Over the past decade, the need for on-site T&D equipment servicing and parts replacement has grown, both for electric utilities and for commercial and industrial customers. While Newton-Evans has studied this portion of the T&D market in a cursory manner over the decades, we have not produced a multi-client study of this important segment of T&D-related spending. Even now, our definition of T&D services is not all-inclusive, as there is significant related expense incurred for equipment testing services (about $450 Million) and even more investment for replacement parts for ancillary equipment like structures, connectors, line tools, et al, accounting for multiple hundreds of millions of dollars.
While much of the cost of T&D equipment services and repairs is grouped as operating expense, we believe there may be some “replacement parts” costs that are likely classified as capital expenditures, especially costly parts for large power transformers and components for HV substation equipment.
The total value of expenditures for T&D equipment-related services and replacement parts in the United States is likely around the $4 Billion level as of 2021, and our estimate for global spending on T&D services is in the $18-20 billion range. These estimates exclude the costs of equipment unit replacement. Together, T&D equipment services, including repairs and replacement parts, accounted for perhaps $3.6 Billion to upwards of $4.2 Billion in 2021. See Figure 1.
Looking at T&D equipment field services, including repairs and maintenance services performed by third parties, our mid-point spending estimate is $1,750 Million. See Figure 2.
Similarly, the spending for replacement parts for HV, MV, LV equipment and for power and distribution transformers is estimated to be in the $2,200 Million range. See Figure 3.
The overall split of spending between utilities and the C&I community is about a four-to-one ratio in our view, with utilities accounting for the bulk of all HV, MV and transformer-related spending, but with the C&I group accounting for substantial portions of LV equipment services and replacement parts, some MV and transformer services, and occasional HV equipment servicing.
The largest portion of spending among the four categories studied for this article (HV, MV and LV equipment, and transformers of all sizes) is for MV equipment services and replacement parts. HV equipment services follow, then comes spending for power transformer services and LV equipment services.
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