The China transformer market is expected to rise at a CAGR of more than 4% during 2020 - 2025. Factors such as increasing energy demands from the industries and expansion of transmission and distribution systems are likely going to drive the China transformer market. However, fluctuating prices for raw material used in manufacturing of transformer are expected to restrain the China transformer market.
- Distribution transformer, due to the increasing number of new substation installation across the region, is expected to be the largest segment for the China transformer market during the forecast period.
- A smart grid is seen as a highly efficient and economical technology that can reduce carbon emissions. Such installation and up-gradation for now exiting networks in the country can create several opportunities for the China transformer market in the future.
- Increasing renewable energy in the country is likely going to drive the China transformer market during the forecast period.
Key Market Trends
Distribution Transformer Expected to Dominate the Market
- A distribution transformer or service transformer is used to provide the final voltage transformation in the electric power distribution system. It will then step down the voltage applied in the distribution lines to the level used by various customers of the residential, commercial, and industrial sectors.
- China, because of its rapidly increasing urbanization and industrialization, is expanding its existing transmission and distribution system by laying new transmission lines and installing new substations to fill the energy demand-supply gap in the country.
- In 2018, the electricity generation for China was about 7111.8 Terawatt-Hour (TWh), which was higher than what the country produced in 2017, 6604.5 TWh. The increase in electricity generation exhibits an increase in the number of power generation capacity, which is likely to use new distribution transformers for transmission of electricity to the consumers.
- In 2019, the power supply project for the China-Laos railway was inaugurated. The project is running along the China-Laos railway through five provincial administrative regions in northern Laos. It is likely to build twenty circuits of 115kV transmission lines with a total length of 268 km and extend 11 bays in 10 substations to supply power from the state-run Electricite du Laos' grid to 10 railway traction substations. Such several planned substations are expected to install several distribution transformers in the project. The project is scheduled to be complete by the end of 2021.
- In 2019, ABB Ltd and the Chongqing Municipal People’s Government signed an agreement to build a smart manufacturing base of transformers in Chongqing’s Liangjiang New Area. According to the agreement, ABB Chongqing Transformer Co., Ltd. will move to Liangjiang New Area from Jiulongpo District and establish a world-leading transformer manufacturing base in the new site. The project is likely to boost the distribution transformer market. The manufacturing plant is expected to be complete by the end of 2022.
- Hence, owing to the above points, the distribution transformer segment is likely to dominate the China transformer market during the forecast period.
Increasing Renewable Energy Expected to Drive the Market
- Due to the constant increase in energy demand and an increasing issue related to greenhouse gas emissions, China is witnessing a large installation in renewable energy capacity, which requires a large amount of power and distribution transformers to transfer electricity from the generation site to the consumers.
- Moreover, China's increasing industrial operations to surpass the United States and become a superpower in terms of the economy are likely to drive the transformers' market in the country. The country's government has also banned coal-fired power plants at several locations; such measures instantly boosted the country's renewable installations and are likely to expand its transmission and distribution system to supply power.
- In 2019, the total renewable energy installation capacity in China was 758.62 gigawatts (GW), which was more than the installed capacity of 2018, 695.43 gigawatts (GW). With the increasing growth in renewable power generation, particularly from wind and solar PV, and connecting those into the country’s grid, the demand for transformers are expected to remain high in the country.
- Moreover, large-scale solar PV development in the country is supported by the government's subsidies. China has adopted a feed-in tariff subsidy policy for renewable energy, which has been marked as one of the most effective renewable energy support policies globally for solar PV developments.
- Hence, owing to the above points, increasing renewable energy is expected to drive the China transformer market during the forecast period.
The China transformer market is fragmented. Some of the key players in this market include Siemens AG, ABB Ltd., General Electric Company, Mitsubishi Electric Corporation, and JiangSu HuaPeng Transformer Co., Ltd.
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