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The global smart transformer market size was USD 1.72 billion in 2018 and is projected to reach USD 5.04 billion by 2026, exhibiting a CAGR of 14.5% during the forecast period from 2019 – 2026.
A smart transformer constantly regulates the voltage and maintains contact with the smart grid such that it allows remote administration in the power system. The smart transformer market growth is driven by increasing investment in developing and strengthening the smart grid and growing trend for adopting digitalization in the power industry. Additionally, the increasing focus on renewable power generation and integration of energy mix result in the need for smart monitoring and voltage regulation. This, thereby propels the demand for market in the projected period. For instance, According to the International Energy Agency annual review, global energy investment stood at USD 1.8 trillion in 2018, which increased the penetration for smart grid and increased reliability in the power system, strengthening the demand for smart transformers in the global market.
Growing Adoption Of Advanced Solution And Equipment’s Efficiency Of The System
This transformer plays a crucial role in the power system starting from generation to the distribution end, where the efficiency of the transmission system is the primary factor. Higher efficiency is primarily catered by adopting advanced solutions and equipment such as Distributed Control system (DCS), Supervisory Control and Data Acquisition (SCADA), MATLAB, power quality monitoring system, and among other solutions.These transformers significantly improves the efficiency of the transmission and distribution system by regulating voltage and is substantially driving the market. This will further increase the adoption of this kind of transformers in the power system on a large scale.
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Smart Grid Continues to Play a Key Role in Adopting Smart Transformer
The smart grid provides various advantages such as energy-saving through reducing consumption, reducing balancing cost, leveling the peak demand, accuracy in the electric bill, and other benefits. This makes power transmission through a grid system more flexible. Application of smart transformers in the power grid will enable the smart grid to work more efficiently and reliably by regulating the voltage at the end-user, which results in improving the efficiency of the grid. Hence, the adoption of smart transformers in smart grid is increasing the efficiency of the grid, which enables more application of the same in the grid.
Significant Growth In Digitalization In Power Industry
The power industry is at the edge of transforming from centralized, conventional, and security threats to distributed, energy mix generation, and advancement in control systems. Digitalization is playing a crucial role in the power industry, which includes control systems, sensors, industrial software, and Industrial Internet of Things (IIoT) technologies, among others. Digitalization integrated with equipment and devices such as smart transformer helps to improve system efficiency and form an integral part of the smart grid. This works independently to regulate the voltage and allow remote administration in the system, thus promoting the smart transformer market growth.
The smart transformer provides digitalized control along with advanced features such as a digital platform to access online, Wi-Fi, Ethernet or cellular options, optimization of asset performance, cybersecurity, and others. This makes the transformer play a managerial role in the electric distribution grid. Increased digitalization in the power system has helped to control real and reactive power, improve the power quality, limit fault current, and reduce energy consumption. Hence, the wide spectrum of advantages for integrating digitalization into the power industry is increasing the demand for smart transformers in the global market.
Increasing Investments In Strengthening Smart Grid
Smart grid has helped the power industry evolve into a new transition from static one-way management to dynamic two-way management. It plays a crucial role in optimizing and monitoring power consumption by the end-user, which helps to saves energy and increases efficiency. It provides better asset utilization, energy efficiency, electricity cost-saving, power quality, and energy security, which makes the deployment of the smart grid more feasible in the existing grid. Hence, a smart transformer is deployed in the smart grid at a large scale, which adds on more efficiency and reliability in power transmission. Substantial investments from utilities, government initiatives, and grid strengthening projects from various funding organizations have helped to strengthen the grid with more efficiency and reliability. Countries are investing dramatically in developing the smart grid equipment and devices at large. For instance, in 2016, the US utilities had spent USD 144 billion in the generation, transmission, and distribution infrastructure; Europe invested USD 5.38 billion in 2017 for deploying a smart grid in the power industry. Hence, associated advantages of the smart grid along with significant investment in deploying the smart grid increases the application of smart transformer in the transmission and distribution sector across the globe, which drives the demand for this market during the forecast period.
High Initial Investment To Deploy Advanced Systems May Hinder the Industry Outlook
The technological advancement in the smart transformer is upgrading day-by-day, which is increasing the end-user expenditure. The integration of advanced technology, such as sensor technologies, monitoring, diagnostics, and cloud computing and analytics, makes these transformers more expensive. Additionally, the availability of raw material and fabrication of various technologies makes the smart transformer costlier. Hence, high initial investments may hamper the market during the projected period.
Expansion of Residential Sector within the Distribution Segment, Dominates the Market during Forecast Period
Based on type, the market is segmented into power, distribution, specialty, and instrument type transformer. The distribution segment accounts for the maximum smart transformer market share. The distribution transformer majorly deals with load fluctuation and variability in voltage, thereby, becomes less efficient than power transformers. Therefore, it becomes more essential to monitor and transmit variation in load to achieve higher reliability. Hence, the smart transformer is placed in the distribution sector, which enhances the communication and diagnosis under fault conditions, increasing operational efficiency, reliability, and grid stability. Hence, the distribution segment is expected to gain momentum during the forecast period.
Smart Grid Applications is Likely to Lead the Market, Accounting for Maximum Share
By application, the market is segmented into smart grid, traction locomotive, electric vehicle infrastructure, and others. The smart grid segment is holding the largest market share owing to the wide deployment of smart transformers in the smart grid to improve the efficiency and reliability of the network. They are dynamically controls the real and reactive power, which helps to optimize the efficiency of distribution systems and enhance the quality of power in the grid.
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It responds instantly to fluctuations within the power grid, acting as a voltage regulator to ensure voltage stability. Growing investments from government and initiatives taken by them to strengthen grid projects from utilities are also driving the smart transformer market. According to the International Energy Agency, smart grid investments increased to 10% in 2018, as compared to the previous year. Hence, a broad scope of smart transformer, along with the advantages of deploying in the smart grid is promoting the demand for the smart grid segment during the projected period.
The findings based on our research study indicates Asia Pacific to hold the largest share in the smart transformer market during the forecast period. Countries in Asia Pacific are strategically focused on improving grid stability and investing in smart grid projects. Therefore, using a smart transformer in the smart grid increases the power quality and grid stability. For instance, according to World Energy Scenario 2019 report, China planned to invest USD 500 billion for renewable energy and smart grids projects. Hence, growing smart gird investments and government initiatives are boosting the market for these kind of transformers. North America is expected to hold the second-largest position in this market during the forecast period.
Asia Pacific Smart Transformer Market, 2018 (USD Billion)
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As per our market research analysis, North America is expected to witness healthy growth of smart transformer. The US accounted to hold the largest share in North America owing to significant growth in investments from utilities to upgrade the existing grid infrastructure. For instance, according to the EIA report 2018, investment in transmission infrastructure in the US peaked at USD 35 billion in 2016. Hence, increasing investments and growing demand for smart grid led to the growth of this market.
Europe is also estimated to hold a significant share in the market during the projected period. Growing digitalization in the power industry and increasing demand for strengthening the smart grid drives the demand for smart transformer market. Countries in Europe are focusing on extension, refurbishment, and replacement of aging grid infrastructure, which would help to improve the power quality, monitoring, and energy saving in the grid. For instance, according to the European Energy Industry Investments Report 2017, the amount of investment projected in the distribution sector is USD 230 billion for the year 2021 to 2030. Hence, growing investments in strengthening the grid will help in the adoption of smart transformer in the market during the forecast period.
The Middle East & Africa is continuously focusing on renewable power generation and energy mix power generation, which emerges the need for smart grid and intelligent equipment. For instance, according to the Middle East Solar Industry Association, energy investment in the Middle East & North Africa region would increase to USD 1 trillion in the forecast period of 2019-2023. Hence, growing investment in smart grid, renewable power generation, and government initiatives for grid modernization will lead to wider adoption of smart transformers in the power grid. This, in turn, is accelerating the demand for smart transformers in the regional market.
ABB Focuses on Developing New Products and Upgrading Existing Devices to Strengthen its Product Portfolio
Key companies are investing significantly in the development of new smart transformers by integrating advanced monitoring and optimizing technologies. Asset management solutions, monitoring, and diagnostics, sensor technologies in a smart transformer have been gaining interest and support from investors. Furthermore, investments in the development of electric vehicle infrastructure will propel the demand for smart transformer in the global market.
At present, the global smart transformer market is dominated by ABB, Schneider Electric, and Siemens, holding a large share in the global market. The dominance of key players is dependent on their investment in the research & development activities, incorporation of advanced features, operational efficiency, innovative strategic partnerships and acquisitions, and application upgradation.
The key players are primarily focused on developing technology such as voltage optimization, power quality, and provision of a digital platform, which leverages the operational efficiency and reliability in the power system.
The deployment of smart transformer is shifting towards building a smart ecosystem, such as optimization of voltage regulation, power quality, energy-saving, monitoring, modeling, and simulation, which help to increase the operational efficiency and energy of the grid. Substantial demand for these transformers from the distribution sector owing to load fluctuations and chances of failure upholds the demand for this market. Hence, smart transformers in power systems in the distribution side are holding a large demand in the global market. Investment in smart grid projects and renewable power generation enables the deployment of smart transformer on a large scale. Growing government initiatives for grid strengthening projects is expected to create promising growth opportunities for the smart transformer market.
The report offers qualitative and quantitative insights on the smart transformer and the detailed analysis of market size & growth rate for all possible segments in the market.
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Along with this, the report provides an elaborative analysis of market dynamics, emerging trends, and competitive landscape. Key insights offered in the report are the advancement in technology for these kind of transformers by individual segments, recent industry developments such as partnerships, mergers & acquisitions, consolidated SWOT analysis of key players, Porter’s five forces analysis, business strategies of leading market players, macro and micro-economic indicators, and key industry trends.
Value (USD Billion)
As per the Fortune Business Insights study, the global market was USD 1.72 Billion in 2018.
The global market is projected to grow at a CAGR of 14.53% in the forecasted period.
The global market in the Asia-Pacific was USD 0.71 billion in 2018
Power industry, oil & gas industry, railway transportation, and electric vehicle infrastructure are the prominent industries were smart transformer are deployed at a large scale.
In 2018, the global market was USD 1.72 Billion, and it is anticipated to reach USD 5.04 Billion by 2026 growing at a stellar CAGR of 14.53% during the forecast period (2019 -2026)
Based on type, the distribution segment is holding the largest share in the global market.
Growing digitalization in the power industry and significant growth in developing and strengthening the smart grid, coupled with growth in renewable power generation, are the major factors fueling the demand for the market. However, high initial investment restraints market growth in the projected period.
The top players in the market are ABB, Schneider Electric, Siemens, Eaton, Alstom, GE Power, Triad Magnetics, Mitsubishi Electric, Powerstar, CG Power and Industrial Solutions Limited, Ormazabal, and SPX Transformer Solutions Inc.
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