Procurement of transformers benefits buyers from several end-use sectors by minimizing energy losses, improving power quality, and enhancing grid reliability. The global market size was estimated at USD 87.3 billion in 2023. Key drivers of the industry include rising demand for electric vehicles (EVs), a shift towards renewable energy, grid modernization initiatives, and technological advancements in design. APAC accounted for the largest share (~30%) of the global industry in 2023. Rapid urbanization, smart city projects, and favorable incentives and subsidies were the major factors driving the APAC market in 2023.
The global industry has been substantially impacted by raw material price volatility, replacement costs of aging infrastructure and equipment, disruptions in supply chain and logistics, high capital investments, and energy transition challenges. For instance, fluctuating prices of copper, steel, and specialized insulation materials are affecting production costs and timelines. At the same time, delays in shipping and transportation, exacerbated by geopolitical tensions and global trade uncertainties, are causing supply chain bottlenecks. Similarly, the rapid pace of technological advancements is rendering existing technologies to become obsolete, thus posing a challenge for manufacturers to keep up to date.
Key technology trends that are driving the growth of the industry in 2024 include integration of 3D printing, use of innovative cooling systems, adoption of IoT-integrated smart transformers, and utilization of digital twins. For instance, the integration of 3D printing offers numerous benefits, including enhanced customization, efficient prototyping, material efficiency, and production flexibility. Similarly, innovative cooling systems such as liquid immersion cooling and hybrid cooling are being used to improve reliability and lifespan. In liquid immersion cooling, the windings of the equipment are directly immersed in cooling fluid to improve heat transfer and enhance cooling capacity.
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Government initiatives are playing a crucial role in influencing the growth of this industry globally. For instance, in India, certain programs, namely the ‘Green Energy Corridors’ (GEC) initiative and the ‘Revamped Distribution Sector Scheme,’ are improving electrification, advancing transmission infrastructure, and safeguarding last-mile connectivity. Renewable energy capacity of ~19 GW is set to be included in the intra-state scheme under the ‘GEC-II’ initiative. This is not only boosting the demand for transformers but is also driving investments in modernization and capacity enhancement throughout the value chain of the power sector.
Key suppliers are focusing on developing renewable energy-compatible equipment (such as the ‘Green Power Transformers’ series developed by GE), specifically designed for wind farms and solar power plants. They are also emphasizing the use of energy-efficient and eco-friendly materials. Smart grid technologies are crucial for managing the complexities of renewable energy integration. Suppliers are also investing in Amorphous Metal Transformers (AMTs), which utilize a core made out of thin layers of amorphous metal alloy (typically composed of iron, boron, and silicon). Compared to traditional silicon steel cores, AMTs exhibit lower core losses and higher energy efficiency.
Key factors leading to fluctuations in transformer prices include design and specifications, raw material price fluctuations, demand and supply fluctuations, and transportation and logistics. For instance, design and specifications such as power rating/capacity and voltage/frequency ratings lead to significant price variations. Similarly, transformers designed for handling larger voltages require specialized insulation systems, larger clearance distances, and robust designs. These factors contribute to higher manufacturing costs and, subsequently, higher prices.
During the COVID-19 pandemic, this industry experienced significant challenges as a result of component shortages, logistical bottlenecks, supply chain disturbances, manufacturing delays, and demand fluctuations. For instance, lockdowns and travel restrictions imposed by several countries disrupted the movement of electrical and electronic components across borders, leading to delays in procurement and delivery. At the same time, reduced air and sea freight capacity, coupled with a rise in shipping costs, further intensified supply chain disruptions, which made it challenging for manufacturers to access essential components.
Transformers Sourcing Intelligence Highlights
• This market consists of a fragmented landscape, with the players engaged in robust competition.
• Buyers within this market have substantial bargaining power due to relatively low product differentiation and low costs of switching to alternative suppliers.
• India, China, Vietnam, Mexico, and Colombia are preferred as low-cost or best-cost countries within their regions for sourcing and procurement due to low raw material costs, cheap labor costs, economies of scale, and favorable government policies.
• The key components of the cost structure involve raw materials, labor, equipment and tools, energy and utilities, logistics, and others as the key components. Other costs include R&D, compliance, warranty, rent, general and administrative, and marketing and sales.
Browse through Grand View Research’s collection of procurement intelligence studies:
• Point of Sale Materials (PoSM) Procurement Intelligence Report, 2024 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)
• Electric Coolant Pumps Procurement Intelligence Report, 2023 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)
Transformers - Key Suppliers
• ABB Ltd.
• Alstom SA
• CG Power & Industrial Solutions Ltd.
• Eaton Corporation plc
• General Electric Company
• Hitachi Energy Ltd.
• Hyosung Heavy Industries
• Hyundai Heavy Industries Co., Ltd.
• Mitsubishi Electric Corporation
• Schneider Electric SE
• Siemens AG
• Toshiba Corporation
Transformers Procurement Intelligence Report Scope
• Growth Rate: CAGR of 6% from 2024 to 2030
• Pricing Growth Outlook: 5% - 10% increase (Annually)
• Pricing Models: Cost-plus pricing, volume-based pricing, demand-based pricing, competition-based pricing
• Supplier Selection Scope: Cost and pricing, past engagements, productivity, geographical presence
• Supplier Selection Criteria: Geographical service provision, industries served, years in service, employee strength, revenue generated, key clientele, regulatory certifications, transformer type (power/distributed/SST/others), voltage type (high/medium/low), cooling type (oil-cooled/air-cooled), customer service, lead time, and others
• Report Coverage: Revenue forecast, supplier ranking, supplier matrix, emerging technology, pricing models, cost structure, competitive landscape, growth factors, trends, engagement, and operating model