Flexible AC Transmission Systems Market Size, Share & Growth Forecast (2026-2031)

The Flexible AC Transmission Systems Market is forecast to grow at a CAGR of 6.8%, reaching USD 3.88 billion in 2031 from USD 2.79 billion in 2026.

The growth of renewable energy generation, transmission congestions, and grid modernization, combined with the increasing electricity demand, are expected to be the major drivers leading to the overall increase within the global flexible AC transmission systems market.

Traditional design of AC transmission networks is usually based upon the expected generation profiles and a more constant flow of power. This operating environment is changing as penetration of variable renewable resources increases.

The large variability of wind and solar generation subjects’ transmission networks to rapid responses in voltage, reactive power, and power flows. The rapid-response feature of FACTS technologies enables transmission operators to adjust accordingly.

Shunt compensation devices adjust voltage and reactive power by controlling the electrical characteristics of transmission networks. Meanwhile, series compensation is applied to control line impedance and increase power-transfer capability, while series-shunt combinations regulate voltages and influence power flows simultaneously.

Additionally, the market is also supported by the increasing need to make maximum use of existing transmission infrastructure. Acquiring additional capacity through FACTS deployment is generally faster and more cost-effective than developing wholly new transmission corridors, especially where land acquisition, environmental approvals, and permitting create complications.

Market Dynamics

Market Drivers

• Increasing Renewable Energy Integration: One of the major driving factors for FACTS deployment is the rise in wind and solar power plants. Renewable generation is intermittent and can lead to fast variations in voltage, reactive power, and flows over the transmission. Renewable energy sources have also begun to be established in regions far from major load centers for large projects. This introduces a new dimension of operational complexity and causes further demand for enabling technologies that support high-volume transmission as well as truly optimal transfer over longer distances.

• Growing Transmission Congestion: In many developed markets, congestion in electricity networks occurs because transmission expansion has not kept pace with generation and demand. This challenge is further exacerbated by the rapid development of renewable projects. This is especially the case for transmission lines that have unused physical capacity but are constrained by operational limits due to voltage stability, thermal, or power-flow distribution issues.

• Improve Utilisation of Existing Transmission Assets: New FACTS deployment may involve significant capital investment, permitting and environmental reviews, land acquisition, and construction of new infrastructure such as transmission corridors. Thus, FACTS systems offer utilities an additional method to improve the performance of existing networks. Series compensation enhances power-transfer capability, while shunt compensation provides voltage stability and reactive power management.

• Aging Transmission Infrastructure: The transmission assets in many electricity networks have been operating for decades. Electricity demand is growing, while extremely old infrastructure needs to be up-to-date. FACTS devices can enhance transmission upgrades through dynamic control of existing assets. With the addition of digital substations, advanced protection systems and sensors, as well as monitoring technologies, utilities can utilize FACTS to enhance the reliability of their networks.

• Increasing Electricity Demand: Industrial electrification, electric vehicles, data centres, heat pumps and digital infrastructure mean electricity consumption is on the rise. AI and hyperscale data centers are producing particularly concentrated electricity demand in a number of markets. This is putting additional pressure on transmission networks and pushing utilities to leverage existing capacity while in parallel constructing new transmission infrastructure.

Market Restraints & Opportunities

• The high level of investment required in the purchase and installation of FACTS systems is a significant barrier. These large systems necessitate specific types of power electronics, transformers, cooling systems, control equipment, protection systems, and engineering services.

• The complexity of the system can also raise deployment requirements. The design of FACTS installations needs to be integrated with existing protection and control systems to avoid any negative coupling with the bulk power system.

• However, rather than stymieing growth, these challenges are opening up opportunities for suppliers developing modular FACTS platforms, digital diagnostics, compact STATCOMs, hybrid compensation systems, and more sophisticated control software.

• The key opportunities exist in the areas of renewable energy integration, weak-grid stabilization, long-distance transmission, and offshore wind connections, as well as reforming congested urban transmission networks.

Key Developments

• July 2026: Quality Power was awarded new orders aggregating to ?56.7 crore, including an international order of around ? 41 crore for supply of equipment on Flexible AC Transmission System suitable for high-voltage grid applications.

• April 2026: Hitachi Energy reported that grid-forming converters will bring benefits to stability in both current and future power systems. It also reported Hitachi Energy’s Fgrid-ensure Portfolio, which includes STATCOM, HVDC, SFC, and other battery energy sotrag solution which is focused on supporting high renewable energy penetration.

Market Segmentation

The market is segmented by type, device type, voltage range, application, end user industry, and geography.

By Type: Shunt Compensation

Shunt compensation is expected to remain the largest type segment, reaching USD 1.89 billion by 2031 and representing 48.6% of the Flexible AC Transmission Systems (FACTS) Market, with a 6.2% CAGR during the forecast period.

Shunt compensation systems are installed in parallel with transmission networks to dynamically supply or absorb reactive power, helping maintain voltage levels within required operating limits. Their role becomes increasingly important in systems with long-distance power transmission, fluctuating renewable generation, and rapidly changing load conditions.

Key technologies within this segment include Static VAR Compensators (SVCs) and Static Synchronous Compensators (STATCOMs). Conventional SVC installations use thyristor-controlled reactors and capacitors to manage reactive power, while STATCOM systems employ voltage-source converter technology to provide faster and more precise reactive power and voltage control.

Hitachi Energy offers the SVC Classic, which supports dynamic reactive power compensation and voltage regulation. Its STATCOM solutions provide rapid reactive power compensation and dynamic voltage control, supporting grid stability under changing network conditions.

By Device Type: Static Synchronous Compensator (STATCOM)

The Static Synchronous Compensator (STATCOM) segment is valued at USD 1.14 billion in 2026, accounting for 41.0% of the Flexible AC Transmission Systems Market, making it a leading device type. STATCOMs are gaining strong adoption because they provide fast dynamic voltage regulation and continuous reactive power compensation, particularly in grids experiencing changing load conditions and increasing renewable-energy penetration. Hitachi Energy notes that STATCOM systems use voltage-source-converter principles to respond rapidly to voltage variations and maintain grid stability.

STATCOMs can dynamically inject or absorb reactive power to support voltage stability during load changes, network disturbances, and weak-grid conditions. Their power-electronics-based architecture enables rapid response compared with conventional compensation technologies, supporting applications across renewable generation, transmission networks, utilities, and power-intensive industrial facilities. This capability is increasingly relevant as wind and solar generation introduce greater variability and reduce conventional synchronous generation in power systems.

Hitachi Energy offers SVC Light® STATCOM solutions for voltage stabilization, reactive power compensation, and renewable-energy integration, while its enhanced STATCOM technology combines advanced power electronics and control systems for grids with high renewable penetration. Siemens Energy provides SVC PLUS® STATCOM, based on modular voltage-source-converter technology, for dynamic reactive power compensation and voltage support. In January 2026, Siemens Energy also announced a grid-forming STATCOM installation for Amprion in Germany, designed to deliver fast voltage support and strengthen grid stability under low short-circuit conditions.

By Application: Voltage Regulation & Reactive Power Compensation

Voltage regulation and reactive power compensation represent a major application of Flexible AC Transmission Systems (FACTS), accounting for an estimated USD 0.84 billion in 2026 and approximately 30.0% of the total market. Maintaining stable voltage levels is essential for improving transmission reliability, supporting power quality, and ensuring efficient operation of electricity networks.

Transmission lines, particularly over short and medium distances, can experience voltage fluctuations and reactive power losses when operating conditions change. Variations in electricity demand, network loading, and power-flow patterns can increase these challenges. The growing integration of renewable generation adds further complexity because electricity output from wind and solar facilities can change throughout the day depending on weather and generation conditions.

FACTS technologies dynamically control power-system parameters by injecting or absorbing reactive power, helping transmission networks manage voltage fluctuations and reduce the risk of voltage instability. Static VAR Compensators (SVCs) and Static Synchronous Compensators (STATCOMs) are particularly suitable for voltage regulation and reactive power compensation because they can respond rapidly to changing grid conditions. Their deployment is expanding across renewable energy interconnection points, transmission substations, industrial facilities, and weak-grid locations where voltage stability and reliable voltage support are critical.

Regional Analysis

North America Market Analysis

North America is a significant Flexible AC Transmission Systems (FACTS) market, supported by the modernization of aging transmission infrastructure, rising electricity demand, increasing renewable power integration, and transmission congestion. The United States is experiencing substantial additions of solar and wind capacity while electricity demand is also increasing from data centers, domestic manufacturing, industrial electrification, and other large-scale loads. In 2026, the region accounts for 24.0% of the global FACTS market, representing approximately USD 0.67 billion, and is projected to expand at a 5.7% CAGR over the forecast period. The U.S. Department of Energy’s 2026 draft National Transmission Needs Study identifies a pressing requirement for additional transmission infrastructure to accommodate new generation and load connections, relieve congestion, and maintain grid reliability.

The expansion of renewable generation is further increasing the need for flexible grid technologies capable of supporting voltage stability, power-flow management, and reliable transmission operation. The U.S. Energy Information Administration expects 86 GW of new utility-scale generating capacity to be added in 2026, with solar representing 51% and wind 14% of planned additions. At the same time, electricity demand is being accelerated by data centers and industrial activity. EIA reported that U.S. electricity demand increased by about 1.7% annually between 2020 and 2025 and forecasts continued growth, while DOE highlights data centers, manufacturing, and electrification as major contributors to rising grid requirements.

These developments create favorable conditions for FACTS technologies, including SVCs, STATCOMs, and other power-electronics-based solutions that can improve grid flexibility and support the integration of variable generation. Growing transmission investment across major U.S. grid regions, alongside the need to manage congestion and accommodate rapidly changing load profiles, is expected to sustain demand for FACTS solutions across North America.

South America Market Analysis

South America offers great potential for the FACTS market due to both the renewable energy potential and considerable needs for frequency control and long-distance transmission. Brazil is the biggest market in the region as its electricity system combines large-scale hydropower along with rapidly growing wind and solar generation.

Europe Market Analysis

Europe holds a substantial position in the FACTS market due to the decarbonization of the energy system; cross-border interconnections, large-scale wind power generation, offshore wind farms, and aging transmission infrastructure. Particularly high requirements for controllability are created by the expansion of offshore wind in the North Sea. FACTS technologies are implemented in renewable interconnection points, supporting voltage stability and reactive power management.

Middle East and Africa Market Analysis

Middle East & Africa region has an emerging FACTS market, with growth driven by renewable energy advancements, grid interconnections, and industrial development coupled with several electricity infrastructure investments. Saudi Arabia and the UAE are investing in solar while upgrading transmission. Solar projects would require reactive and voltage management where generation is predominantly located in remote areas.

Asia Pacific Market Analysis

Asia-Pacific will be the largest as well as fastest-growing regional market owing to fast electricity demand growth, rapid transmission construction, renewable energy deployment, and industrialization. China holds a major regional share with the biggest grid and largest renewable generation potential for the region. High-capacity wind and solar projects generate intermittent electricity that must be transported over long distances, due to new high-tech transmission devices to work.

List of Companies

• Hitachi Energy Ltd.

• Siemens AG

• ABB

• GE Vernova

• Mitsubishi Electric

• Toshiba Energy Systems

• Larsen & Toubro

• NR Electric

• Fuji Electric

• Eaton Corporation

Hitachi Energy Ltd.

Hitachi Energy is a major market player in FACTS technologies, transmission systems, substations, power electronics, and digital grid solutions. The FACTS solutions in its portfolio include static var compensators like SVC Classic, SVC Light, and STATCOM to provide dynamic reactive power compensation and voltage control.

Siemens AG

Siemens Energy is supplying FACTS, transmission, grid stabilisation and power quality technology. SVC PLUS is based on advanced modular multilevel converter technology to deliver dynamic reactive power compensation and voltage support. It is especially suitable for renewable energy projects and grids that need provision of flexible voltage support.

ABB

ABB offers FACTS solutions along with power electronics, grid stabilization, transmission and substations, and power-quality technologies. ABB brings experience in power-electronics-based compensation systems and grid integration. Its technologies enable voltage control, reactive power management, renewable integration, and transmission optimization.

Analyst View

One of the strong drivers that is steadily shaping the Flexible AC Transmission Systems market toward advanced, digitally controlled grid-stability infrastructure from traditional reactive-power compensation is renewable energy integration, transmission congestion, aging networks, and rapidly increasing electricity demand. Shunt compensation will continue to dominate as the largest segment, as voltage regulation and reactive-power management are basic needs for any modern transmission system. Meanwhile, STATCOM is set for particularly high growth due to the ongoing trend towards renewable-dominated grids and weak grid conditions that leverage its fast dynamic response and flexible reactive power capability. Voltage control and reactive power compensation will continue to be the primary application area, as utilities aim to extract maximum value from their existing infrastructure. FACTS technologies will rise depending on digitally coordinated transmission networks in the coming years.

Flexible AC Transmission Systems Market Scope: