Global Gas Insulated Transformer Market is Estimated to Witness High Growth Owing to Increasing Capacity Requirements and Infrastructural Developments
The global gas insulated Transformer market is estimated to be valued at US$ 2.81 Bn in 2024, exhibiting a CAGR of 5.2% over the forecast period (2024-2031). Furthermore, increasing investments in upgrading aging power infrastructure along with the expansion of transmission and distribution networks are boosting the demand for gas insulated transformers globally.
Market Dynamics:
The growth of the global gas insulated transformer market is driven by increasing capacity requirements owing to rapid urbanization and industrialization. Urban population growth around the world has been quite significant over the past few decades creating demand for stable and reliable electricity supply. This has necessitated investments in upgrading and expanding existing transmission and distribution infrastructure.
Another key driver is ongoing infrastructural development projects particularly in developing regions of Asia Pacific and Latin America. Mega infrastructure projects related to rail, road, airport, and urban mass transit systems require stable electricity supply which is boosting the demand for gas insulated transformers in these regions. The opportunities arising from rural electrification programs and upgrading of aging power grids in developed markets are also contributing to the growth of the market.
Increasing Demand for Power Due to Rapid Urbanization and Industrialization
The global demand for power is witnessing strong growth due to rapid urbanization and industrialization activities taking place across major economies. As per estimates, the global power consumption is projected to rise by close to 50% in the next two decades. This increasing power demand is driving investments in new power generation, transmission, and distribution infrastructure. Gas insulated transformers are increasingly being adopted by utility companies and industrial facilities for providing reliable and safe power distribution at high voltages. Their compact size and low maintenance requirements make them well-suited for applications with space constraints. The growing need to augment power infrastructure will continue driving the demand for gas insulated transformers in the coming years.
Strict Safety Regulations for the Installation of Transformers
Installing conventional oil filled transformers requires proper safety measures and compliance with regulations to prevent hazards in case of fire or explosion. Many countries have introduced strict safety standards for handling flammable insulating oils and locating transformers away from residential areas and other sensitive infrastructure. Compliance with such stringent regulations involves significant additional costs. Gas insulated transformers provide a safe alternative as they eliminate the fire risk associated with conventional oil insulated types. However, the high initial costs of gas insulated transformers has restrained their widespread adoption. With subsidies and financing schemes, utilities are now able to offset the higher capital expenditure.
Need for Replacements of Aging Transformer Fleet
A sizable portion of the existing transformer fleet across utility networks is reaching the end of their useful life. As per estimates, nearly 30% of transformers in operation today are over 35 years old. Such aged equipment is prone to failures and unplanned outages. Also, outdated technologies limit optimal grid utilization. The need to replace aging transformers presents a strong opportunity for gas insulated types which provide higher reliability and availability. Utilities are allocating greater budgets for asset refurbishment and modernization programs, benefiting the sales outlook of gas insulated transformer manufacturers.
Declining Price Points Due to Mass Production
One of the major constraints in widespread adoption of gas insulated transformer technology was their relatively higher costs compared to oil-filled variants. However, with growing orders and mass production levels, manufacturers have been able to lower production costs and reduce price points significantly. As assembly lines realize economies of scale, the price differential is expected to narrow further. This will encourage many utilities to replace outdated fleets with gas insulated types for performance and safety benefits, without major budgetary constraints. Ongoing cost optimization initiatives are opening up the technology to more applications and geographical markets.
Impact of COVID-19 on Project Timelines and Budgets
The unprecedent impact of the COVID-19 pandemic has severely disrupted supply chains and stalled on-site construction activities globally. Many electric utilities postponed capital expenditure projects or faced delays due to lockdown restrictions and manpower shortages. This had an adverse effect on the demand for gas insulated transformers in the short-term. Prolonged economic downturn also squeezed investment budgets. As the global economy struggles to recover, players in the value chain may continue battling weak demand scenarios and funding constraints in the near future. This presents a major challenge for growth strategies in the transformer industry.
Issues with Transportation and Installation of Large Sizes
While gas insulated transformer technology enables compact designs, transportation and on-site installation of extra high voltage ratings remains a complex and costly challenge. The maximum footprint and clearances required mandate specialized equipment and trained manpower for moving such large enclosures. Utilities have limited flexibility to integrate transformers for custom applications requiring non-standard equipment layout or footprints. Transportation difficulties are further compounded in remote or difficult terrain areas with inadequate infrastructure. Such issues restrict the adoption of higher voltage gas insulated transformer types for some niche grid applications.
In conclusion, the global gas insulated transformer market is driven by the need for safe and reliable power distribution solutions to meet increasing demand. While initiatives to lower costs are opening new opportunities, project delays due to COVID-19 and logistical difficulties in handing large enclosures currently act as restraints. Overall demand outlook remains positive with ongoing grid modernization programs worldwide.
Link: https://www.coherentmarketinsights.com/market-insight/gas-insulated-transformer-market-5232
Key Developments:
- In May 2022, Arteche, a prominent global player in the electricity sector established in 1946, and Hitachi Energy, a Swiss technology leader focused on sustainable energy solutions, received regulatory approval to finalize their joint venture, Arteche Hitachi Energy Instrument Transformers S.L. This new entity succeeds Arteche Gas Insulated Transformers (AGIT) and aims to accelerate the development of sustainable, environmentally friendly gas-insulated transformers, with Arteche holding a 51% stake and Hitachi Energy owning 49%.
- In December 2021, Pfiffner, a manufacturer recognized for its innovative solutions in electrical engineering, and Trench Group, a leader in high voltage technology, jointly announced their commitment to developing SF6-free transformers. While SF6 has traditionally been used for its safety features in AIS High Voltage Instrument Transformers, it is also identified as a potent greenhouse gas that contributes to global warming when released into the atmosphere.
Key Players:
ABB Ltd., Alstom (now part of GE), Bharat Heavy Electricals Limited (BHEL), CG Power and Industrial Solutions Limited, Eaton Corporation, Efacec, Hitachi Energy, Hyundai Electric & Energy Systems Co., Ltd., Siemens Energy, Schneider Electric, SGB-SMIT Group, Toshiba Corporation, Transformers and Rectifiers (India) Limited, Toshiba Corporation, and ZTE Energy
