Power Transformer Market

Market Overview

The global power transformer market size was valued at USD 32.1 billion in 2021. It is expected to reach USD 64.16 billion by 2030, growing at a CAGR of 8.0% during the forecast period (2022–2030). The increasing need for electricity, infrastructure development, integration of renewable energy, technical breakthroughs, replacement of outdated infrastructure, and rising investments in energy systems and smart grids are the main factors driving the market.

Power transformers are a particular kind of transformer primarily used to transmit low voltage generator electricity across distribution channels within the power grid network. It is an essential component of the electrical grid and aids in the frequency-invariant transmission of power from one network to the next. Low-voltage electricity generation is economical, but it results in high line currents. More line losses result from the high current transmission. However, efficient power transmission is possible if the incoming power's voltage is raised. Therefore, the voltage is primarily increased using a power transformer. These transformers are made to have maximum efficiency at full load and operate at peak load. The transmission voltages have increased due to decades of research into transmission networks.

Market Dynamics

Market Drivers

Rising Global Demand for Electricity

Rapid industrialization and rising domestic power demand are driving the global power transformers market growth. Globally, there is a steadily growing demand for electricity, which has increased the use of energy resources. As a result, there are now more power plants and extensive transmission networks worldwide. The development of modern electric vehicles and incentives to use them are driving up electricity consumption in the automotive industry. Most power plants are situated in remote areas; the electricity produced is then transmitted to the substations via HVDC power transmission lines, which are distributed to the end users after step-down. Most developing nations have underutilized energy resources, while the power infrastructure in most poorer countries could use improvement. As a result, the global power transformers market is currently driven by the demand for electricity worldwide.

Upgrading Current Transmission Networks

Transmission lines, poles, switch equipment, and power grids make up the transmission network. Transmission losses account for the majority of losses in a power system, and raising the transmission voltage is a constant effort to cut these losses. In order to minimize transmission losses, electric power is typically transmitted at high voltage (above 115KV). The introduction of Ultra High Voltage (UHV) transmission (1100KV and above) has necessitated the global upgrade of the transmission network.

India currently has the capacity to transmit power at 1200KV, while China has been using UHV DC/AC transmission since 2009. The power transformer plays a crucial role as a connecting device that joins two networks with various voltages. Power transformers connect various networks throughout the power system. As a result, the demand for power transformers with higher ratings is driven by increased transmission voltages.

Market Restraints

High Cost of Transformer Installation, Logistics, and Supporting Infrastructure

Since copper, steel, and aluminum comprise the backbone of transformer construction, their respective prices as raw materials impact the final price of the finished product. Additionally, logistics and installation costs are high because they account for about 25% of the overall cost of ownership. The fact that it takes a long time to manufacture power transformers is another hindrance. For installation, a sizable supporting infrastructure is needed for power transformers. This cost is even higher in the case of overhead and underwater transformers. All power transformers have installed protective devices, including winding thermometers, pressure relays, Buchholz relays, and oil level monitor devices. Therefore, the cost of these instruments, combined with the cost of logistics, installation, and supporting infrastructure, raises the effective price of a transformer.

Market Opportunities

Increasing Use of Non-Conventional and Renewable Energy Sources

The main forces behind renewable energy production are supportive governmental regulations to reduce greenhouse gas emissions, followed by programs for clean energy. Primary non-conventional energy resources include nuclear, biomass, and geothermal, while primary renewable energy sources include wind, solar, and hydroelectricity. These new plants are integrated into the current transmission networks with power transformers.

The transformer can turn the hydroelectric power plant's alternating current into a high voltage current. The national grid receives this converted energy and distributes it to homes and businesses for use. Also, renewable energy is the fastest-growing energy source in the world and the United States. The fastest-growing source of electricity, solar generation is expected to increase from 11% of all renewable energy produced in the United States in 2017 to 48% by 2050.

However, since they are an essential part of the power grids for other non-conventional energy sources as well, power transformers are not only used in wind and solar power plants. Power transformers can also be installed underground and underwater, making it possible to install them at the generation point for tidal and geothermal power plants. As a result, the global market for power transformers has opportunities for long-term growth as renewable energy becomes a significant energy source.

Regional Analysis

The global power transformer market is bifurcated into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.

Asia-Pacific Dominates the Global Market

Asia-Pacific is the most significant shareholder in the global power transformer market and is expected to grow at a CAGR of 9.10% during the forecast period. The Asia-Pacific region is comprised of nations frequently investing in the power sector to modernize their power grids, including Australia, China, and India. Asia-Pacific has a high adoption rate and is expected to spur market expansion during the forecast period. Australia receives the highest average solar radiation per square meter, making increased use of renewable energy a significant growth factor. Also, China and India, two of the world's fastest-growing economies, are among the top electricity producers and have extensive transmission systems. Both nations have focused on creating smart grids and integrating renewable energy sources with the national power grid. China has made significant financial investments in constructing one UHV DC power transmission network and three UHV AC transmission networks. The replacement of outdated units has created an additional opportunity in Asia-Pacific nations.

North America is expected to grow at a CAGR of 7.4%, generating USD 15.97 billion during the forecast period. North America is anticipated to have higher market growth than other regions due to its high adoption rate. This area can quickly adapt to new technologies due to the presence of significant power transformer manufacturers. A project by the Beijing-based Global Energy Interconnection Development and Cooperation Organization (GEIDCO) to combine UHV AC and D.C. transmission will be deployed by State Grid in China. It involves a network of 800-kV UHV DC lines that widely share solar and wind energy across the United States from east to west. In contrast, north-south lines would give the entire continent access to Canada's massive hydropower plants. Power exchanges with South America could be made possible by a second UHV DC line, which would span 5,200 kilometers from Mexico to Peru. Although the U.S., Mexico, and Canadian governments are still reviewing the project, such investments position North America to present opportunities to expand the global power transformers market.

This Europe power transformer market analysis covers Germany, France, the United Kingdom, Italy, and the rest of Europe. New cross-country power transmission projects aid the power transformer market expansion. Europe's moderate adoption rate is expected to spur market expansion during the forecast period. Due to its industrial dominance, Europe needs a modernized power grid just as much as it needs to implement renewable energy sources. Due to its size, Russia has extensive transmission networks, whereas the U.K. and Germany have more advanced power infrastructure. European nations are moving away from coal-based electricity generation and toward nuclear energy and other renewable energy sources.

LAMEA's high adoption rate is expected to spur market expansion over the upcoming years. In order to meet its industrial needs, the area is a significant consumer of electricity. Transportation, mining, and construction are the three industries that use the most electricity. African nations have a high potential for electricity demand growth, and a USD 120 billion investment in the power sector is required to meet the continent's energy needs by 2040. As a result, the global market for power transformers is well-positioned to benefit from future growth opportunities in this region.

Segmental Analysis

The global power transformer market share is segmented by rating.

By Rating Analysis

Based on the rating, the global market is bifurcated into low, medium, and high.

The medium segment is the highest contributor to the market and is expected to grow at a CAGR of 8.80% during the forecast period. Medium-rating power transformers fall between 100 MVA and 500 MVA. Medium power transformers are used to transform and distribute energy to lower voltage substations or directly to large industrial consumers after receiving it from higher voltage levels. High voltage and extra high voltage power transmissions use medium rating power transformers. The need to upgrade transmission lines to reduce losses presents a significant market opportunity for these transformers.

In generation step-up units (GSU), transmission substations, industrial plants like oil and gas refineries, chemicals and petrochemicals, cement industry, mining industry, desalination plants, malls, metros, and other infrastructure fields, low power transformers of up to 100 MVA are used. Transformers are categorized by their capacity rating or the most amount of power they can transfer. Due to their applications, low-rating power transformers are in demand. Any power management system can incorporate power transformers, improving grid performance. Most power transmitted globally operates between medium and high voltages, the range of power transformers with low ratings. The Asia-Pacific region's replacement of outdated power transformer units, specifically in China and India, is anticipated to present new opportunities for the growth of the global low-rating power transformers market.

A power transformer's rating is defined by its capacity rating or the maximum amount of power it can transfer, and the rating of high-rating power transformers is 801 to 1200 MVA. UHVAC and UHVDC voltage transmissions are the main uses for high-power transformers. They result in low power losses and have a smaller environmental impact, making them economically advantageous for transferring large amounts of power over long distances. Due to ongoing and upcoming power transmission projects, there has been an increase in demand for high-power transformers. High-rating power transformers should see increased use due to developments to raise transmission voltage and lower transmission losses.

Recent Developments

• August 2022- At InnoTrans 2022, Siemens Mobility unveiled its brand-new digital business platform, Siemens Xcelerator. Siemens Xcelerator is an open digital business platform designed to create a robust ecosystem of partners that can collaborate to drive digital transformation and sustainability in mobility at scale.
• May 2022- As the push for green energy increases, Schneider Electric considered partnerships with Indian businesses. Indian corporations are interested in partnerships with French main Schneider Electric, which supplies energy management and industrial automation solutions to enterprises globally.