In the overall global power industry, transformers play a major role. Out of different kinds of transformers, three-phase transformers serve a critical purpose. Owing to some of its advantages like: lower cost; light in weight; ease of installation; and higher efficiency, which outweigh its disadvantages, nowadays these transformers are finding wider applications in power distribution.
According to Global Market Insights’ (GMI’s) last report, “Three-phase Distribution Transformer Market was valued at over USD 12.9 billion in 2023 and is estimated to grow at a CAGR of more than 9.4% during 2024 to 2032.”
Developments leading to the growing demand
The GMI report states that the increasing demand for electricity, particularly in emerging economies, fuels the need for efficient and reliable power distribution systems, where three-phase distribution transformers play a crucial role. Additionally, urbanization and industrialization are driving the expansion of power infrastructure, leading to higher demand for transformers.
The advancements in renewable energy integration, such as wind and solar power generation, require robust distribution networks supported by transformers to efficiently transmit electricity to end-users. Furthermore, government initiatives aimed at modernizing and upgrading aging power grids, coupled with a focus on energy efficiency and grid reliability, are further propelling the market growth.
Emerging trends in this market
The GMI report also communicates that behind the evolving landscape of the three-phase distribution transformer industry lies the increasing demand for compact and eco-friendly designs, which are driving manufacturers to develop transformers with reduced footprint and environmental impact.
Concurrently, the adoption of digital and IoT-enabled transformers is on the rise, facilitating real-time monitoring, predictive maintenance, and performance optimization of distribution networks. Grid modernization initiatives worldwide underscore a focus on resilience and reliability, encouraging the deployment of advanced transformers with enhanced fault tolerance and self-healing capabilities.
What’s going to stimulate the demand?
According to GMI, the significant investment outlined by the European Union for electricity grid enhancement, including substantial funds for distribution grid modernization and digitalization, is poised to stimulate demand for advanced three-phase distribution transformers, fostering three-phase distribution transformer market growth.
Integration of energy storage systems with transformers is also gaining traction, enabling better management of peak demand and grid stability. Furthermore, research into next-generation materials and technologies aims to enhance transformer performance and efficiency while minimizing environmental impact. These trends collectively reflect the industry’s pursuit of innovation and sustainability amid changing energy landscapes and regulatory frameworks.
How is the industry gearing up?
Starting from the recent past, we are finding that many initiatives are being taken up in the industry globally to address the emerging demand. In the next few paragraphs, I will present information on a few such drives to present how the companies are gearing up to supply more three-phase transformers.
New transformer manufacturing plant
US-based JST Power Equipment has opened a new pad mount transformer factory in Wytheville, Virginia on March 13, 2025. This latest expansion has been a result of the company’s strong fiscal year 2024 – and it is one of the several new investments that JST Power has made since expanding its dry type transformer manufacturing plant in Nogales, Mexico in 2024. The Wytheville factory will support US customers and the advancement of engineering, services, and production in North America.
Courtesy: JST Power Equipment
The company has plans to produce small batch manufacturing of three-phase pad mount transformers in this 45,000 square feet facility. The location will also serve as a customer experience center, service center and R&D center for other JST transformer product lines.
Commenting on the development, Trey Smith, Director of Marketing for Transformers, JST Power, said, “The most effective way to meet the current increasing electrical power demands is through strategic brownfield projects like this one. JST Power can stay ahead of the curve in the transformer industry by delivering exceptional products, seamless business operations, and added value for both existing and future partners.”
Investment in new transformer manufacturing site
The intelligent power management company, Eaton is helping address the critical shortage of transformers – and record demand for its solutions across utility, large commercial, industrial and data center customers.
The company is investing $340 million to increase U.S. production of its three-phase transformers essential to reliable electrical power. Production and hiring at Eaton’s new Jonesville, South Carolina facility is expected to begin in 2027. Eaton will also continue to manufacture three-phase transformers at two Wisconsin facilities.
Courtesy: Eaton
Focusing on the present market scenario, Mike Yelton, President, Americas Region, Electrical Sector, Eaton, said, “Electrical power demand is increasing dramatically, and our solutions are at the heart of energy systems everywhere, from the utility grid to industrials, data centers, buildings and more. We’re grateful for the strong collaboration and support in South Carolina, where we have a long history of manufacturing and innovation. Eaton is continuing to increase production and add jobs there and across the U.S. to support affordable, reliable and clean energy.”
Eaton transformers meet the highest efficiency standards in the industry, helping customers save energy and costs. Building on more than a century of transformer innovation and manufacturing, the company will convert an existing facility in Jonesville, South Carolina into a state-of-the-art manufacturing site for three-phase transformers. The project is supported by local, state and federal economic development incentives. The company is also working closely with readySC and regional schools to support hiring and industry training.
Plans of expanding transformer manufacturing capacity
Schneider Electric Infrastructure Ltd. (SEIL), has chalked out plans of expanding its transformer manufacturing capacity. In a regulatory filing, SEIL has informed that the company’s Board of Directors in a meeting on February 11, 2025, approved the plan to enhance the existing manufacturing capacity of medium power transformers.
SEIL would be investing Rs.13.6 crore, to be financed through internal accruals and/or borrowings, to expand the manufacturing capacity of medium power transformers by 1,500 MVA per year.
According to the filing, the objective of the capacity expansion plan is ‘to meet market demand and growth ambition’ of the company’s Medium Power Transformer business.
SEIL manufactures transformers at its plant located at Vadodara in Gujarat, India. According to the plan, the existing capacity of 5,500 MVA would be enhanced to 7,000 MVA, by end of FY26 (i.e., March 31, 2026).
The Vadodara’s plant current capacity utilization is around 96%, the filing informed. Meanwhile, according to a Schneider Electric Infrastructure investor presentation, the company saw its order inflow in the first nine months (Nine months: April to December 2024) of FY25 grow 13.8%, year on year. Order inflows stood at Rs.1,546 crore in 9M FY25 as against Rs.1,359 crore in the same period of FY24. In Q3 (October to December) of FY25, year-on-year order inflow growth was milder at 5.3%.
Investment to address global transformer shortage
Hitachi Energy is set to make additional major investments of more than $250 million USD by 2027 to expand global production of critical components for transformers. This rapid follow-up to the recently announced $6 billion USD investment across the company portfolio reflects the escalating transformer shortage, which continues to increase.
These investments will bolster Hitachi Energy’s manufacturing capabilities across the U.S., enhancing production capacity at the company’s transformer factories in Virginia, Missouri, and Mississippi. It includes transformer components such as bushings and insulation as Hitachi Energy is a critical supplier to other transformer manufacturers.
This pivotal move will also help alleviate the broader, ongoing transformer supply shortage, ensuring increased production capacity and supply-chain resilience. The global investment program, one of the most significant in the industry today, will also strengthens Hitachi Energy’s manufacturing capabilities in Asia, South America, and Europe.
Focusing on Hitachi’s decision, Andreas Schierenbeck, CEO, Hitachi Energy, said, “The demand for transformers and grid infrastructure is rising at an unprecedented scale and pace. As the world’s largest transformer manufacturer, we have a responsibility to expand our capacity and accelerate the delivery of transformers and essential components, helping the industry scale up faster and advance critical infrastructure projects.”
By P. K. Chatterjee (PK)
