Large Power Transformers Market: Variable Commodity Prices Will Hurt but Not Stall Growth

Although alternative energy sources are now being discussed seriously by both governments and commercial corporations, the switchover from electricity is not going to as easy or as rapid as expected. The power grid continues to remain the lifeblood of energy infrastructure in most countries. Large power transformers – equipment that connects electrical networks of disparate voltages – are an inextricable part of the power grid. 

A recent report by Transparency Market Research puts the compounded annual growth rate (CAGR) of the global large power transformers market at 7.8% between 2014 and 2020. The market had an estimated valuation of US$18.35 billion in 2013 and is projected to rise to US$31.05 billion by 2020.

As Industries, Agriculture, and Homes Consume More Electricity, LPTs See Increment in Demand

The consumption of electricity has always been high, but with farm mechanization now becoming common in hitherto underdeveloped agrarian economies, the agricultural sector has also emerged as a massive consumer of electricity. Homes, too, are consuming more electricity than before with the widespread use of electrical appliances and gadgets. The cumulative effect of these changes has helped boost the demand for large power transformers that carry power ratings in the range of 100 megavolt-amperes (MVA) to 1200 MVA.

Browse Market Research Report of Large Power Transformers Market: 

Although demand for large power transformers is rising, it does not follow the conventional pattern any more. There is now a greater focus on large power transformers that run on alternative energy sources; companies are responding to this need. A case in point would be a large power transformer by Siemens that runs on vegetable oil – the transformer, meant for high voltages, was placed into operation in Germany in 2013. Thus, it is clear to see that while demand will remain steady, it will be heavily influenced by the changing energy consumption patterns and regulations.

Large Power Transformer Companies Still Struggling to Build Immunity against External Forces

Manufacturing and installing a large power transformer is both time- and cost-intensive. But in the larger scheme of things, that’s not the key concern for companies in the power transformers market. Braving the volatility in raw material costs is the biggest factor that market players have to contend with. Copper and electrical steel are the two basic raw materials that go into the making of large power transformers; these two materials constitute nearly 50% of the total cost of such equipment. Both of these commodities have been vulnerable to the vagaries of the market in recent years. 

This not only challenges the very manufacturing schedules and lead times of companies in the large power transformers market, but affects the more basic procurement strategies. The demand for copper as well as electrical steel has been rising because of higher energy transmission investments in developing countries and infrastructure upgrade projects in developed regions. This presents an additional growth impediment that large power transformer makers are forced to brave.

Large Power Transformers Market Swings Eastward 

Currently, the developed countries constitute the largest LPT markets globally; but their installed base is aging rapidly. This ups the risk of failure, and hence, the demand for LPT upgrades will remain high in the traditional markets. 

Browse Press Release of Large Power Transformers Market: 

The future, however, belongs to the Asia Pacific and RoW economies where new investments are being pumped in to ensure greater energy security. This makes the RoW and Asia Pacific the most attractive regions in the global large power transformers market. The increasing ratio of electrification in countries such as China and India will drive the market ahead over the next five years.


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