PUBLISHER: Knowledge Sourcing Intelligence | PRODUCT CODE: 1390091
PUBLISHER: Knowledge Sourcing Intelligence | PRODUCT CODE: 1390091
The global transformer oil market was valued at US$2.329 billion in 2021 and is expected to grow at a CAGR of 6.82% during the forecast period.
Transformer oil is an essential fluid driven from crude petroleum through partial distillation and is used in transformers for insulation and cooling purposes during their normal operation without interruption. Transformer oil is broadly classified into two types namely paraffin-based transformer oil and naphtha-based transformer oil. The rise in industrialization is the prominent driver boosting the transformer oil market size year-by-year.
Rapid industrialization is bolstering the transformer oil market growth.
The rapid industrialization and urban development witnessed in emerging economies have a significant impact on electricity consumption and infrastructure expansion. As these economies are growing, the electricity demand has increased which necessitates the installation of new transformers to support power distribution. Consequently, this surge in transformer installations fuels the demand for transformer oil, which is crucial for the insulation and cooling of transformers. According to the International Energy Agency, in 2040, it is projected that India's urban population will witness impressive growth, with approximately 270 million people expected to be added. /
The growing oil & gas sector is expanding the transformer oil market size.
The oil and gas industry plays a pivotal role in driving the transformer oil market, as the industry heavily relies on transformers for various operations, including exploration, drilling, refining, and transportation. Transformers require efficient insulation and cooling, which transformer oil provides. The growing global demand for oil and gas leads to the installation of new transformers, thus increasing the need for transformer oil. According to the International Trade Administration, government-owned companies have held a prominent position in India's oil and gas sector, these companies currently contribute to approximately 80% of domestic oil and gas production and possess a refining capacity of nearly 70%.
Mining operations depend heavily on the utilization of extensive equipment and machinery, including excavators, haul trucks, and crushers. These machinery units often rely on transformers for efficient power distribution and voltage regulation. Transformer oil plays a crucial role in ensuring the insulation and cooling of these transformers and as the mining activities are increasing the demand for transformer oil is witnessing a simultaneous increase.
The European region is expected to dominate the transformer oil market.
Europe is considered dominant in the transformer oil market due to the region's well-established and growing industrial sector, extensive electricity infrastructure, and a strong focus on renewable energy integration. According to the Federal Ministry For Economic Affairs And Climate Action, the European Commission successfully increased the industrial share of the EU's GDP to 20% by 2020. This achievement highlights the Commission's effective measures and strategies aimed at promoting and strengthening the industrial sector within the European Union.
Rising dry-type transformer usage is restraining the transformer oil market growth.
The transformer industry is witnessing a growing trend toward the adoption of dry-type transformers, which utilize solid insulation materials instead of liquid transformer oil. This shift is driven by several factors, including the perceived advantages of dry-type transformers such as enhanced safety, reduced maintenance needs, and environmental benefits. Dry-type transformers eliminate the risk of oil leaks, fire hazards, and the need for oil containment systems, making them a preferred choice in certain applications. Consequently, this increasing preference for dry-type transformers limits the demand for traditional transformer oil, impacting the market dynamics of the transformer oil industry.