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 anticipated to account for the largest type segment owing to the basic need for voltage regulation and reactive power support on transmission networks.

Shunt compensation systems are connected in parallel with transmission networks to supply and absorb reactive power to keep the voltage at a particular node within acceptable operating ranges. This is especially beneficial in networks characterised by long transmission lines, volatile renewable generation, and hunting loads.

The principal devices of this category are the SVC and STATCOM technologies. Thyristor-controlled reactors and capacitors are common in conventional SVC systems, while a STATCOM provides superior, fast-acting reactive power control with the use of voltage-source converter technology.

Hitachi Energy SVC Classic brings SVC technology for dynamic reactive power compensation and voltage regulation. Additionally, Hitachi Energy STATCOM offers STATCOM technology for direct and dynamic voltage and reactive power control.

By Device Type: Static Synchronous Compensator (STATCOM)

STATCOM segment is witnessing significant growth due to its rapid response time, flexible reactive power control, and suitability in renewable energy applications. Power electronic converters are incorporated to inject or absorb reactive current and provide dynamic voltage support using STATCOMs.

STATCOMs can adapt their compensation output to fluctuations in grid load conditions much faster than conventional mechanically switched compensation equipment. This makes them especially useful for wind farms, solar parks, weak grids, and industrial loads capable of rapid voltage fluctuations.

Hitachi Energy STATCOM Solutions provides advanced solutions designed to ensure voltage stability and dynamic reactive power compensation. Similarly, Siemens Energy SVC PLUS is a modular power-electronics-based compensation solution for grid stability and voltage support.

By Application: Voltage Regulation & Reactive Power Compensation

Voltage regulation and reactive power compensation are the major application areas because stable voltage has always been an essential requirement in ensuring the reliability of the transmission system.

Short-distance transmission lines have considerable variation in voltages and reactive power losses, for instance, when the load conditions are altered. These variations can be exacerbated by renewable generation, as output from both wind and solar plants varies over the course of a day.

FACTS systems dynamically inject or absorb reactive power in a system to mitigate any risk of voltage instability. SVCs and STATCOMs are most suitable for this application due to their fast response time. The FACTS technology is increasingly being utilized at renewable energy connection points, transmission substations, industrial loads, and weak-grid locations.

Regional Analysis

North America Market Analysis

North America is a significant FACTS market driven by an aging transmission network, increased penetration of renewable energy resources, transmission congestion, and the growth in demand for electricity. The United States is seeing an unprecedented addition of solar and wind capacity even as demand for electricity from data centers, manufacturing, EVs, and industrial electrification rises.

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: