STATCOM Market Trends

Growth Drivers

• Regulatory support and grid codes: The STATCOMs are experiencing rapid adoption across the globe, due to the governments’ support and changes in grid code standards. For instance, in October 2024, the Central Electricity Regulatory Commission, through its first amendment of the Indian Electricity Grid Code (IEGC) 2023, implemented strict operational standards that enhance grid stability. These modifications restrict the delivery of infirm power through renewable generation sources and storage systems to span 45 days, with possible extensions upon approval. This amendment requires all generating stations to meet their requirements throughout off-peak hours, and it sets restrictions on the number of scheduling changes during daily and monthly periods. Such regulatory changes are implemented to produce a predictable, stable operation of the grid, which is boosting the demand for advanced reactive power compensation solutions, including STATCOMs.

• Increasing investments in transmission and distribution: Industrial leaders and country objectives are constantly supporting power sector companies to follow government-declared grid modernization programs, which enable the deployment of advanced technology such as STATCOMs. The deployment of STATCOM throughout worldwide power grid networks is receiving traction owing to the increasing investments by governments that modernize transmission and distribution infrastructure. For instance, in September 2024, India’s Ministry of Power finalized modifications to the National Electricity Plan 2023–2032 to expand transmission infrastructure from 4.85 lakh circuit kilometers (ckm) to 6.48 lakh ckm and boost the transformation capacity from 1,251 GVA to 2,342 GVA by 2032. Such strategic initiatives are opening substantial opportunities for STATCOM technology providers while improving the grid’s readiness to meet future energy requirements and sustainability targets.

Challenges

• Long payback period: The payback period for STATCOM installations is a challenging factor for STATCOM markets that do not face urgent grid events and have limited renewable energy integration. Power utilities in these areas hold back from installing STATCOM technology as they need to recover their expenses over an extended period, therefore, the technology is facing higher initial outlays when compared to temporary solutions. Power utilities prefer less expensive temporary grid solutions instead of STATCOM systems, as they require substantial capital investment.