Dry-Type Transformers Market - Renewables & Regulations Driving Growth

by Aleena Ahmad, Research Analyst – at Power Technology Research

  • According to Power Technology Research, the global distribution transformers market accounted for USD 7.32 billion (in terms of revenue) in 2020.
  • 92% of the global transformers installed base (in terms of units) consisted of oil-immersed transformers with dry-type transformers accounting for just 8% that year.
  • The annualmarket share (in terms of revenue) of dry-type transformers in the APAC region was the highest among other regions of the world in 2020.

According to Power Technology Research, the global distribution transformers market accounted for USD 7.32 billion in 2020. APAC held the largest market share of 49% (in terms of revenue) which accounted for USD 3.59 billion of this amount in 2020. The APAC region was followed by North America (20%) and Europe (13%) accounting for USD 1.47 billion and USD 0.95 billion, respectively, that year (see figure 1).

Additionally, MEA (11%) and South America's (7%) market share in terms of revenue accounted for USD 0.81 billion and USD 0.51 billion, respectively. Penetration of dry-type distribution transformers in the global market is expected to increase mainly due to a decrease in the price difference between dry- and oil-type transformers. We expect to see a notable increase in the installed base of dry-type transformers over the coming years.

Fig 1: Global Distribution Transformers Market (Oil & Dry) -2020.
Source: Power Technology Research

Applications and Comparison of Oil and Dry Type Transformers

Generally, oil-immersed transformers have more applications than dry-type transformers. Dry-type transformers are usually used in sites where fire hazards are high, for instance the marine industry, oil and gas industry, renewable sector, and utilities (applications in indoor and underground substations). In the European Utilities, 8.5% of the substations are underground/indoor substations which, for the most part, have dry type transformers installed in them while 91.5% of the substations are outdoor substations.

For the same capacity and voltage as their oil-immersed counterparts, dry-type transformers are generally larger in size. The raw material used in dry-type transformers is also more than used in oil-immersed type transformers; this difference is mainly because of the materials and methods used to provide cooling and insulation in both types. As far as maintenance is concerned, dry-type transformers are relatively easier to maintain and repair which can be done on-site, unlike oil-immersed type transformers which need to be taken to a factory.

Installed Base of Oil and Dry Type Transformers

Globally, according to Power Technology Research, 92% of the distribution transformers installed base (in terms of unit) consists of oil-immersed transformers with dry-type transformers accounting for just 8% (see fig 3). Furthermore, the share of dry-type transformers in the global distribution transformers market of key countries is as follows: Germany-13%, France-3%, India-3%, Argentina-4%, Chile-5%, South Africa-2%, and the United States-13% (see figure 2).

Fig 2: Share of dry-type vs oil-immersed transformers in key country markets.
Source: Power Technology Research

Fig 3: Global Share of Oil-Immersed vs Dry-Type Transformers (Installed Base-2020).
Source: Power Technology Research

Dry Type Transformers Market Drivers

Renewable targets and regulations which incentivize the adoption of dry-type transformers, along with the technological improvements reducing the price difference between the two types, are expected to drive growth in the dry-type transformers market globally.

High Uptake of Renewables

Renewables will provide a major push to the global dry-type transformers market, especially in the context of the installations of offshore wind turbines where dry-type transformers (step-up) are installed to transmit power back to shore. The reason why dry-type transformers are preferred offshore over oil-immersed type transformers is due to their higher reliability and off-shore fire-safety considerations. Dry-type transformers have low flammability and are resistant to moisture as compared to oil-immersed transformers.

As per IRENA, onshore and offshore wind will generate more than one-third (35%) of the total global electricity produced, becoming the prominent generation source by 2050. The global cumulative installed capacity of onshore wind power is expected to increase more than threefold by 2030 (to 1787 GW) and nine-fold by 2050 (to 5044 GW) compared to the installed capacity in 2018 (542 GW).

Furthermore, global annual capacity additions for onshore wind will increase more than four-fold to around200 GW per year by 2050 compared to just 45 GW added in 2018. Even higher growth will take place in annual offshore wind capacity additions – around a ten-fold increase to 45 GW per year by 2050 from a shy 4.5 GW added in 2018. Asia (mostly China) will continue to dominate the onshore wind power industry housing more than 50% of the global installations by 2050, followed by North America (23%), and Europe (10%).

Impact of Regulations

Regulations from utilities and regulators are also expected to drive the growth of dry-type transformers globally. For instance, Belgium’s Transmission System operator, Elia, requires that hazardous liquids, flammable materials, and fuels to be stored in either double-walled metal tanks or in containers or collection tanks with adequate capacity. Flammable liquids must be stored in a ventilated space where there is no risk of fire. Storage of flammable substances in buildings must be avoided. In addition to this, no more than 50 liters of liquids with a flash point lower than or equal to 21°C are allowed.

Around the world, in Hungary, according to article 114 of the National Fire Protection Regulations Act XXXI of 1996, only dry-type transformers should be installed in underground installations. Croatia’s DSO, HEP, allows only dry-type transformers to be installed for indoor applications in order to minimize the chances of fire hazards. That said, large oil-immersed transformers can be installed in external areas where fire doesn’t cause undue hazards. Slovenia’s DSO, SODO, requires that dry-type transformers of fire class F1 pursuant to IEC 60076-11 may be installed in industrial buildings (group 125 pursuant to CC-SI) while large oil-immersed transformers may be installed in external areas. Similarly, the Indian Electricity Rules of 1956 were amended on the 25th of November 2000, to mandate the use of dry-type transformers in all indoor applications.

Technology Evolution

In the past, the price difference between dry-type and oil-immersed transformers used to be on average 50% (with dry-type being more expensive). However, this difference has reduced over the years as the dry-type transformers technology has matured along with higher number of orders. This downward trend is expected to continue and will make dry-type transformers increasingly favorable over the coming years.

Today, with the exception of the Americas, the average price per kVA of dry-type transformers in the rest of the world is on average 25-30% higher than oil-immersed type transformers. In the Americas, however, the average price per kVA of oil-immersed type transformers is on average 20% higher than that of dry-type transformers. This, along with other factors, is a big reason why the market share of dry-type transformers in Americas is comparatively higher and accounted for 35% of the market in 2020. In other regions, the share of dry-type transformers has been relatively lower at 10% in the MEA market; 15% in the APAC market, and 20% in Europe (see figure 4).

Fig 4: Percentage share of dry- and oil-immersed type transformers by region (in terms of units) in 2020.
Source: Power Technology Research  

Looking Ahead

The demand for dry-type transformers will be heavily driven by infrastructure development, high rise buildings, and the renewables sector. Moreover, fire hazards and associated costs (i.e., deluge valves and fire suppression system) will further increase the demand for dry-type distribution transformers globally. Unless the market is addressed via alternatives including vegetable esters. The market share of dry-type transformers in the MEA, APAC, Europe and the Americas regions has been growing steadily over the last few years, which suggests greater penetration of dry-type transformers in the global distribution transformers market in the future as well.

Author Bio

Aleena Ahmad is a Market Analyst at Power Technology Research. She is involved in projects on the transformer topic at Power Technology Research and is responsible for data collection and analysis in various areas including the structure of distribution utilities, the installed base of T&D equipment, and future market trends. As a market analyst at PTR, she performs in depth analysis of the different technologies within the transformer market and their impact. Prior to joining PTR, Aleena worked at Nestle as an Electrical and Automation Engineer. Aleena comes from a technical background and has a BSc. In Electrical Engineering.


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