Transformer Oil Market size is set to grow by USD 1.12 billion from 2024-2028, Expansion of T and D to boost the market growth, Technavio

NEW YORK, July 12, 2024 /PRNewswire/ -- The global transformer oil market size is estimated to grow by USD 1.12 billion from 2024-2028, according to Technavio. The market is projected to grow at a CAGR of 8.09% during this period. The expansion of transmission and distribution (T&D) networks is driving market growth, with a trend towards eco-efficient transformers. However, fluctuations in crude oil prices pose a challenge. Key market players include Apar Industries Ltd., BP Plc, and Exxon Mobil Corp. Regions such as Asia-Pacific and the Middle East are expected to see the highest growth in transformer oil consumption.

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Key Market Trends Fueling Growth

Transformer manufacturers are responding to customer demand by designing and producing eco-friendly transformers. These green transformers offer minimal environmental hazards, improved life cycle costs, and reduced maintenance requirements. General Electric is among the manufacturers focusing on this trend, producing energy-efficient, market-efficient, grid-reliable, and environmentally friendly transformers. Green power transformers use ester oil as an insulating agent instead of mineral oil, significantly reducing pollution levels. Ester oils are biodegradable and have minimal toxic substances, making them an eco-friendly choice. These transformers also produce less noise and offer enhanced fire safety, making them suitable for urban and ecologically sensitive areas. The higher combustion point of ester oil (above 3,500 degrees Celsius) makes green power transformers less hazardous. These benefits are expected to drive the global transformer oil market, as the demand for eco-efficient power transformers grows. 

The Transformer Oil Market is experiencing significant trends in the power sector, with a focus on electric grids and advanced insulating fluids. Dielectric insulating fluids, including bio-based products, are gaining popularity among power utilities and government bodies due to their environmental benefits. Mineral-based products, such as base oil, continue to dominate the market. Crude oil prices impact the cost of mineral-based transformer oils. Iran and Libya are key suppliers. The COVID-19 pandemic has affected the market, particularly in the <100 MVA segment and industrial applications, including chemicals, food processing, steel, automotive industries, and power generation facilities. Three-phase distribution transformers, capacitors, circuit breakers, switchgear, boilers, refineries, and power plants use transformer oil. High-performance computing (HPC), renewable energy resources, electric vehicles, and HVDC transmission systems are driving the demand for transformer oil in the power sector. Excess heat and thermal stress require transformer oils with high dielectric strength. Renewable energy sources, including solar, are increasing the need for transformer oil in the energy transition. The International Energy Agency reports that dry-type transformers use ester liquids, silicon oil, or mineral oil. The market includes both dry-type and oil-filled transformers. 

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Market Challenges

•         The price volatility of crude oil significantly influences the transformer oil market. According to the International Energy Agency, the average crude oil price was USD73.6 per barrel in October 2018. However, the price surged to over USD100 per barrel in the first half of 2022. Unpredictable oil price fluctuations can disrupt the oil and gas industry, leading to investment risks in the global transformer oil market. This market relies heavily on mineral oils like naphthenic and paraffinic for transformer applications. As a result, the transformer oil market may face challenges due to the unstable crude oil prices during the forecast period.

•         The Transformer Oil Market faces several challenges in various industries such as Boilers, Refineries, Power plants, Manufacturing facilities, and the Industrial segment. Key industries including Chemicals, Food processing, Steel, Automotive, and Power generation facilities utilize transformers for their operations. In the transformer oil market, the <100 MVA segment and the Industrial segment are significant consumers. Transformer oil plays a crucial role in cooling, insulating, and providing electrical insulation for transformers. However, challenges such as excess heat and thermal stress impact dielectric strength, affecting the performance of transformers. Renewable energy resources like Solar, Biomass, Hydroelectric, and Geothermal power require transformers, leading to increased demand for transformer oil in remote locations and population centers. Transformer oil types include mineral oil, ester liquids, and silicon oil. Dry-type transformers and oil-filled transformers are commonly used in HVDC transmission systems and renewable energy sources. Transmission losses, stability, reliability, and transmission capacity are essential factors driving the transformer oil market. The International Energy Agency anticipates growth in the market due to the increasing adoption of renewable energy sources and the development of High-performance computing (HPC) and Electric vehicles.

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Segment Overview 

This transformer oil market report extensively covers market segmentation by

1. End-user
• 1.1 Industrial
• 1.2 Utilities
• 1.3 Commercial
• 1.4 Residential
2. Product
• 2.1 Mineral-based
• 2.2 Silicon-based
• 2.3 Bio-based
3. Geography
• 3.1 APAC
• 3.2 North America
• 3.3 Europe
• 3.4 South America
• 3.5 Middle East and Africa

1.1 Industrial-  The global transformer oil market is primarily driven by the dominance of mineral-based transformer oil, which accounted for over 70% of the market share in 2023. This product segment's popularity is due to its superior properties, including high viscosity gradient, extended dielectric properties, and excellent withstanding capabilities. Naphthenic and paraffinic oils are the key base oils used in transformer oil production and lubricant base stock. Naphthenic oil, in particular, is widely used in the metalworking industry for metal shaping and forming processes, such as structural steel, automotive body panels, and other components. Its easy availability and usage in capacitors, high voltage switches, and circuit breakers further boost demand. In the industrial sector, where uninterrupted power supply is crucial, mineral-based transformer oil is indispensable. Any power interruptions can result in significant financial losses and productivity downtime. Developing countries like China and India are investing in upgrading their power infrastructure to ensure a reliable power supply, leading to the replacement of transformers and subsequently driving the demand for mineral-based transformer oil.

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Research Analysis

The Transformer Oil Market is a critical component of the power sector, serving electric grids worldwide. This market primarily focuses on the production and supply of dielectric insulating fluids used in transformers, which ensure efficient power transfer and insulation. The market caters to various industries, including power utilities, government bodies, and manufacturing facilities, with a significant demand in the <100 MVA segment. Mineral-based products dominate the market, derived from crude oil. However, there is a growing trend towards bio-based products due to their eco-friendly nature. The market is influenced by factors such as crude oil prices, geopolitical tensions in oil-producing countries like Iran and Libya, and the COVID-19 pandemic. Transformer oil is used in various applications, including capacitors, circuit breakers, switchgear, boilers, refineries, power plants, and manufacturing facilities. It is essential for three-phase distribution transformers, ensuring thermal stress resistance, high dielectric strength, and resistance to excess heat. The market also caters to industries like chemicals, food processing, steel, automotive, and power generation facilities. Renewable energy resources and high-performance computing (HPC) are emerging areas of application for transformer oil, offering opportunities for market growth. The market faces challenges from factors like thermal stress, dielectric strength, and the need for high-performance insulating fluids to meet the demands of modern power grids.

The Transformer Oil Market is a critical component of the power sector, serving as dielectric insulating fluid in electrical transformers used in electric grids. The market includes mineral-based products like mineral oil and ester liquids, such as silicon oil, used in oil-filled transformers and dry-type transformers. The market is driven by the increasing demand for electricity in various industries, including power utilities, manufacturing facilities, and power generation facilities. Factors influencing the market include crude oil prices, government policies, and the COVID-19 pandemic. Renewable energy resources, such as solar, biomass, hydroelectric, and geothermal power, are also driving the demand for transformer oil in remote locations and population centers. The market caters to various segments, including the <100 MVA segment, industrial segment, and power utilities. Transformer oil plays a crucial role in ensuring the stability, reliability, and transmission capacity of electrical power systems. It helps mitigate thermal stress, excess heat, and dielectric strength issues in transformers, circuit breakers, switchgear, capacitors, boilers, refineries, and power plants. The market is also influenced by emerging trends, such as high-performance computing (HPC), electric vehicles, and HVDC transmission systems. The International Energy Agency forecasts continued growth in the transformer oil market due to the increasing demand for electricity and the shift towards renewable energy sources.

Table of Contents:

1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation

• End-user
• Industrial
• Utilities
• Commercial
• Residential
• Product
• Mineral-based
• Silicon-based
• Bio-based
• Geography
• APAC
• North America
• Europe
• South America
• Middle East And Africa

7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Trends
10 Company Landscape
11 Company Analysis
12 Appendix

About Technavio

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SOURCE Technavio