- The power transformer market is driven by increasing global energy consumption.
- The reluctance of governments worldwide in taking up capital incentive projects can hamper the power transformer industry.
- Asia-Pacific the largest market for power transformers, and is expected to dominate the market till 2020.
Overview of Power Transformer Market:
The Power transformer market is projected to reach a value of $29.91 billion by 2020, from an estimated $20.7 billion in 2015, at a CAGR of 7.6% from 2015 to 2020. Increasing energy demand coupled with rising electrical infrastructure projects would drive the demand for power transformers. Apart from this, the replacement of aging infrastructure in North America & Europe and the increasing rate of installation of green transformers are driving the power transformer market.
Global energy production has increased over the past decade, from 15,409.0 TWh in 2000 to 23,536.5 TWh in 2014. This has also led to the increasing need for expanding T&D networks globally; new T&D infrastructure needs $1.9 trillion in cumulative investment by 2024 to meet the growing energy demands.
This includes substations, power lines, and associated equipment and new technology. Governments worldwide are investing in T&D network expansion projects, increasing the demand for power transformers.
T&D investment would approximately account for 40% of the total power infrastructure spending. An investment in renewable energy sources has increased from $60 billion in 2000 to $300 billion in 2011. However, for many emerging economies, keeping up with the increasing electricity demand is a huge investment challenge and current investment trends provide some warning signs for the adequacy of power supply.
Currently, a small power transformer is the largest segment of the power transformer industry, primarily due to its use in various applications. However, a large power transformer is the fastest-growing segment. With countries emphasizing on reducing transmission losses, the use of high voltage transmission technologies such as EHV, UHV, and HVDC has also gone up.
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Asia-Pacific: the leading market for power transformers
The power transformer market is driven by increasing global energy consumption; to fulfill this, new T&D lines are being installed. Moreover, investments being made by governments in electrical infrastructure projects have also gone up, further aiding in the growth of the power transformer market.
Asia-Pacific the largest market for power transformers, and is expected to dominate the market till 2020. Europe is the second-largest market, partly due to the replacement of aging infrastructure activities going on in the region. Meanwhile, Asia-Pacific is also the fastest-growing market for power transformers, as the region is witnessing some of the largest T&D expansions being carried out due to rapidly increasing demand in countries such as India and China.
The demand for power transformers is increasing globally because of numerous T&D expansion projects and grid interconnection projects between countries. Siemens AG (Germany) is constructing a $450 million high-voltage direct current transmission link between Ethiopia and Kenya. The Ethiopia-Kenya Power Systems Interconnection Project will be roughly 1,000 kilometers long and will transmit hydroelectricity. Five South American countries (Chile, Peru, Colombia, Ecuador, and Bolivia) are seeking to interconnect their energy systems in search of better regional integration.
For Europe to reach its targets for 2020 and 2030, a massive expansion of the power grid is required. All over Europe, there is a significant need for improved and integrated transmission lines, carrying more power. In addition, transition into renewables requires new lines and a restructuring of the grid, to transfer electricity from the place of production to usage.
In order to fully optimize the potential of renewables, better integration of energy markets is also required to exchange electricity across borders. However, the reluctance of governments worldwide in taking up capital incentive projects can hamper the power transformer industry.
Grid stability and reliability have driven new investments and overall spending in the transmission and distribution markets, with fewer major outages occurring in recent years. Despite a strong focus on grid infrastructure renewal, especially in Europe, there has also been a significant expansion of the grid network. In 2011, the total installed transmission and distribution line length reached 69.5 million kilometers; in 2016, that figure is set to reach 74.2 million kilometers.
In 2011, Capital Expenditure (CAPEX) in transmission and distribution rose to $190.21 billion, and is forecast to increase to $231.83 billion by 2016. There is an ever-increasing capital spend as seen in previous years during the replacement of existing technology with higher-end smart ones.
The major players in power transformer market include ABB (Switzerland), Siemens (Germany), Crompton Greaves (India), and General Electric (U.S.) among others.