 10 kV to 69 kV segment was the fastest growing segment in the capacitor bank market forecast representing the CAGR of 5.1% during the forecast period. In distribution networks operating at 10 kV, 15 kV, 33 kV, and up to 69 kV, voltage drops can occur due to long-distance transmission and fluctuating load conditions. capacitor bank market trend maintain steady voltage levels, ensuring that customers receive consistent and reliable power. This is especially vital for industries with sensitive equipment, such as data centers, hospitals, and automation-driven manufacturing plants, where voltage variations can cause malfunctions, downtime, and financial losses. Capacitor banks also contribute to reducing transmission and distribution losses. When reactive power demand is high, current flow in conductors increases, leading to higher I²R losses (power dissipation due to resistance).

On the basis of type, internally fused is expected to be the fastest growing segment in the market with a CAGR of 5.0% during the forecast period. Capacitor banks are widely used in electrical power systems to improve power factor, reduce losses, and stabilize voltage levels. Maintenance efficiency is another significant advantage of internally fused capacitor banks. Since the internal fuses operate automatically without requiring manual intervention, the system continues to function even when individual capacitor elements fail. This feature significantly reduces downtime, as operators do not need to shut down the entire capacitor bank for minor faults.

On the basis of installation, metal enclosed substation is the fastest growing segment in the market. A metal-enclosed substation is a compact, factory-assembled substation where all major components, including switchgear, transformers, and capacitor banks, are enclosed within a metal housing. These substations are widely used in industrial, commercial, and utility applications due to their space-saving design, enhanced safety, and reduced maintenance requirements. Within these substations, capacitor banks are primarily installed to provide reactive power compensation, voltage regulation, and power factor correction, which are essential for the optimal functioning of electrical networks.

Regional Analysis

Region wise, Asia-Pacific was the fastest growing segment in the capacitor bank market growth in 2023. Capacitor banks play a crucial role in improving the efficiency and stability of electrical systems across various industries in the Asia-Pacific (APAC) region. The region, with its rapidly growing economy, high industrial output, and extensive infrastructure development, has witnessed an increasing demand for reliable and efficient power systems. Capacitor banks are increasingly used in these systems to improve the voltage stability and efficiency of the power being generated. For example, in countries such as India, Australia, and Japan, solar farms are utilizing capacitor banks to maintain a stable voltage output as the generation fluctuates with weather conditions. Similarly, in wind power installations, capacitor banks are used to improve the power factor and ensure smooth integration of the generated power into the grid.

Competitive Analysis

The key players in the capacitor bank market analysis across Circutor, Toshiba Corporation (Toshiba), Vishay Intertechnology Inc., Siemens, Enerlux Power s.r.l., Comar Condensatori S.p.A, Hitachi Ltd. (Hitachi), ABB Ltd., Eaton, and EPCOS. All these companies are expected to offer capacitor bank market opportunities in future timeline.

In February 2024, Powerside launched the Pole-MVar, a compact pole-mounted tuned-filter capacitor bank designed to address harmonic distortion. In 2023, Kyocera AVX introduced high-capacity supercapacitor banks with low leakage and compliance with UL 810A standards.

Key Market Insights

• In 2023, the 10 KV to 69 KV segment accounted for more than one third of the share in the global capacitor bank market and is expected to maintain its dominance during the forecast period.
• In 2023, the industrial segment accounted for more than one fourth of the capacitor bank market share in the year 2023 and is anticipated to grow at a rate of 5.1% in terms of revenue, increasing its share in the global capacitor bank market.
• The star connection type segment dominated the global capacitor bank market in 2023, growing with a CAGR of 5.0% during the forecast period
• In 2023, Asia-Pacific dominated the global capacitor bank market, with more than one third of the share in terms of revenue.