The India transformer market is expected to rise at a CAGR of more than 5% 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 India transformer market. However, delay in the implementation of the projects due to lengthy government procedures is expected to restrain the India transformer market.
- Distribution transformer, due to the increasing number of new substation installation across the region, is expected to be the largest growing segment for the India transformer market during the forecast period.
- A smart grid is seen as a highly efficient and economical technology that can reduce carbon emissions. Such up-gradation for now exiting networks in the region can create several opportunities for the India transformer market in the future.
- Several favorable government policies in India made in accordance with the increasing energy demand are likely going to drive the India transformer market.
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.
- India, 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 India was about 1561.1 Terawatt-Hour (TWh), which was higher than what the country produced in 2017, 1470.3 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, Sterlite Power, India's leading private power transmission player, received a letter of award for two key inter-state projects worth over INR 3000 crore for Udupi-Kasargode and WRSS 21 (Part B) involving lines and gas-insulated substations (GIS). The Udupi project includes 400 KV Transmission Line (120 km) from Udupi in Karnataka to Kasaragode in Kerala along with a 400 KV gas insulated substation (GIS).
- In 2019, Linxon won an order of around USD 10 million from ObraBadaun Transmission Ltd in India as an upgrade for a turnkey gas-insulated substation (GIS) at Ujhani and Bilsi substation sites in the state of Uttar Pradesh, northern India. The contract consists of design, engineering, manufacturing, testing, and equipment delivery of a 400/220kV/132kV GIS substation, and also 30 bays of GIS 132 kV extensions to both sites. The commissioning of the new substation is expected to be for the later part of 2020.
- Hence, owing to the above points, the distribution transformer segment is likely to dominate the India transformer market during the forecast period.
Government Policies Expected to Drive the Market
- India's power sector is undergoing a wide-scale transformation, owing to the country facing steep electricity demand growth rates. Several parts of India witness high power cuts due to the growing demand for electricity and the supply gap. To address the issue of electricity reliability, the government has implemented policies to increase electricity generation and encourage consumers to reduce their consumption during peak hours.
- In 2019, the ministry of new and renewable energy (MNRE) launched the Pradhan Mantri Kisan Urja Suraksha evem Utthan Mahabhiyan (PM KUSUM) scheme for farmers for installation of solar pumps and grid-connected solar and other renewable power plants in the country. The program aims to add solar and different renewable capacities of 25,750 MW by 2022, with the total central financial support of Rs. 34,422 crore, including service charges to the implementing agencies. The scheme's purpose is to increase the electric access in the rural parts of India and is likely going to expand transmission and distribution system, which is expected to drive the country's transformer market.
- In recent years, the government has launched several schemes, such as the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY), Integrated Power Development Scheme (IPDS), and National Electricity Fund (NEF), to improve the distribution sector in the rural and urban areas, which is expected to drive the demand for transformers in India.
- Moreover, transformers produced in the country have been brought under mandatory Bureau of Indian Standards (BIS) certification that has resulted in the standardization of the product, which has led to quality improvement and reduction of failure in transformers. These transformers have been brought under a mandatory BEE star labeling scheme, which has resulted in the use of modern technology in manufacturing energy-efficient transformers.
- Moreover, government policies towards the rapid increase in renewable energy installations at different sites that require transformers of step-up and step-down of the electrical voltage that is being transferred through it will likely drive the market. In 2019, the total renewable energy installation in the country was 128.23 gigawatts (GW), which higher than its installation in 2018, 118.07 gigawatts (GW).
- Hence, owing to the above points, government policies are expected to drive the India transformer market during the forecast period.
The India transformer market is fragmented. Some of the key players in this market include Siemens AG, ABB Ltd., General Electric Company, Mitsubishi Electric Corporation, and CG Power and Industrial Solutions Ltd.
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