Electrical Grid Market Expected to Reach $413.1 Billion by 2033

According to a new report published by Allied Market Research, titled, “Electrical Grid Market," The electrical grid market size was valued at $251.9 billion in 2023, and is estimated to reach $413.1 billion by 2033, growing at a CAGR of 5.1% from 2024 to 2033.

Introduction

An electrical grid is a complex and interconnected network designed to generate, transmit, and distribute electricity from power plants to end users, such as households, businesses, and industries. It serves as the backbone of modern energy infrastructure, ensuring a reliable and continuous supply of electricity to meet the varying demands of consumers. The grid consists of several key components: power generation facilities such as thermal, hydroelectric, nuclear, and renewable energy plants, high-voltage transmission lines for long-distance energy transport, and distribution systems that deliver electricity to local areas at lower voltages. These components work in tandem to ensure a stable and efficient flow of electricity.

Market Dynamics

Increase in interconnection of national and regional electrical grids is a major driving force behind the growing demand for electrical grid infrastructure. This trend is largely driven by the need for greater efficiency, reliability, and flexibility in electricity distribution, particularly as countries and regions work to integrate renewable energy sources such as wind and solar power. Electrical grids more easily balance supply & demand, accommodate variable energy sources, and reduce the risk of blackouts by linking grids across larger geographical areas. As national and regional grids become more interconnected, the demand for advanced grid technologies and systems rises. These technologies include smart grids, energy storage systems, and advanced control mechanisms that enable real-time monitoring and management of electricity flow across diverse and sometimes distant areas. The integration of these grids also fosters energy trading between countries, promoting more cost-effective energy use and supporting energy security by providing backup options in case of local disruptions. All these factors are expected to electrical grid market trend during the forecast period.

As the global demand for energy increases, coupled with the shift toward renewable energy sources, there is an urgent need for modernized and smart grids that efficiently integrate these diverse power sources. However, the development and operation of these advanced grids require a highly skilled workforce with expertise in new technologies such as smart meters, grid automation, energy storage systems, and cybersecurity. The shortage of skilled professionals, including engineers, technicians, and cybersecurity experts, has created a bottleneck in the rollout and optimization of these advanced grids. These experts are needed to design, operate, and maintain the infrastructure needed for the transition to smart grids. The lack of available talent is especially pronounced in regions that are transitioning from traditional power systems to more complex and decentralized energy networks, such as in developing countries or areas with rapidly expanding renewable energy sectors. All these factors are expected to hamper the electrical grid market growth

As utilities and energy companies increasingly turn to smart grid technologies, there is a rise in demand for advanced solutions that enhance grid reliability, efficiency, and resilience. Automation and digitalization enable real time monitoring, predictive analytics, and seamless integration of renewable energy sources, which are crucial for optimizing grid operations. These advancements allow utilities to better manage energy flow, reduce downtime, and respond more effectively to system disruptions. In addition, digital tools help improve decision-making by providing operators with valuable insights, driving further investment and innovation in the sector. As a result, the ongoing push toward digital transformation in grid infrastructure is expected to fuel the growth of the electrical grid market, providing new avenues for technology providers and creating a more sustainable and resilient energy future. All these factors are anticipated to offer electric grid investment opportunities during the forecast period.

Segments Overview

The electrical grid industry is segmented into power source, application, and region. On the basis of power source, the electrical grid market is segregated into coal, natural gas, hydro, and others. On the basis of application, the market is classified into power generation, transmission, and distribution. Region-wise, the market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.

On the basis of power source, the electrical grid market is divided into natural gas, coal, hydro, and others. The hydro is anticipated to grow at the fastest CAGR of 5.6% during the forecast period. This growth in the hydro segment could be driven by increasing investments in renewable energy, government incentives for clean power generation, and the growing global push for reducing carbon emissions. Hydro power, being a significant renewable energy source, also benefits from its established infrastructure and efficiency in producing large amounts of electricity.

On the basis of application, the market is classified into power generation, transmission, and distribution. The distribution segment is anticipated to grow at the fastest CAGR of 5.5% during the forecast period. This growth is primarily driven by the increasing demand for electricity in residential, commercial, and industrial sectors, necessitating the expansion and modernization of distribution networks.

Region-wise, the electrical grid market analysis across North America, Europe, Asia-Pacific, and LAMEA. The Asia-Pacific region is anticipated to grow at the fastest CAGR of 5.4% during the forecast period. Asia-Pacific region are heavily investing in grid modernization projects to enhance energy efficiency, integrate renewable energy sources, and improve grid reliability. In addition, the increasing deployment of smart grid technologies and electrification initiatives, particularly in rural and underserved areas, is further propelling electrical grid market dynamics growth.

Regional Analysis

Region-wise, the market is analyzed across North America, Europe, Asia-Pacific, and LAMEA. The Asia-Pacific region is anticipated to grow at the fastest CAGR of 5.4% during the forecast period. Asia-Pacific region is expected to continue to maintain its leading position throughout the forecast period due to ongoing technological innovations, government support for clean energy adoption, and increasing demand for efficient, low-cost solar technologies. In addition, the region's large population and growing urbanization rates contribute to the increasing need for sustainable energy solutions, further boosting the demand for electrical grid market.

Key players in the electrical grid market include Schneider Electric SE, Siemens AG, Toshiba Corporation, Eaton Corporation, Mitsubishi Electric Corporation, ABB Ltd, NextEra Energy, Inc, General Electric Company, National Grid, and Itron Inc.

Key Market Insights

• On the basis of power source, the electrical grid market is divided into coal, natural gas, hydro, and others. The natural gas segment accounted for more than one-thirds of the electrical grid market share in 2023 and is expected to maintain its dominance during the forecast period.        

• On the basis of application, the electrical grid market is classified into power generation, transmission, and distribution. The power generation segment accounted for more than two-fifths of the electrical grid market share in 2023 and is expected to maintain its dominance during the forecast period.

• Region-wise, Asia-pacific was the highest revenue contributor of global electrical grid market forecast share in 2023.