Distribution Transformer Market - Forecasts from 2024 to 2029

The global distribution transformer market was evaluated at US$15.606 billion for the year 2022, and the market is set to expand at a CAGR of 6.06%, thereby reaching a market size of US$23.558 billion by the year 2029.

The market expansion is attributable to the increasing use of smart grid technologies. Over the projected period, the rising global need for sustainable energy is also anticipated to drive up the demand.

Additionally, as a result of the rise in energy production, there are more power plants, which means that to provide electricity to customers, new distribution transformers are needed. According to the U.S. Energy Information Administration, the United States produced 4,243 terawatt-hours (TWh) of energy in total in 2022, up almost 3% from 2021.

Rise in government initiatives

Growing government initiatives, investments, and new product launches are further boosting the global distribution transformer market growth. The government of the United Kingdom declared in September 2021 that it would invest US$ 1.2 billion in green initiatives and renewable energy in India to support its goal of 450 GW of renewable energy by 2030, which will boost the nation's electricity production.

Additionally, China's State Grid Corporation committed over 461 billion yuan in 2020 to the advancement of smart grid technologies. Such advancements in technologies increase the need for distribution transformers, supporting the expansion of the global distribution transformer industry. Additionally, in August 2023, the U.S. Department of Energy announced US$20 million in funding for the construction of energy-efficient distribution transformers and expanding product systems that employ machinery with electric motors, such as pumps, air compressors, and fans.

Rural areas, especially in India, are experiencing a surge in electricity accessibility, primarily due to extensive government initiatives like the Saubhagya scheme and Power for All. These initiatives are aimed at ensuring electricity connectivity to every household, thereby driving up the demand for distribution transformers below 500 kVA. As more rural households gain access to electricity, there is a growing need for smaller distribution transformers to facilitate the efficient and reliable distribution of power in these areas. This trend underscores the critical role of distribution transformers in supporting rural electrification efforts and advancing the goal of universal access to electricity.

Increasing demand for electricity

The demand for dependable and effective electricity distribution infrastructure is being driven by expanding urbanization, population growth, and rising living standards. Substantial amounts of energy are needed in industrial buildings to run HVAC systems, heavy machinery, and manufacturing processes. By scaling down the voltage from the distribution grid to levels consistent with the needs of industrial equipment, distribution transformers play a significant role in providing power to industrial enterprises safely and effectively.

The need for distribution transformers is driven by the expanding demand for energy in the residential and industrial sectors. For instance, according to the United Nations Environment Programme's 2020 Global Status Report for Structures and Construction, residential structures utilized 22% of the world's power in 2020. Further, in 2022, according to the Nuclear Energy Agency (NEA), the primary, secondary, and tertiary sectors in China consumed 114.6 TWh, 5,700.1 TWh, and 1,485.9 TWh, respectively.

India is anticipated to be the fastest-growing country in the Asia-Pacific region

The rising energy requirements in industries, the expansion of transmission and distribution networks, and the growth of the renewable energy sector are majorly driving the distribution transformer market growth. Favourable government policies are also one of the key reasons propelling the distribution transformer market growth of distribution transformers in the country. For instance, in February 2022, the Indian government approved projects valued at USD 4.12 billion (INR 308.02 billion) under the Integrated Power Development Program.

These projects are aimed at enhancing sub-transmission and distribution networks in urban areas within the country. The growing electricity generation, and efforts to replace or refurbish aging distribution transformers, coupled with increased access to electricity are driving the distribution transformer market in India. According to the Ministry of Power, the total electricity generation including renewable sources was 1,381.9 billion units in 2020-21 which increased to 1,624.2 billion units in 2022-23.

In the fiscal year 2021-22, the Indian government unveiled plans to introduce a comprehensive reforms-based power distribution sector scheme, valued at around USD 50 billion. This initiative aims to support Distribution Companies (DISCOMS) by facilitating infrastructure development, which includes the implementation of prepaid smart metering systems, feeder separation utilizing distribution transformers, and enhancement of existing distribution networks. The scheme is designed to modernize and strengthen the power distribution infrastructure across the country, fostering efficiency, reliability, and sustainability in the electricity sector.

Market Key Developments

• In October 2023, Hitachi Energy and E.ON conducted a successful trial of a circular value chain for distribution transformers in Sweden. Through this collaboration, Hitachi Energy utilized recycled insulation fluid in its transformers, resulting in a remarkable 90 percent reduction in embedded carbon emissions compared to using virgin mineral oil. Aligned with its commitment to promoting a sustainable energy future, Hitachi Energy effectively delivered distribution transformers incorporating recycled insulation fluid, developed in partnership with E.ON, Stena Recycling, and Starke & Sohn GmbH Mineralolwerk. This project serves as a prime example of a comprehensive value chain model that efficiently implements circular economy principles to foster sustainable production and consumption, particularly within electricity systems.
• In February 2023, Servokon unveiled a 16,000 KVA power and distribution transformer, marking a significant advancement towards the Indian government's goal of modernizing the nation's power infrastructure and achieving energy independence.
• In January 2023, the "INCON(R) Distribution Transformer Monitor" was introduced by Franklin Electric. It offers meter-grade accurate performance monitoring of high-value, mission-critical, low voltage pad mount transformers as well as traditional pole top transformers.
• In December 2021, Tata Power Delhi Distribution Ltd (DDL) implemented a unique submersible power substation in Gujranwala Town, New Delhi. Through technical collaboration with Toshiba Transmission & Distribution Systems (India) Pvt. Ltd, Tata Power DDL installed a 630KVA submersible distribution transformer beneath the parking area of its substation building. This innovative setup ensures an uninterrupted and dependable power supply to critical consumers during emergencies, including those providing essential services.
• In December 2021, Transformers & Rectifiers India Ltd. (TRIL) secured orders for a variety of transformers, such as distribution transformers, from Gujarat Energy Transmission Corporation (GETCO), totalling INR 72 crore.

Segmentation:

By Mounting Type

• Pad-Mounted
• Pole-Mounted

By Phase

• Single Phase
• Three Phase

By End-User

• Residential
• Commercial
• Industrial

By Geography

• North America
• United States
• Canada
• Mexico
• South America
• Brazil
• Argentina
• Others
• Europe
• Germany
• United Kingdom
• France
• Spain
• Others
• Middle East and Africa
• Saudi Arabia
• UAE
• Others
• Asia Pacific
• China
• Japan
• South Korea
• India
• Australia
• Others