Gas-Insulated Substation (GIS) Market Trends

Growth Drivers

• Rising demand for electricity globally: The National Infrastructure Advisory Council (NIAC) transformer lead times have exponentially surged over the past few years, reaching an average of 120 weeks in 2024 from 50 weeks in 2021.  Large transformers, including substation power and generator step-up transformers, have operations ranging from 80 to 210 weeks. Driven by the rising electrification across the globe, the demand for transformers has exacerbated supply chain transformation leading to the build-out of renewable electricity generation for largeload end users including data centers. This further resulted in a steep spike in electricity prices for residential and business customers. The producer price index (PPI) crossed 426.800 in December 2024 from 251.800 in March 2020, indicating an 80% increase in electric power and specialty transformer manufacturing costs since the COVID-19 pandemic.
  
  A recent National Renewable Energy Laboratory (NREL) report finds distribution transformer demand in the U.S. is likely to be 160 to 280% higher than 2021 levels by the end of 2050- marking a CAGR of 5.3%.  The national lab manages the seven regional transmission operators/independent system operators (ISO) grid interconnection queues and 44 non-ISO balancing areas, representing 95% of U.S. electric generating capacity.   To get a sense and context of the massive size of the interconnection queue, American Public Power Association (APPA) disclosed that the total utility-scale capacity installed in the U.S. was 1,277 GW in 2023 and the pending interconnection queue is set to double the installed capacity base during the forecast timeline.
• Rising focus on renewable energy: Governments are striving to lower carbon footprint and encourage the usage of renewable energy sources such as wind and solar energy. For the wind farm cluster in the Baltic Sea, Siemens Energy was awarded a contract in 2021 to provide two onshore high-voltage direct currents (HVDC) systems. Gas-insulated switchgear technology will be used in the project, which is anticipated to be finished by 2029, to guarantee dependable and effective power transmission.
  
  The California Air Resources Board (CARB) standardized regulations for limiting GHG emissions from gas-insulated systems and aims to gradually eliminate SF6 GIS purchases. The phaseout provisions in rule amendments were incorporated on January 1, 2022. The first phase of the amendment restrictions began on January 1, 2025, and the final phase is expected to start in January 2033. The initial phaseout is dedicated to lower voltage capacity devices (less than 35 kV) and the last phase applies to higher voltage equipment. Purchases of 245 kV will be prohibited by January 2033, under CARB prohibitions. The proposed regulations are estimated to facilitate cost-effectiveness of USD 33 per metric ton of CO2e from gas insulated switchgear sulfur hexafluoride byproducts.

Challenges

• Shortage of advanced modern infrastructure and high costs: With the focus shifting toward lowering GHG associated with gas insulated substation systems, the gap between demand and supply is increasing owing to the presence of SF6 based equipment. Retrofitting involves high capital costs and is proven to be a market barrier.