Global electricity demand is expected to reach around 38,700 terawatt-hours by 2050, around 30% higher than the consumption in 2006, which is supported by the expansion of the transmission and distribution network. This resulted in a significant demand for the T&D equipment, such as a transformer. The global power supply is undergoing a major transition, moving away from fossil fuels and shifting towards renewable energy sources. Moreover, investments in new renewable power capacity have outstripped the amount invested in fossil-based generating capacity, with most of the installation of new renewable energy capacity currently occurring in developing and emerging countries. Renewable power accounted for 60% of net additions to global power generating capacity in 2018. The strong growth in renewable energy is a result of the increasing competitiveness of wind and solar power. With the rapid integration of renewable energy sources and distributed technologies onto the grid, utilities have to upgrade their existing systems to address the challenges of maintaining power quality, balancing supply and demand in real-time, and ensure adequate distribution infrastructure capacity.
- The distribution transformers are expected to dominate the market, owing to the increasing number of load centres across the globe.
- With the falling cost of renewable-based power generation, the requirement for T&D infrastructure is expected to increase, thereby, providing an opportunity to the players involved in manufacturing and supplying the transformers.
- Asia-Pacific region is expected to lead the market, owing to infrastructure development investments.
Key Market Trends
Distribution Transformers to Dominate the Market
- Distribution transformers (DTs) or service transformers provide the final voltage transformation in the electric power distribution system. DTs are used to step down the voltage used in the distribution lines (usually up to 36 kV), to the level used by the customer (usually 250 up to 435V).
- As a result, it is the most widely used in commercial buildings and by industrial customers, as well as electric utilities, largely in areas, where electricity leaks are more costly.
- In Asia-Pacific, according to BP Statistics 2019, total electricity generated in 2018 was 12273.6 Terawatts, while the overall consumption was less. This stems to higher demand for distribution transformer infrastructure to bridge the gap of supply and demand.
- Increasing investments in the transmission and distribution networks in countries, such as India and China, provide tremendous opportunity for the distribution transformer manufacturers to increase their share in the market, during the forecast period.
- Countries in the Middle-East and African region, such as Oman and Saudi Arabia, are also investing in the expansion and restructuring of distribution power grids, which increases the growth prospects of the distribution transformer market segment.
Asia-Pacific Region to Lead the Market
- The factors that attribute to the growth of transformer market include the increasing upgradation of power and distribution infrastructure, replacement of aging equipment, and the increasing development in heavy industries, and renewable energy.
- Extensive power plant capacity additions, economic growth, and the need to improve access to electricity, particularly in the emerging nations of Asia-Pacific, are expected to further drive grid expansion and the transformers market.
- The robust economic growth in China reached nearly 7%, and the gross electricity consumption grew by 6.6%, exceeding 6,000 TWh, for the first time in 2017. China has witnessed high rates of demand for electricity, owing to the unprecedented growth of the economy, along with the rapid industrialization and urbanization of the region.
- In India, the Ministry of Power has allocated 14 smart grid pilot projects that are expected to be executed by various state-owned distribution utilities across India, with the aim of ensuring energy efficiency in the country.
- Furthermore, the Indian government plans to invest in strengthening the electrical network, to build a strong and smart grid, hence driving the transformer market during the forecast period.
The global transformer market is fragmented. Some of the major companies include Siemens AG, ABB Ltd, General Electric Company, and Mitsubishi Electric Corporation.
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