Westford, USA, Dec. 06, 2022 (GLOBE NEWSWIRE) -- Global distribution transformer market is expected to grow at a CAGR of around 5.8% during the forecast period. The market is driven by the need for energy efficiency, stable power supply, and equity in the distribution of electricity. SkyQuest's analysis of the distribution transformer industry shows that the Asia-Pacific region is expected to be the largest market for distribution transformers, followed by North America and Europe. The Asia-Pacific region is also projected to be the fastest-growing market for distribution transformers during the forecast period.
The global distribution transformer market generated a revenue of 17.6 billion in 2021. This was driven by a 5% increase in unit sales to 24.3 million units as average prices remained flat. The growth was primarily driven by emerging markets, with unit sales in Asia-Pacific and Latin America increasing by 9% and 8%, respectively. In contrast, Western European sales were flat while North American sales increased by 2%.
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The distribution transformer market is characterized by a high degree of technology intensity. The production process is Energy Star certified and uses advanced manufacturing technologies such as laser welding and vacuum impregnation. The industry is also subject to stringent government regulations, owing to the critical nature of its products. Distribution transformers are used in the distribution network of electricity utilities and are therefore required to meet strict safety and reliability standards. Despite the challenges, the distribution transformer industry is expected to continue to grow in the coming years, driven by the expanding electricity grid and rising demand for power in developing economies.
Top 10 Producers Hold 40% Share of Global Distribution Transformer Market
SkyQuest analysis also found that the distribution transformer industry is highly fragmented, with the top 10 manufacturers accounting for less than 40% of global sales. The leading manufacturers are ABB (8%), Siemens (7%), GE (6%), and Schneider Electric (5%).
The analysis shows that the distribution transformer industry is consolidating, with the top 10 companies accounting for 40% of total market share. This consolidation is being driven by a number of factors, including: - Increasing need for reliability and efficiency: Distribution transformers are critical components in the electricity grid, and as such, there is an increasing need for reliable and efficient products.
The top four companies in the global distribution transformer market are able to invest heavily in research and development to create innovative products that meet this demand. - Stringent environmental regulations: Many countries are implementing stringent environmental regulations that restrict the use of certain materials in transformer manufacturing. The economies of scale enjoyed by the top four companies allow them to invest in the necessary processes and technologies to comply with these regulations. - Mergers and acquisitions: The consolidation of the distribution transformer industry is also being driven by a wave of mergers and acquisitions. The top four companies have all been active in this area in recent years,
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Shortage is Key Concern in Distribution Transformer Market
SkyQuest's analysis of the shortage of distribution transformers is that the current system is not equipped to handle the future demand. The electric grid is aging, and as more renewable energy sources are added to the mix, the need for new and upgraded infrastructure will only increase.
The other key parameters are the average age of the transformer population and the total capacity of the transformer fleet. In terms of the number of units in operation, SkyQuest’s analysis of the US distribution transformer market shows that there are approximately 2.4 million distribution transformers in operation in the United States. The average age of distribution transformers in operation is about 8 years. In terms of total capacity, the distribution transformer fleet in the United States has a total capacity of approximately 120 gigawatts (GW). Our analysis also shows that there are significant differences in the number of distribution transformers in operation and the total capacity by state. For example, California has more than twice as many distribution transformers in operation than any other state and its total capacity is nearly double that of Texas, which has the second largest number of units in operation.
The study found that the global distribution transformer market is facing a number of challenges.
- First, the demand for transformers is growing faster than the supply. This is resulting in longer lead times and higher prices for customers. In fact, most of the end-users’s lead time in the US has grown to more than 12 weeks to one year to get the required quantity of distribution transformers
- Second, the quality of transformers is declining. This is due to the use of lower-quality materials and components, as well as poor manufacturing processes.
- Third, the availability of skilled labor is decreasing. This is because the transformer industry is not attracting enough young workers. As a result, there are fewer qualified workers available to meet the increasing demand.
- Fourth, government regulations are becoming more stringent. This is making it difficult for manufacturers to comply with all the new requirements.
- Fifth, financing for new projects is becoming harder to obtain. This is because banks are increasingly unwilling to lend money to transformer manufacturers.
As a result of these challenges, SkyQuest believes that the global distribution transformer market is at risk of not being able to meet future demand. This could lead to power outages and other problems for utilities and their customers.
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Top Players in Global Distribution Transformer Market
- ABB Ltd. (Switzerland)
- Eaton Corporation plc (Ireland)
- Schneider Electric (France)
- Siemens AG (Germany)
- Crompton Greaves Ltd. (India)
- Mitsubishi Electric Corporation (Japan)
- Toshiba Corporation (Japan)
- Bharat Heavy Electricals Limited (India)
- Hyosung Power & Industrial Solutions (South Korea)
- SPX Transformer Solutions Inc. (US)
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