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North America power transformer market is projected to attain a valuation of $6,438 million by 2030 at a CAGR of 6.4% during the forecast period 2023–2030.
The North American power transformer market is a key segment in the global energy sector, playing a pivotal role in enabling efficient power transmission and distribution. With a high demand for electricity across various industries and a growing need for renewable energy integration, the market is experiencing significant growth and transformation. One of the driving factors for the growth of the North American power transformer market is the increasing demand for electricity. Industries such as manufacturing, healthcare, and IT rely heavily on a reliable and uninterrupted power supply to operate efficiently. Additionally, the rising population and urbanization in North America have led to an increased need for power transmission and distribution infrastructure to meet the growing energy requirements.
Governments and regulatory bodies in North America have been implementing policies and incentives to promote the use of clean energy, such as wind and solar power. This shift towards renewable energy sources necessitates the integration of power transformers into the existing electrical grid to facilitate efficient transmission and distribution of electricity generated from renewable sources.
In terms of market competition, the North American power transformer market is characterized by the presence of several established manufacturers and suppliers. These companies are investing in research and development activities to introduce innovative products and technologies that offer improved efficiency, reduced losses, and enhanced reliability. Additionally, collaborations and partnerships between power transformer manufacturers and utility companies are becoming more prevalent to meet the evolving market demands.
Aging Power Infrastructure Fuels Urgent Need for Modernization and Replacement
More than 60% of the power transformers in the United States are over 25 years old, surpassing their intended lifespan. These aging transformers face increased risks of failures, reduced efficiency, and higher maintenance needs. Consequently, there is an urgent need for modernization and replacement to ensure a reliable and efficient power grid.
The US electric grid in the North America power transformer market requires an estimated investment of approximately $2 trillion over the next 30 years for modernization, including upgrading aging infrastructure. Power transformers play a crucial role in grid modernization efforts, making them a focal point for utilities and grid operators. This substantial investment presents a lucrative opportunity for power transformer suppliers and manufacturers. The Department of Energy's Grid Modernization Initiative, coupled with federal and state regulations, aims to enhance the resilience, reliability, and flexibility of the US power grid. This comprehensive initiative provides incentives and funding opportunities for utilities to upgrade their aging infrastructure. As a result, a favorable market environment is created for power transformer suppliers and manufacturers in the power transformer market.
The proposed American Jobs Plan allocates $100 billion to modernize the US electric grid. This significant investment will be utilized to improve infrastructure resilience and reduce transmission and distribution losses. The resulting demand for power transformers is expected to surge, presenting lucrative opportunities for suppliers and manufacturers.
The integration of renewable energy is a top priority for the US, with over 21.5% of total utility scaled electricity generation came from renewable sources in 2022. As renewable energy capacity continues to expand, the efficient transmission and distribution of intermittent sources like solar and wind rely on robust power transformers. This integration presents a substantial market opportunity for power transformer suppliers and manufacturers.
Growth Drivers of North America Power Transformer Market
Technological advancements are reshaping the power transformer industry. The adoption of smart transformers, which can provide real-time feedback on power supply conditions, is on the rise. Additionally, developments in transformer materials and design are leading to more energy-efficient transformers, which are both environmentally friendly and cost-effective in the long run.
Industrial Power Transformer to Capture More Than 42% of the North America Power Transformer Market
Industrial power transformers are integral components of manufacturing and processing industries, converting the high-voltage power generated by utility companies to a lower voltage that can be safely used in industrial settings.
The prediction that industrial power transformers will capture more than 42% of the market share in North America could be due to several factors. North America, particularly the United States, has seen a resurgence in manufacturing activity in recent years. This has driven an increased demand for power transformers as new factories are built and old ones are modernized.
Modern power transformers are increasingly energy-efficient, reducing wastage and operating costs. As industries are being more pressured to reduce their carbon footprint and energy expenses, they are expected to invest more in such energy-efficient transformers in the power transformer market. Moreover, the electricity grids in many parts of North America are outdated and are being upgraded. The replacement of old transformers with new, high-capacity units is a major part of this process.
Apart from this, the rising demand for electric vehicles (EVs) is prompting a concurrent need for EV charging stations, many of which will require industrial power transformers to operate.
Renewable Energy Source to Generate More Than 40% Revenue Share
The role of renewable energy in powering the future is no longer a matter of debate. With increasing concerns over climate change and finite fossil fuel resources, the shift towards renewable energy sources like solar, wind, and hydropower is accelerating. The estimation that renewable energy sources will generate more than 40% of the revenue share in the North American power transformer market is based on the following aspects:
Government Policies and Incentives: Federal and state-level incentives for renewable energy installation and use are driving a shift away from traditional energy sources. This directly translates into increased demand for power transformers suitable for renewable energy sources.
Economic Viability: The cost of renewable energy technology, especially solar and wind, has been decreasing steadily, making it a more financially attractive option. This is likely to boost the need for transformers designed for renewable energy systems.
Energy Storage: The advent of large-scale battery storage systems is resolving the intermittency problem associated with renewable energy. The integration of these systems with renewable energy plants requires specialized transformers, adding to the market growth.
Grid Integration: The integration of distributed renewable energy resources with the grid requires transformers to regulate voltage and maintain power quality. This is expected to further drive the demand for transformers in renewable energy systems.
The North America power transformers market is segmented into:
By Energy Source