The global distribution transformer market is expected to grow at a CAGR of approximately 5.95% over the period of 2020-2025.Factors such as increasing power generation capacity plans across the world, growing demand for replacing/refurbishing of aging distribution transformers, and increasing electricity demand, particularly in China and India, owing to rapidly increasing industrial and infrastructural development activities, are expected to drive the market during the forecast period. Moreover, with growth in renewable based power generation and aging transmission and distribution (T&D) infrastructure is promulgating the growth of distribution transformer market. However, delay in implementation of electrification projects globally is likely to hamper the growth of the market.
- Oil-filled segment is expected to be the largest market for distribution transformer, as it is more efficient, having longer service life and features more reliable overload capabilities. In developing countries, oil-filled distribution transformers account for around 90% of the total distribution transformer units and 80% in developed countries.
- Rising electrification projects in Africa and Asia-Pacific countries, with several initiatives signaling that significant improvements are underway in the regions to improve the electrification rate, is expected to create ample opportunities for the distribution transformer market players.
- Asia-Pacific accounts for the majority share in the global distribution transformer market owing to one-third of the world's population currently residing in India and China, with the two countries accounting major share of global electricity demand.
Key Market Trends
Oil-filled Distribution Transformer to Dominate the Market
- Oil-filled transformers use flammable liquids for cooling, making them highly suitable for outdoor application. It is considered to be more efficient, having longer service life and features more reliable overload capabilities.
- A liquid is a more through medium for cooling application, and regardless of the type of liquid used for cooling, a liquid-based transformer is a better option than dry type. The biggest advantage of an oil-filled transformer is that it can handle higher ratings.
- Countries, such as India and China, are expanding their transmission & distribution network to increase the electrification rate of the country, which is expected to drive the oil-filled distribution market. For example, in India, the government aims to electrify all households under the Pradhan Mantri Sahaj Bijli Har Ghar Yojana.
- China, in a bid to decarbonize its power sector, is heavily investing in renewable energy, creating ample opportunity for distribution transformers to expand the market in the country. The country is expected to increase its average annual investment in distribution network, hence increasing the demand for oil-filled distribution transformer.
- Moreover, oil-filled distribution transformers are subjected to periodic oil analysis, in addition to cleaning and general inspection of working components and its repairing cost is less costly than dry type distribution transformers. Hence, oil-filled distribution transformers are expected to dominate the distribution transformer market during the forecast period.
Asia-Pacific to Dominate the Market
- Asia-Pacific is expected to be the largest and the fastest growing region, due to the increasing power generation capacity plans, growing demand for replacing/refurbishing of aging distribution transformers, and increasing electricity demand, particularly in China and India, owing to rapidly increasing industrial and infrastructural development activities.
- China has witnessed high rates of demand for electricity, owing to the unprecedented growth of economy, coupled with factors, such as rapid industrialization and urbanization electricity. 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.
- Utilities and governments in China are developing new generation projects, particularly renewable energy ones, to meet the rising electricity demand. This is likely to require transmission and distribution infrastructure to accommodate these projects, which is expected to drive the growth of distribution transformers in the country.
- With Australia’s ageing electricity infrastructure nearing the end of its lifespan, it has become crucial to refurbish/ renovate electricity distribution network for increasing renewable energy generation. Moreover, the country has been taking initiatives to modernize its energy infrastructure, for which, the government invests nearly USD 5 billion each year into the distribution network.
- Furthermore, the Indian government plans to invest further in strengthening the electrical network, to build a strong and smart grid, and this, in turn, is expected to supplement the demand for distribution transformers in the country.
The distribution transformer market is moderately fragmented.Some of the key players are ABB Ltd, Siemens AG, Eaton Corporation PLC, Schneider Electric SE and General Electric Company.
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