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The global power transformer market is growing at a rapid pace owing to the increasing integration of renewable energy into the central grid, ongoing activities of upgrading the old T & D infrastructure, and the artificial intelligence boom, which are some of the major factors driving the power transformer market globally.

However, rising supply chain constraints, increasing lead times, and high prices are acting as major restraints on the global power transformer market.

Power transformers form a critical part of the power grid and are primarily used to receive low voltage generator electric power and transmit it across distribution channels across the power grid network. It forms a crucial part of power grid and helps in power transmission from one network to another without change in frequency.

Drivers

Increasing Renewable Power Integration to the Grid

More and more renewable power is being added to the grid, which is increasing the need for power transformers around the world. This is because the grid needs to be expanded, strengthened, and connected, and it also needs advanced voltage and frequency regulation to keep things stable and reliable in a changing energy landscape. 

Renewable electricity generation capacity is experiencing unprecedented growth, outpacing the last three decades. According to the International Renewable Energy Agency (IRENA), in 2023 alone, the global addition of renewable energy capacity surged by 54.4%, reaching 473.4 gigawatts (GW). Notably, solar photovoltaic (PV) installations constituted three-quarters of this expansion worldwide.

China experienced the most significant growth in renewable energy capacity, commissioning as much solar photovoltaic (PV) capacity in 2023 as the entire world did in 2022. Additionally, China's wind power additions increased by 66% year-on-year. Furthermore, Europe, the United States, and Brazil also achieved record-high increases in their renewable energy capacity during this period.

The rapid addition of renewable energy capacity can be attributed to several major factors, such as favorable government policies worldwide, which have incentivized investment in renewable energy projects. 

Secondly, nations' ambitious decarbonization targets have spurred the adoption of renewable energy as a key component of their energy transition strategies. Thirdly, major European countries are increasingly prioritizing renewable energy to enhance energy security and reduce dependence on fossil fuels.

Lastly, increasing energy prices and the surge in investments reflect growing confidence in the long-term viability and sustainability of renewable sources. These combined factors have propelled the rapid expansion of renewable energy capacity globally.

Favorable government policies to increase electrification contributed to the growth of the global transformer market. Electricity consumption has skyrocketed in the past few years due to increasing digitization and a rise in population, and major nations around the world are implementing several initiatives to increase electrification across their countries. These initiatives increased the market demand for medium power transformers in the historic period and the increasing demand for low-, medium-, and high-power transformers.

Many countries are also focusing towards sharing generated power with other countries to help them fill energy supply and demand gaps. With the world switching attention towards onshore and offshore renewable energy to produce electricity, the demand for power transformer is expected to rise in the upcoming years.

Restraints

Long Lead Times

The manufacturing and procurement process for power transformers often involves long lead times, which can delay project timelines and hinder the implementation of new infrastructure or grid expansion initiatives.

Supply chain challenges have significantly extended the lead times for both power and distribution transformers. Previously, large power transformers had a lead time of 12–14 months before the pandemic, but this has now surged to 38 months. This impact is particularly noticeable in the US, where there's a lack of domestic transformer supply chains, compounded by import barriers for large power transformers, unlike Europe.

Regional Analysis

Asia-Pacific is a major market for power transformers and is expected to play a significant role in the global market landscape. The region also hosts the largest power transformer manufacturing nations, such as South Korea and China. One of the main reasons for the demand in the region is the rapidly increasing demand for electrification initiatives in India, China, and other Southeast Asian countries.

North America stands out as the region with the highest demand for power transformers, fueled by the pressing necessity to modernize aging power infrastructure. This urgency is particularly pronounced in the United States, where the integration of renewable energy sources is rapidly increasing. With approximately 2.1% of the total transformer fleet retired each year and over 70% of the power grid in the country aged over 25 years, the need for transformer upgrades is critical to ensuring the reliability and efficiency of the power grid.

The development of electric vehicle (EV) charging infrastructure and the growing adoption of renewable energy sources are driving demand in Europe, a significant transformer market. With the European Union ambitiously targeting a 45% share of renewable energy in the energy mix by 2030, the deployment of approximately 600 GW of solar photovoltaic (PV) and 510 GW of wind generation capacity is anticipated. 

Additionally, aiming to increase annual EV sales to at least 55% post-2030, the EU's plans are poised to propel demand for transformers across the electricity market. This surge in demand encompasses both distribution and power transformers as utilities prioritize the deployment of renewable energy, along with upgrading and expanding the transmission and distribution infrastructure to facilitate the integration of clean energy sources.

Recent Trends

The transformer market is moving towards the advancement of autonomous and self-regulating smart transformers and green transformers. Smart transformers are programmed to constantly regulate voltage, maintain contact with stakeholders, and provide information and feedback on the power supply. They provide the exact amount of power needed and respond to fluctuations through a process known as voltage optimization.

A smart transformer constantly regulates the voltage and maintains contact with the smart grid so that it allows remote administration of the power system. The growth of the smart power transformer market is driven by increasing investment in developing and strengthening the smart grid and the growing trend for digitalization in the power industry. Additionally, the increasing focus on renewable power generation and integration of the energy mix results in the need for smart monitoring and voltage regulation. 

A green transformer offers a new alternative for customers who want to preserve the environment by offering a lower carbon footprint, limited pollution risk, and optimized life cycle costs thanks to less maintenance. Other advantages include reduced aging, lower noise levels, and increased fire safety.

Power Transformer Market Opportunities:

• Government Grid Strengthening Initiatives: Growing government initiatives worldwide aimed at grid strengthening projects present lucrative opportunities for power transformer manufacturers and suppliers. Participation in these initiatives can enable market players to capitalize on the demand for transformers needed to enhance grid reliability and capacity.
• Booming Real Estate Industry: The expansion of the real estate industry globally offers substantial opportunities for power transformer market players. As the demand for electricity infrastructure escalates alongside the growth of residential, commercial, and industrial developments, there is a significant opportunity for manufacturers and suppliers to cater to the increasing need for transformers in these projects.

Recent Developments

• In April 2024, Hitachi Energy revealed plans to invest over USD 1.5 billion to expand its global transformer manufacturing capacity. This significant investment aims to align with the increasing demand for transformers and to bolster long-term electrification initiatives worldwide. 
• Siemens Energy has unveiled plans to invest USD 150 million in the United States to initiate power transformer manufacturing at its Charlotte facility in North Carolina. The production of transformers is slated to commence in 2025, aligning with the escalating demand for electricity in the region.
• In March 2024, Hitachi Energy finalized a frame agreement with transmission system operator RWE to provide transformers for their renewable energy projects across Europe.

Blackridge Research's global power transformer market report provides insights into the current global and regional market demand scenario and its outlook.

The new report from Blackridge Research on the global power transformer market provides comprehensive qualitative and quantitative analyses along with a deep insight into the current and future of the market.

What Do We Cover in the Report?

Power Transformer Market Drivers & Restraints

The study covers all the major underlying market dynamics that help the market develop and grow, as well as the factors that constrain global market growth.

The report includes a meticulous analysis of each factor, explaining the relevant, qualitative information with supporting data.

Each factor's respective impact in the near, medium, and long term will be covered using Harvey balls for visual communication of qualitative information and will function as a guide for you to analyze the degree of impact.

Power Transformer Market Analysis

This report discusses the market overview, the latest updates, important commercial developments and structural trends, and government policies and regulations.

Power Transformer Market Size and Demand Forecast

The report provides the global power transformer market size and demand forecast until 2029, including year-on-year (YoY) growth rates and CAGR.

Power Transformer Industry Analysis

The report examines the critical elements of the power transformer industry supply chain, its structure, and the participants.

Using Porter's five forces framework, the report covers an assessment of the power transformer industry's state of competition and profitability.

Power Transformer Market Segmentation & Forecast

The report dissects the global power transformers market into various segments based on power rating (small power transformer, medium power transformer, high power transformer). A detailed summary of the current scenario, recent developments, and market outlook will be provided for each market segment.

Further, power transformer market share, size, and demand forecasts will be presented, along with various drivers and barriers for individual market segments.

Effective market segmentation enables you to identify emerging trends and opportunities for long-term growth. Contact us for "bespoke" market segmentation to better align the research report with your requirements.

Regional Market Analysis

The report covers detailed profiles of major regions across the world. Each region's analysis covers the current market scenario, market drivers, government policies & regulations, and market outlook.

In addition, market size, demand forecasts, and growth rates will be provided for all regions. The region is segmented geographically into North America, Europe, Asia-Pacific, and the rest of the world (South America, the Middle East, and Africa).

Key Company Profiles

This report presents detailed profiles of key companies in the power transformer industry, such as Hitachi Energy Ltd., Iljin Electric Co., Ltd, Hyosung Heavy Industries Co., Ltd., HD Hyundai Electric Co., Ltd, LS ELECTRIC Co., Ltd., Siemens Energy AG, Schneider Electric SE, General Electric Vernova Inc, etc. In general, each company profile includes company overview of the company, relevant products and services, a financial performance, and recent developments.

Competitive Landscape

The report provides a comprehensive list of notable companies in the market, including mergers and acquisitions (M&As), joint ventures (JVs), partnerships, collaborations, and other business agreements.

The study also discusses the strategies adopted by leading players in the industry.

Executive Summary

The Executive Summary will be jam-packed with charts, infographics, and forecasts. This chapter summarizes the findings of the report crisply and clearly.

The report begins with an executive summary chapter and ends with conclusions and recommendations.

Also, check out our other reports:

• Global Smart Transformer Market
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• Global Distribution Transformer Market
• Global Large Power Transformer Market