Market Trends of United States Transformer Industry
This section covers the major market trends shaping the US Transformer Market according to our research experts:
Distribution Transformer Expected to Dominate the Market
- A distribution transformer or service transformer is used to provide the final voltage transformation in the electric power distribution system. It will then step down the voltage applied in the distribution lines to the level used by various customers of the residential, commercial, and industrial sectors.
- The United States has had access to 100% electricity for several years. Still, ongoing increasing energy demand in the country, along with the upgrading of outdated transmission and distribution systems, is likely going to drive the country's transformer market.
- In 2021, the electricity generation in the United States was about 4406.4 Terawatt-Hour (TWh), which was higher than what the country produced in 2020, 4284.8 TWh. The increase in electricity generation reflects an increase in the power generation capacity, which is likely to use new distribution transformers for the transmission of electricity to consumers.
- In January 2023, Hyundai Electric America Corp. (the South Korean company's sales unit in Atlanta) signed a USD 86.3 million contract with American Electric Power (AEP) to supply 3,500 distribution transformers. AEP intends to put the devices across Texas, Ohio, and Oklahoma, where the firm provides power. Thus, such type of investment in the power transmission line is likely to create demand for transformers, which, in turn, will drive the transformer market in the forecast period.
- Hence, owing to the above points, the distribution transformer segment is likely to dominate the United States Transformer Market during the forecast period.
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Increasing Renewable Energy Expected to Drive the Market
- The United States, due to the constant increase in energy demand and an increasing issue related to greenhouse gas emission, is witnessing a large installation of renewable energy, which requires a large number of power and distribution transformers to transfer electricity from the generation site to the consumers.
- In 2021, the total renewable energy production in the country was 12,326 Trillion Btu, which was more than the production of 2020, 11,683 Trillion Btu. Moreover, according to the Energy Information Administration (EIA), the country is expected to increase its renewable energy mix to 38% in 2050, thus surpassing energy from coal, nuclear, and natural gas. This is likely to drive the transformer market in the country.
- Moreover, California and Texas, have massive installations of solar in their counties; these solar farms, which are either built or proposed, are expected to connect to the state grid via transmission lines. Some of the solar farms in the states have also installed their substations, having transformers on-site to plug into the state grid directly.
- The United States has several projects of offshore wind energy that have a status of under-construction, proposed, or got clearance from the government. All these projects require transmission lines and distribution systems to transmit electricity from the offshore facility to the onshore. These offshore wind installations are likely going to install offshore substations with transformers to step-up the voltage.
- Hence, owing to the above points, increasing renewable energy is expected to drive the United States transformer market during the forecast period.
