Global transformers market is projected to witness a CAGR of 6.93% during the forecast period 2024-2031, growing from USD 70.09 billion in 2023 to USD 119.77 billion in 2031. Factors such as rising energy consumption, urbanization, industrialization, advancements in the integration of renewable energy sources with smart grid technology, and environmental restrictions drive the growth of the transformers market. The combination of economic, technological, and regulatory factors is expected to create opportunities for transformers in the forecast years.
The electrical grid is aging in developed regions, especially in North America and Europe. Utility providers are upgrading and replacing old transformers, which is essential to meet modern energy demands and improve efficiency, driving the growth of the global transformers market in the forecast years. Moreover, developing regions, such as Africa and Asia-Pacific, are investing in rural electrification projects for expanding power grids, which boosts the demand for transformers in the market.
For instance, in March 2024, According to National Renewable Energy Laboratory (NREL) estimates, the United States will increase the distribution transformer capacity above 100% by 2050.
Electrification Upliftment in Developing Countries to Increase Market Demand
The rise in the global population has led to high power demands. Developing countries invest heavily in infrastructure and the energy sector to accommodate the rapid development. Region such as Asia-Pacific, Africa, and South America are engaged in industrial, residential, and commercial construction that consumes significant amounts of electricity, leading to higher demand for transformers to distribute and regulate high-power loads.
Additionally, developing countries, such as India, Thailand, and Indonesia, are investing in industrial growth, such as mining, manufacturing, and oil and gas, along with data centers, which fuel the demand for electricity. Indeed, transformers are required to deliver reliable electricity for different applications since industrial operations require consistent power supply at stable voltage. Utilization of HVAC systems, home automation technology, and high-energy-consuming products results in high electricity consumption within residential applications. With high demand from the residential sector, the demand for transformers is rising in the forecast period.
Globally, governments of different countries have taken the initiative for the electrification of rural and remote areas, which significantly contributes to the demand for transformers in the forecast period. Governments and utility companies are extending the existing power grids to bring electricity to rural areas, boosting the transformers market size.
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Thus, the electrification of rural areas, rapid urbanization in developing countries, and rise in the consumption of electricity drive the demand for the transformers market.
For instance, in April 2024, The World Bank Group and African Development Bank Group entered in a partnership with an ambition to provide electricity access to 300 million people in Africa by 2030.
In March 2022, the Embassy of Japan and the United Nations Development Programme (UNDP) signed an agreement to provide support for sustainable rural electrification in remote areas of Cambodia.
Electrification of the Transportation Sector to Proliferate Market Growth
The electrification of the transportation sector in developing countries is driving the demand for transformers. The transformers demand in transportation sector is driven by transition from fossil fuels, powered to electric vehicles (EVs), electric railways, and other electrified public and commercial transportation.
Furthermore, governments are introducing new environmental policies to reduce carbon emissions, which raise the adoption of electric vehicles in different regions. A rise in EV sales leads to the expansion of EV charging networks that drive transformers market growth as EV charging stations need transformers to reduce high-voltage power from the grid to the level required for safe charging of vehicles. Based on the findings, with the rise in the number of charging stations, urban and rural areas foster the transformers market share.
Thus, the electrification of the transportation sector in all regions, the expansion of EV charging networks, and the development of smart grids and energy storage solutions drive the demand for the global transformer market.
For instance, in July 2024, the Indian government is looking to expand the scope of the electric vehicle (EV) policy, which will prompt global players to localize production and invest in the domestic ecosystem of EV charging infrastructure.
Distribution Transformers to Dominate the Global Market Share
In 2023, distribution transformers will have a high adoption rate, which will make the segment a major contributor to the transformers market. High demand for distribution transformers is driven by a combination of urbanization, rural electrification, increasing power consumption, the shift towards renewable energy, and the need for modern and efficient power distribution networks. Distribution transformers are essential for extending power grids into rural communities.
In most countries, the distribution transformers have facilitated policy support, making the product an economically feasible option for the producers and investors. Thus, several beneficial aspects of distribution transformers sustain their dominance in the transformers market.
For instance, in July 2024, Toshiba decided to invest a significant amount to increase production capacity of power transmission and distribution equipment in India.
Asia-Pacific Leads the Global Transformers Market
Asia-Pacific dominates the transformers market with the highest share. The region comprises developing countries, that are largely investing in renewable energy sources and the power distribution sector, driving the growth of the market in the country. China and India are some of the biggest energy consumers, which makes Asia-Pacific contribute significantly to the magnitude of global consumption. Countries are investing in modernizing power grids, improving energy efficiency, reducing transmission losses, and ensuring reliable power supply.
Developing countries are highly focused on the manufacturing sector and electrification of rural areas, fostering the demand for transformers in the region. Additionally, the rise in interest in electrification of the transport sector in developing countries is expected to be a major factor for market growth during the forecast period.
According to the National Family Health Survey (NFHS) report published in March 2022, rural residents with access to electricity surged from 53 percent to 86 percent in the last five years.
Future Market Scenario (2024 – 2031F)
1. Advanced transformers will be required for the integration of renewable energy and smart transformer applications, helping to shape the future of immersive experiences.
2. As government concerns push for more sustainable technological solutions, energy-efficient transformers will gain significance.
3. The rise in rural electrification results in a rise in the demand for distribution transformers in developing countries.
Report Scope
“Transformers Market Assessment, Opportunities and Forecast, 2017-2031F”, is a comprehensive report by Markets and Data, providing in-depth analysis and qualitative and quantitative assessment of the current state of global transformers market, industry dynamics, and challenges. The report includes market size, segmental shares, growth trends, opportunities, and forecast between 2024 and 2031. Additionally, the report profiles the leading players in the industry, mentioning their respective market share, business models, competitive intelligence, etc.
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