Power Transformers Market by Type, End-user, and Geography - Forecast and Analysis 2023-2027

Power Transformers Market Forecast 2023-2027

The Power Transformers Market size is estimated to grow at a CAGR of 6.15% by USD 11.57 billion between 2022 and 2027 CAGR of 6.15%. The expansion of the power transformer market hinges on various factors, including the modernization of existing transformers, the growth of transmission and distribution (T&D) infrastructure driving the demand and the increasing capacity of renewable power generation. The modernization of transformers involves upgrading older units with newer, more efficient technologies to improve performance and reduce energy losses. The expansion of T&D infrastructure, particularly in developing regions, is boosting the demand for power transformers to facilitate the efficient transmission and distribution of electricity. Additionally, the increasing capacity of renewable power generation, such as wind and solar, requires the integration of power transformers to connect these sources to the grid, further driving market growth.

It also includes an in-depth analysis of drivers, trends, and challenges. 

What will be the size of the Market During the Forecast Period?

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Market Segmentation

This market research report extensively covers market segmentation by type (liquid immersed and dry type), end-user (commercial power, residential power, and industrial power), and geography (APAC, Europe, North America, Middle East and Africa, and South America).

By Type

The market share growth by the liquid-immersed segment will be significant during the forecast period. The use of oil as an insulating medium is more widely prevalent in the case of power transformers. They are mostly located inside the safe perimeters of a substation or a distribution station, and hence, the chances of injuries or fatalities due to any accidents are less when compared with distribution transformers. However, due to better-insulating properties and other characteristics, SF6 gas, which is non-flammable and non-polluting, is also used for insulation, but it is more expensive. Therefore, the use of this type of transformer is restricted in developing nations, and hence, oil continues to be the dominant category of insulation used inside power transformers.

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The liquid-immersed segment was valued at USD 19.66 billion in 2017. Much of the demand originates from the Middle East and APAC. Growing population and thriving economies have led to expanded electricity coverage in these regions, especially in the Middle East, fueling the installation of new grid networks. Also, rapid industrial development in India and China has raised the demand for electricity in APAC, leading to increased investment in power infrastructure. In addition to the new installation, the replacement demand is witnessing growth across the regions, especially in North America and Europe. Post-financial crisis in 2008, industrial activities gained momentum, which led to increasing investments in power generation in the US and European countries. This led to the expansion of power generation capacities, which resulted in the replacement of the existing ones with highly efficient products. Therefore, such factors are expected to drive the segment of the global market during the forecast period.

By Region

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APAC is estimated to contribute 37% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.

The APAC power transformer market is experiencing significant growth due to increasing electricity demand driven by urbanization and improved living standards in major countries like China and India. Private sector involvement in power generation has led to increased efficiency, reduced electricity prices, and heightened competition. Green initiatives are gaining momentum in the power sector, with a focus on producing Green transformers that minimize greenhouse gas emissions and contribute to grid stability. High-voltage switches and insulation materials, such as laminated steel and insulation, are essential components used in industrial applications and infrastructure development. Manufacturing processes, including the use of precision machine tools and primary materials like mineral oil, can impact manufacturing time and line current. Renewable energy installations in remote places require transformers for power transmission, and retrofitting existing oil-filled transformers with low-carbon insulation is a key trend. Power losses and short circuits are ongoing challenges for power systems, and the power transformer industry continues to innovate to address these issues. Hence, such factors will propel the market's growth in APAC during the forecast period.

Market Dynamics and Customer Landscape

The market plays a crucial role in the renewable energy generation sector, particularly in addressing the challenges posed by aging power grids and increasing electricity demand. With the shift towards renewable resources, there is a growing need to ensure the stable transmission of electricity. Investor confidence in the power transformer industry is influenced by sociopolitical instability and infrastructure development. Cross-border transmission projects require them with high terawatt-hour capacity to facilitate the transfer of electricity between countries. Smart grid development, including the implementation of smart meters, necessitates the use to manage voltage and frequency, minimize losses, and ensure the reliable distribution of electricity.

The power transformer industry is also at the forefront of transmission network research, focusing on developing transformers for remote places and reducing carbon emissions. Power grid networks and distribution channels rely on maintaining voltage levels and ensuring electricity access to consumers. The industry is expected to witness significant investments in the coming years due to the increasing demand for electricity and the need to upgrade existing ones to meet the demands of the smart grid. Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.

Key Market Drivers

The modernization of existing transformers is notably driving market growth. The market is experiencing significant growth due to the increasing installation and replacement of transformers, driven by the need to modernize and expand transmission infrastructure. This trend is particularly prominent in regions with aging power grids and growing energy demand. In India, the government's Accelerated Power Development and Reform Programme (APDRP) is providing funding to help state electricity boards improve their infrastructure and reduce losses. Key factors driving market growth include the adoption of smart energy grids and smart grid development, which require advanced transformers with features such as silicone insulation and voltage optimization. Sociopolitical instability and supply chain disruptions can also impact market growth.

The telecommunication industry is also a significant player in the market, as the development of smart grids and the integration of smart meters require robust supporting infrastructure. The market is expected to reach terawatt-hour capacity, with a focus on solid insulation and high voltage levels to support the smart grid revolution. Traditional transformers are being phased out in favor of more efficient and advanced solutions. Therefore, these factors will lead to significant growth in the global market during the forecast period.

Significant Market Trends

The increasing popularity of bio-based and naphthenic transformer oil is an emerging trend in the power transformer market. The market is experiencing significant growth due to the increasing adoption of bio-based transformer oils, such as those derived from silicone. This shift is driven by the advantages of bio-based oils, including their excellent insulating properties, biodegradability, high fire point, and extended service life. The rise in the use of bio-based oils can be attributed to the increase in fire accidents in traditional mineral oil-based transformers and the non-biodegradable nature of mineral oil.

Moreover, the smart energy grid revolution is fueling the demand for these with solid insulation and high voltage optimization capabilities. Smart grid development and the integration of smart meters are key drivers in this sector. Sociopolitical instability and supply chain disruptions can also impact the market, highlighting the importance of supporting infrastructure. The telecommunication industry and transmission infrastructure are significant consumers of transformers with terawatt-hour capacity. The overall demand for naphthenic oil is anticipated to increase during the forecast period, as the industry continues to evolve and adapt to the changing energy landscape. Thus, these factors are expected to play a significant role in the growth of the market during the forecast period.

Major Market Challenges

The new regulations increasing the cost of power transformers is a major challenge impeding the market growth. The market, particularly in Europe and the US, has seen increased regulations focusing on energy efficiency since the late 2000s. The Department of Energy (DOE) in the US mandated the National Electrical Manufacturers Association (NEMA) TP-1 minimum-energy efficiency standard for low-voltage dry-type transformers in 2007. This regulation was revised in 2016, covering liquid-immersed, low-voltage dry-type, and medium-voltage dry-type transformers with a capacity of 10kVA to 2,500kVA and voltage levels up to 34.5kV. The NEMA Candidate Standard Level (CSL)-3 standards, introduced in 2010, are not federally mandated but are widely adopted.

In the context of the global energy landscape, the market plays a crucial role in supporting smart grid development and the smart energy revolution. With the increasing adoption of smart meters and telecommunication infrastructure, there is a growing demand for transformers with solid insulation, such as those using silicone, to ensure reliable and efficient energy transmission. However, sociopolitical instability and supply chain disruptions can pose challenges to the transmission infrastructure's supporting infrastructure. The market is expected to reach terawatt-hour capacity as the demand for voltage optimization and higher voltage levels continues to grow. This is expected to restrict the growth of the global market during the forecast period.

Key Market Customer Landscape

The market report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.

Global  Market Customer Landscape

Who are the Major Market Companies?

Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.

Tyree Industries -  The company focuses on manufacturing pole mount transformers, large distribution transformers, power transformers, and substation assembly. The key offerings of the company include power transformer solutions. 

The report also includes detailed analyses of the competitive landscape of the market and information about 15 market companies, including:

• ABB Ltd.
• ALTRAFO Srl
• Altro Transformers Pty. Ltd.
• CG Power and Industrial Solutions Ltd.
• DuPont de Nemours Inc.
• Eaton Corp. Plc
• Etel Transformers Pty ltd
• Fuji Electric Co. Ltd.
• General Electric Co.
• Hammond Power Solutions Inc.
• Hitachi Ltd.
• Hyundai Electric and Energy Systems Co. Ltd.
• Kirloskar Electric Co. Ltd.
• Layer Electronics Srl
• MGM Transformer Co.

Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.

Segment Overview

The market research report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027. 

• Type Outlook 
  • Liquid immersed
  • Dry type

• End-user Outlook 
  • Commercial power
  • Residential power
  • Industrial power

• Region Outlook 
  • North America
    • The U.S.
    • Canada
  • Europe
    • The U.K.
    • Germany
    • France
    • Rest of Europe
  • APAC
    • China
    • India
  • Middle East & Africa
    • Saudi Arabia
    • South Africa
    • Rest of the Middle East & Africa
  • South America
    • Chile
    • Brazil
    • Argentina

Market Analyst Overview

The market encompasses a significant segment of the power industry. Agings of these, especially those in the power sector, have become a major concern. Aging transformers in networks call for Capital Expenditures (Capex) for their replacement or refurbishment. Capitals are invested in Capital Intensive Technologies like Capping, Regeneration, Overhaul, and Replacement of transformers. The Capacity of these plays a crucial role in the market. Capacities range from Aluminum Liquid-filled to Oil-filled, with Capacities varying from Hundreds of Kilovolt-Amperes (kVA) to Megavolt-Amperes (MVA).

Capacitive Transformers, such as Capacitor Banks and Reactors, are also part of the market. Bulk Power Transformers are essential for the transmission of electricity over long distances. Bulk Power Transformers are large, heavy, and complex systems, requiring specialized skills for their installation, maintenance, and repair. The market is driven by the increasing demand for electricity and the need to maintain the reliability and efficiency of the power grid. The market is competitive, with key players including ABB, Siemens, General Electric, and Siemens Energy. These companies invest in Research and Development to improve the efficiency, reliability, and lifespan of transformers. The market is expected to grow, driven by the increasing demand for electricity and the need to modernize aging power infrastructure.

Market Scope
Report Coverage	Details
Page number	163
Base year	2022
Historic period	2017-2021
Forecast period	2023-2027
Growth momentum & CAGR	Accelerate at a CAGR of 6.15%
Market growth 2023-2027	USD 11.57 billion
Market structure	Fragmented
YoY growth 2022-2023(%)	5.76
Regional analysis	APAC, Europe, North America, Middle East and Africa, and South America
Performing market contribution	APAC at 37%
Key countries	US, China, Japan, India, and Germany
Competitive landscape	Leading companies, Market Positioning of companies, Competitive Strategies, and Industry Risks
Key companies profiled	ABB Ltd., ALTRAFO Srl, Altro Transformers Pty. Ltd., CG Power and Industrial Solutions Ltd., DuPont de Nemours Inc., Eaton Corp. Plc, Etel Transformers Pty ltd, Fuji Electric Co. Ltd., General Electric Co., Hammond Power Solutions Inc., Hitachi Ltd., Hyundai Electric and Energy Systems Co. Ltd., Kirloskar Electric Co. Ltd., Layer Electronics Srl, MGM Transformer Co., Schneider Electric SE, Siemens Energy AG, Southern Electronic Services, Tyree Industries, and Wilson Power And Distribution Technologies Pvt. Ltd.
Market dynamics	Parent market analysis, Market Forecasting, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period.
Customization purview	If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized.

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What are the Key Data Covered in this Market Research Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the market growth and forecasting of the market between 2023 and 2027
• Precise estimation of the size of the market size and its contribution to the parent market
• Accurate predictions about upcoming market trends and analysis and changes in consumer behavior
• Growth of the market industry across Europe, North America, APAC, South America, and Middle East and Africa
• Thorough market growth analysis of the market’s competitive landscape and detailed information about companies
• Comprehensive market analysis and report on the factors that will challenge the market research and growth of market companies

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