Focus on upgrading the existing power grid network with modern energy technology for flexible, secure, efficient, and reliable supply of power will emerge as a chief growth driver.
Transformers are critical components in power transmission systems as their main function is to receive power with low voltage and transmit it across various distribution channels in power grid. Increasing demand for electricity, increasing investment to expand Transmission and Distribution (T&D) network will drive the power transformer market growth in upcoming years.
The current trend
The power transformer market exhibited year-on-year growth of 4% in 2021, backed by increasing efforts towards incorporating modern energy solutions in existing power systems and high demands of efficient and reliable power supply. FMI states that, power transformer market revenue grew by 10% between 2019 and 2021, reaching US$ 21.9 billion in 2021 with a healthy CAGR of 4.6%.
An indicative evidence
As of 2021 Adani power had around five ongoing power projects with capacity ranging from 1300 MW to 2700 MW in Indian states of Rajasthan, Madhya Pradesh, Gujarat, Karnataka, and Jharkhand. Rise in number of new power projects in developing countries will boost the market sales over the forecast period.
Rising urgency to replace the aging power infrastructure with smart grid system along with increasing penetration of renewable energy and development of interconnected grid infrastructure are key growth drivers in developed economies.
The transforming grids
Market players are focusing on developing power transmission systems capable of handling flow of stored and renewable energy throughout the grid system. Advancement towards designing system for efficient management of electricity transmission and distribution as a part of disaster recovery efforts along with redefining electrical grids to reduce operational costs and lead times will positively influence the market growth in the future.
FMI’s significant observations
North America power transformer market is forecast to experience growth at 3% CAGR due to rising necessity to replace old power grid networks with modern and efficient equipment and increasing supply and demand gap of electricity in U.S. and Canada.
Europe power transformer market is anticipated to grow at 3.2% CAGR during the forecast period. Growth uptick can be attributed to rapid electrification and increasing investment towards upgrading transmission and distribution networks in the region.
Growing awareness among population regarding CO2 emission, increase in consumption of electricity, and increasing efforts towards electrification of rural areas will drive the demand for power transformers in India.
China is expected to offer lucrative opportunities owing to increasing investment in power grid infrastructure development and booming mining and oil and gas industries in the country.
Japan and South Korea accounted for 7% of global power transformer market share in 2021. Industrialization, increasing efforts to fill the energy supply and demand gap, and imposition of energy efficient laws and standards are key growth drivers in these countries.
Changing trends in the industry
Leading market players account for 35% global market share. They are focusing on new product development like green transformers to reduce the carbon footprint and are also emphasizing on establishing production and supply operations in key high-demand demographics like South East Asia. In addition, key players have been increasing production outputs and moving manufacturing plants to developing countries to reduce lead times and operation costs.