Power Transformer Market Is Estimated To Witness High Growth Owing To Rising Investments In Renewable Energy Sector
The Power Transformer Market is estimated to be valued at Us$ 38.6 Bn in 2023 and is expected to exhibit a CAGR Of 7.7% over the forecast period 2023 To 2030, as highlighted in a new report published by Coherent Market Insights.
Market Overview:
Power transformers are used in power transmission and distribution systems to increase or decrease transmission voltage levels according to requirements or load at a particular location. They help ensure safe and efficient transmission and distribution of power across distances. Power transformers offer advantages such as high voltage transmission capacity, reduced power loss, compact size, flexibility, and reliability. With increasing investments in smart grids and renewable energy sources globally, the demand for efficient and reliable power transformers is growing steadily.
Market key trends:
One of the key trends fueling growth of the power transformer market is the rising investments in renewable energy infrastructure across the globe. According to the International Renewable Energy Agency (IRENA), global investments in renewable energy reached over $300 billion in 2020, a 5% increase from 2019. Countries are increasingly focusing on developing their renewable energy capabilities to reduce dependence on fossil fuels and achieve sustainable development goals. This is augmenting the demand for power transformers to efficiently transmit and distribute renewable energy across long distances. Furthermore, investments in modernizing aging power grids through smart grid technology adoption are also driving the need for installation of new power transformers with advanced monitoring and communication capabilities. Adoption of biodegradable insulation fluids and development of eco-friendly transformers will further contribute to future expansion of the market.
Porter’s Analysis
Threat of new entrants: The threat of new entrants in the power transformer market is low as it requires huge capital investment to enter and set up manufacturing facilities. Additionally, established players dominate the market making it challenging for new players to gain market share.
Bargaining power of buyers: The bargaining power of buyers is moderate as there are many established players supplying power transformers. However, buyers have high bargaining power due to the essential service transformers provide for the sustainable transmission and distribution of electricity.
Bargaining power of suppliers: The bargaining power of suppliers is moderate due to the availability of several raw material suppliers and suppliers having less dependence on a single buyer for materials. However, customized designs and large-volume orders provide some bargaining power to suppliers.
Threat of new substitutes: There are limited substitutes for power transformers currently and establishment of new substitutes requires significant investment due to technological challenges. This keeps the threat of substitutes low.
Competitive rivalry: Competitive rivalry in the power transformer market is high due to the presence of many global and regional players competing on the basis of product quality, reliability, product innovation, and pricing.
SWOT Analysis
Strength: The power transformer market benefits from strong demand for reliable and efficient transmission and distribution of electricity globally. Established players have vast experience and technical expertise in the market.
Weakness: High initial investment and lengthy qualification process pose challenges for new entrants. Environmental regulations on SF6 greenhouse gas usage add compliance costs.
Opportunity: Growing investments in smart grid infrastructure and renewable energy integration open new growth avenues. Rising power demand from emerging economies boosts replacement and upgradation needs.
Threats: Geopolitical tensions and trade wars hike input costs and impact supply chains. Stringent energy efficiency standards raise compliance pressure.
Key Takeaways
The Global Power Transformer Market Demand is expected to witness high growth, exhibiting CAGR of 7.7% over the forecast period, due to increasing investments in smart grid upgrades and modernization of aging power infrastructure across regions. By 2030, the power transformer market size is estimated to reach $64.5 Bn.
Regional analysis: Asia Pacific dominates the global market, accounting for around 45% share in 2023, led by China, India and southeast Asia. The region is expected to continue its dominance during the forecast period due to rapid infrastructure development and industrialization. North America and Europe are also significant markets driven by investments in grid modernization programs.
Key players operating in the power transformer market are ABB Ltd., Toshiba Corp., Alstom SA, Siemens Energy, Bharat Heavy Electricals Limited, Mitsubishi Electric Corporation, Hyosung Power & Industrial Systems Performance Group, Hitachi, Hyundai Heavy Industries Co. Ltd., GE Co., and Crompton Greaves Ltd.