Spurred by high energy prices and government spending on infrastructure, the oil and gas business along with the water and wastewater industry will generate the largest growth of all application markets for medium-voltage motor control centers (MCCs) and soft starters in the coming years, according to a new report from research firm IHS.
The report says revenue for MCCs and soft starters used for oil and gas extraction, manufacturing and transportation will rise to $287 million in 2016, increasing at a compound annual growth rate (CAGR) of 6.9 percent from $206 million in 2011. Meanwhile, the water and wastewater segment in 2016 will generate $117 million in demand for MCCs and soft starters, growing at a CAGR of 5.4 percent from $90 million in 2011. In comparison, the overall market for MCC and soft starters used in all applications will expand by a CAGR of only 5.5 percent during the same period.
“Brent oil prices in 2011 and 2012 remained inflated, at $111 and $112 per barrel, respectively,” IHS analyst Jared Kearby said in a prepared statement. “Because of this, oil companies invested capital to increase production capacity, thus generating sales and shipments of medium-voltage MCCs and soft starters. Meanwhile, MCCs and soft starters are seeing increased demand from the water and wastewater market as governments seek to replace outdated systems. Furthermore, growth in this segment is being fueled by new installations required for increased capacity, and the need to mitigate environmental impact.”
Investment in water and wastewater as well as oil and gas industries is particularly strong in emerging markets such as India, the Middle East and China, IHS says.
In oil and gas applications, MCCs and soft starters are most often used to start medium-voltage motors, such as pumps and compressors utilized for extraction, manufacturing and transportation. MCC and soft starter demand from this area is forecast to continue to grow, as Brent oil prices will average $101 per barrel in 2013 and $93 per barrel in 2014, according to IHS current projections, a level that will spur further investment.
Further, awareness of energy use is growing, because of higher electricity costs worldwide, and because of the need to reduce CO2 emissions. This will continue to boost shipments of medium voltage MCC and soft starter shipments into the oil and gas industries.
In the water and wastewater industry, medium-voltage MCC and soft starter growth is forecast through 2016 because of potential opportunities to replace outdated systems. There is also growth in the industry from new installations because of expanding urban areas. New systems are also being installed that reduce damage to the environment, such as treatment facilities that handle rainwater run-off in urban locations.
In addition, applications such as water purification, collection and distribution commonly require pumps; high functionality, however, is not necessary for most of these medium-voltage motors. The most critical function for a medium-voltage motor control in water applications is the ability to minimize water cavitation during motor startup, requiring a medium-voltage motor starter such as an MCC or soft starter.