Global Large Power Transformers Market: Thrust on Product Development to Drive Up Competition

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The global large power transformers market is somewhat fragmented with seven key players together accounting for about three fourths of the market share. Among the top seven companies, ABB Ltd. dominated the market in 2013 with 18.0% of the overall share on account of a comprehensive product portfolio that included shunt reactors and variable shunt reactors, phase shifting transformers, HVDC and HVDC light transformers, polytransformers and multi-voltage generator step-up transformers, and mobile transformers. Alstom SA followed ABB Ltd. in terms of market share in 2013 on the back of innovative technologies and a comprehensive product portfolio. TBEA Co. Ltd came in the third position trailed by Siemens Energy, Toshiba Corp., GE Co., and Crompton Greaves Ltd. 

In the global market for large power transformers, companies have been vying to capture greater market share on the basis of product differentiation. For example, Alstom SA has designed green transformers for environmentally delicate zones and Crompton Greaves Ltd. has introduced transformers that generate very little noise. With more such tailor-made innovative products being unveiled in the near future, competition in the market is slated to rise. On account of well-entrenched big players in the market, new entrants might find it difficult to gain a foothold in the market. 

In terms of revenue, the global market for large power transformers is predicted to attain a value of US$31.05 bn by 2020. 

Asia Pacific Market to Gain due to Significant Uptick in Demand for Energy 

Large power transformers with a rating ranging from 100 MVA to 500 MVA dominated the market with maximum share in 2014 on account of substantial demand for it by most of the utilities. In the coming years the segment is further slated to increase its dominant market share. In 2015, it raked in a revenue of US$14.57 bn. 

Geography-wise, Asia Pacific accounts for the leading share in the market and in the coming years will likely increase it marginally on the back of a substantial uptick in demand for energy from the emerging economies in the region. Asia Pacific large power transformers market is predicted to attain a value of US$12.86 bn by 2020. North America trails Asia Pacific in terms of market share and it is followed by Europe. But going forward, the mature markets in North America and Europe would likely trim their shares due to lesser new opportunities. 

Growing Energy Needs of Emerging Economies Boosting Market 

At the forefront of driving growth in the global large power transformers market is the massive increase in global energy demand. “The rapidly rising electrification ratio in emerging economies such as China, Brazil, India, and Russia have boosted demand considerably. Moreover, increase in load growth and high transmission and distribution losses highlights the need for more substations. Due to rapid economic development and increased need for uninterrupted and reliable power supply in these countries, the power demand is expected to exhibit healthy growth rate over the forecast period,” explains the analyst of the report. 

Countering the growth in the market is the volatility in the prices of raw materials such as copper, steel, aluminum, and oil. In fact, oil and steel have been seeing price swings for quite a while now. This makes it tough for transformer manufacturers to carry on production at optimum prices. Since companies cannot reduce their profit margins beyond a certain limit, they pass on the burden of increased costs to customers. Eventually, this would likely have a negative impact on the market.