The United States transformer market is expected to rise at a CAGR of more than 3% during 2020 - 2025. Factors such as increasing energy demands from the industries and upgrading old transmission and distribution systems are likely going to drive the United States transformer market. However, delay in the implementation of some of the national level projects is expected to restrain the United States transformer market.
- Distribution transformer, due to the increasing number of substation installation across the country to transfer electricity, is expected to be the largest growing segment for the United States 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 United States transformer market in the future.
- Increasing renewable energy installation and connecting them into the country's grid is expected to drive the United States 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.
- The United States has access to 100% electricity for several years now. Still, ongoing increasing energy demand in the country, along with the upgrading of outdated transmission and distribution systems, is likely going to drive the country's transformer market.
- In 2018, the electricity generation in the United States was about 4460.8 Terawatt-Hour (TWh), which was higher than what the country produced in 2017, 4302.5 TWh. The increase in electricity generation reflects 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 California Public Utilities Commission granted San Diego Gas & Electric (SDG&E) a permit to construct the Artesian 230-kV Substation Expansion Project in San Diego County, Calif. The commission added that SDG&E’s stated purpose for the proposed project is to build a new substation to meet the mandatory North American Electric Reliability Corporation (NERC) reliability criteria. The project is expected to be located in the western portion of the county, with elements within the City of San Diego.
- In 2019, National Grid started the construction of the West Ashville substation project in New York. The step was taken regarding the low voltage concerns on the existing electric transmission grid that were going to decrease as the area load overgrows. To improve reliability to the region, National Grid decided to construct a new substation in the Town of Harmony to provide load relief to the existing system.
- Hence, owing to the above points, the distribution transformer segment is likely to dominate the United States transformer market during the forecast period.
Increasing Renewable Energy Expected to Drive the Market
- The United States, due to the constant increase in energy demand and an increasing issue related to the greenhouse gas emission, is witnessing a large installation of the renewable energy, which requires a large number of power and distribution transformers to transfer electricity from the generation site to the consumers.
- In 2019, the total renewable energy installation capacity in the country was 294.504 gigawatts (GW), which was more than the installed capacity of 2018, 246.596 gigawatts (GW). Moreover, according to the Energy Information Administration (EIA), the country is expected to increase renewable energy mix from 19% in 2019 to 38% in 2050, thus surpassing energy from coal, nuclear, and natural gas. This is likely to drive the transformer market in the country.
- Moreover, California and Texas, have massive installations of solar in their counties; these solar farms, which are either built or proposed, are expected to connect into the state grid via transmission lines. Some of the solar farms in the states have also installed their substations, having transformers on-site to plug into the state grid directly.
- The United States has several projects of offshore wind energy that have a status of under-construction, proposed, or got clearance from the government. All these projects require transmission lines and distribution systems to transmit electricity from the offshore facility to the onshore. These offshore wind installations are likely going to install offshore substations with transformers to step-up the voltage.
- Hence, owing to the above points, increasing renewable energy is expected to drive the United States transformer market during the forecast period.
The United States transformer market is fragmented. Some of the key players in this market include Siemens AG, ABB Ltd., General Electric Company, Schneider Electric SE, and Emerson Electric Co.
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