POWER September 2023 - 32

POWER TRANSFORMERS
How the Energy Transition Is
Impacting the Transformers Market
Power grids around the world require upgrades to accommodate growth and
incorporate new clean energy resources. Transformers are a necessary component
in the modernization. Estimates suggest hundreds of billions of dollars will be spent
on grid infrastructure, including transformers, each year through 2030 and beyond.
Shaista Naz
G
overnments across the globe, especially
in
the advanced economies,
are moving to reduce greenhouse
gas (GHG) emissions to mitigate
the impact of climate change. The power
sector is a significant contributor to GHG
emissions, which is why countries are
moving toward renewable energy as
power produced from it is clean. As a
result, renewables are set to account
for almost 95% of the increase in global
power generation capacity through 2026.
Similarly, electric vehicle (EV) demand is
also expected to grow at an annual rate
of 23% in the next ten years.
There are several challenges associated
with the rapid rollout of renewables
and EVs. One of these major
challenges at hand is whether existing
grid infrastructure is capable of dealing
with these modern technologies. Additional
capacity calls for modernization
and upgradation of the grid giving rise to
the demand for legacy grid equipment
including transformers.
Snapshot of Evolving Climate and
Energy Policies
The policies revolving around climate and
energy across the globe have evolved
over the years including in the European
Union (EU), U.S., Middle East, and Central
Asia. For instance, in the EU, in order
to align the region's climate, energy,
transport, and taxation policies with the
target of reducing GHG emissions by at
least 55% by 2030 compared to 1990
levels, the European Commission (EC)
has adopted a set of proposals.
Similarly, the U.S. came up with a
Federal Sustainability Plan, which has
set out several objectives that are in
line with President Biden's goal of reducing
GHG emissions by 50% to 52%
from 2005 levels by 2030. Furthermore,
around 32 countries in the Middle East
and Central Asia have committed to reducing
their GHG emissions from 13%
32
to 21% under the Paris Agreement.
However, only 13% reduction in GHG
emissions is unconditional; whereas,
21% reduction in emissions is subject
to availability of external support.
Energy Transition and Rollout of
Renewables. According to the International
Energy Agency (IEA), global renewable
generation capacity is expected
to increase by almost 2,400 GW (75%)
from 2022 to 2027. As the share of renewables
in the generation capacity mix
of countries will increase, it will require
replacement of conventional transformers
with digital transformers as conventional
transformers are unable to provide
required safety, productivity, and reliability
in the electrical network.
Integration of EVs into the Grid.
Globally, economies are moving toward
electrification of the transport sector,
especially the developed economies. To
mitigate the impact of EVs on the electricity
grid, many utilities are deploying
smart grid technologies, including smart
transformers that are more efficient and
reliable as compared to conventional
technology. It is noteworthy that the
global EV industry has been observing
tremendous growth in recent years. According
to the IEA, EV sales doubled in
2021 (accounting for 6.6 million units).
Upgradation of Grid Infrastructure.
As wind and solar are being rapidly integrated
with the electricity grid, it has
created need for the upgradation of
decades-old grid infrastructure globally.
Utilities are replacing outdated grid technology
with the latest equipment, which
is not only efficient but also improves
the reliability of grid operations. This
in turn has created demand for digital
transformers that offer not only higher
efficiency but also have a lower climate
impact as well.
Under Project Stratus of UK's Power
Network, smart transformers will be
installed in the streets across East Sussex.
These smart transformers are exwww.powermag.com
pected
to provide live data on electricity
usage and demand, which in turn would
not only increase the resilience of the
network but will also pave the way for
a low-carbon future. Smart transformers
are equipped with state-of-the-art
power electronic technologies that allow
the transformer to balance the load, control
the flow of electricity in an efficient
manner, and protect the system against
potential faults.
Transformer Market Overview
According to PTR Inc., the global transformer
market accounted for nearly $40
billion in terms of annual market revenue
in 2022 (Figure 1). In 2023, as per the estimates
of PTR Inc., the global transformer
market is expected to generate a revenue
of $41.6 billion posting a growth of 4.73%
year on year. Furthermore, the global
transformer market is expected to grow
to about $52 billion in 2027 with a compound
annual growth rate (CAGR) of 6%.
Regulations for Transformers Driven
by Climate Goals. Multiple regulations
and standards are either in place or are
being proposed in advanced economies,
especially in the EU and U.S., that focus
on improving the efficiency of transformers.
According to EC estimates, about
2.9% of all the energy generated across
the EU's 27 member states and the UK
is wasted through transformer losses.
These transformer losses amount to 93
1. Annual market revenue of global transformer
market in billions of dollars (2022-
2027). Courtesy: PTR Inc.
POWER | September 2023
http://www.powermag.com
POWER September 2023

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