Data Center Distribution Transformer Market Size, Share & Trends Analysis Report By Insulation (Oil Immersed, Dry), By Voltage (Below 625 kVA, 625-1,250 kVA, 1,250-3,750 kVA, Over 3,750 kVA), By Channel Partners (Original Equipment Manufacturers (OEMs), Distributors, Online Retailers, Electrical Contractors) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2023-2031

Market Overview

The global data center distribution transformer market size was valued at USD 6,029.6 million in 2022. It is expected to reach USD 10,186.88 million by 2031, growing at a CAGR of 6.12% during the forecast period (2023–2031).

An electrical transformer distributes and transforms electrical energy from one circuit to another in a data center. A transformer is used to either boost or decrease the voltage before it is distributed to the next circuit. Three-phase medium voltage step-down transformers are the most common type of transformer used in data center facilities. Companies with data centers need to implement DCT transformers for redundancy and protection against failures, short circuits, and interruptions in the power supply, among other potential disruptions.

Market Dynamics

Global data center distribution transformer market drivers

Rising demand for energy-efficient transformers

Data centers utilize a lot of energy because running the IT infrastructure and cooling equipment requires a lot of power. Data centers typically use 25% of a company's total power consumption for IT equipment and operate in "Always On" mode. Although they are rarely used at peak loads, data centers are built to operate at peak demand. On the other hand, even during off-peak hours when data centers are not operating at full capacity, IT servers can use up to 70% of the total electrical load supplied to them. Further, cooling the data centers at maximum efficiency, even during off-peak hours, uses additional unnecessary energy. As a result, data centers' growing power consumption drives the demand for energy efficiency.

Advancements and new trends in transformer design

Transformer design improvements are good news for the market's expansion. Amorphous core transformers are one of the newest design trends for distribution transformers. Amorphous ribbons are used in the cores of these transformers to increase the air gap in the core and simplify the assembly of the electric windings, reducing losses in the transformer and increasing efficiency. Another method calls for using high-temperature materials in transformers to guarantee the users' economic, environmental, and safety benefits.

High-temperature materials reduce losses while ensuring safer operations because they are less flammable, lighter in weight, and smaller in size. Additionally, these materials can be used with high-temperature fluids due to their lower flammability levels, which reduces the transformer's size and weight while maintaining environmental reliability. The development of smart transformers and the advantages they offer are anticipated to accelerate their adoption in the data center industry.

Global data center distribution transformer market restraints

Distribution transformers' high costs and data center harmonics

Electricity supply line harmonics can interfere with the power distribution system, increasing maintenance costs. Most utilities offer steady power. However, non-linear loads in a data center facility, including servers, variable frequency drives, fluorescent lighting, and other electronic devices, can skew the voltage and current waveforms. Poor line harmonics can also result in transformer losses, raise energy costs, and reduce the transformers' operating efficiency. Additionally, harmonics can cause the transformer winding to overheat, which shortens the transformer's lifespan. The heating and distortions force data center operators to replace the transformer more quickly with an oversized transformer, raising the system's overall cost.

Global data center distribution transformer market opportunities

Rising construction of new data centers

Networked computers and storage devices used for organizing, storing, processing, and disseminating data essential to a business organization's operation make up a data center. The increased network connectivity and widespread use of smartphones are responsible for daily data generation. There are over 5 billion connected devices worldwide, and most of them produce large amounts of data that must be stored, routed, and managed to ensure optimal performance. Several IT organizations would need to rely on big data analytics to increase the effectiveness of their operations while protecting their data as the number of connected devices rises and Industry 4.0 standards continue to develop. However, several IT organizations are switching to data centers after realizing that internal data management can be challenging and time-consuming, propelling the expansion of the data center market.

Regional Analysis

By region, the global market is segmented into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

Asia-pacific dominates the global market

Asia-Pacific is the most significant market shareholder and is expected to grow at a CAGR of 10.1% during the forecast period. The regional market is growing due to rising demand for cloud-based applications and data storage. Implementing cloud-based services in industries like healthcare and education, along with government support, has accelerated the growth of knowledge centers in this region. In addition, the widespread use of smartphones and the accessibility of the internet, combined with the rising demand for mobility, are expected to increase the number of knowledge centers in the region, directly contributing to the market's growth.

North America is expected to grow at a CAGR of 4.2% during the forecast period. Significant players like Eaton and General Electric are responsible for this market growth. The region's users' advanced technological development and technical awareness are also anticipated to affect market growth positively. Additionally, numerous data centers in the area may be a key element in propelling the regional market.

Segmental Analysis

The global market is segmented by insulation, voltage, and channel partners.

Based on insulation, the global market is bifurcated into oil immersed and dry.

The oil-immersed segment is the highest contributor to the market and is expected to grow at a CAGR of 5.8% during the forecast period. This is due to the major benefits of liquid insulation, which guarantees low noise levels, quieter operation, and efficient heat removal, minimizing electrical losses and improving system performance. Additionally, as liquid-type transformers offer better efficiency and service life, they are increasingly used to handle higher loads. This is helping to drive up demand for liquid-type transformers during the forecast period.

The dry-type insulation transformer eliminates any potential for fire by using air as a cooling medium. The dry insulation type transformers also require less maintenance because no moving parts exist. This type of insulation has a high initial investment cost, but users consider it a one-time investment because it offers long-term cost benefits. Additionally, it is projected that the employment of ecologically safe temperature insulation systems based on UL and CSA Group (CSA) standards by dry-type transformers, which are environmentally benign, will boost the expansion of the dry-type segment.

Based on voltage, the global market is bifurcated into below 625 kVA, 625-1,250 kVA, 1,250-3,750 kVA, and over 3,750 kVA.

The 1,250-3,750 kVA segment owns the highest market share and is expected to grow at a CAGR of 6.9% during the forecast period.

Based on channel partners, the global market is bifurcated into original equipment manufacturers (OEMs), distributors, online retailers, and electrical contractors.

The OEMs segment is the highest contributor to the market and is expected to grow at a CAGR of 6.7% during the forecast period. The global market is moderately consolidated and established OEMs are working to preserve their market share through mergers, acquisitions, and other tactical partnerships. In addition, several industry players are developing innovations to raise the sophistication and efficiency of the transformers. For instance, companies like Eaton and Legrand have created dry-type cast resin transformers that are environmentally benign, non-flammable, and extremely short-circuit resistant. Similarly, the Swiss company ETH Zurich has unveiled small and effective smart transformers.

Recent Developments

• December 2022- Eaton added global customer experience sites and expanded cybersecurity services to assist customers in addressing critical infrastructure vulnerabilities.
• December 2022- GE Renewable Energy and Hyundai Electric entered a strategic partnership agreement to promote the expansion of offshore wind in South Korea.