The global transformer oil market is expected to register a CAGR of 7.88% between 2024 and 2029.
Transformer oil or insulating oil is used in fluorescent light ballasts, high-voltage capacitors, switches, circuit breakers, transformers and other electrical appliances for electrical insulation, heat absorbing and release, and cooling. Transformer oils primarily come in two varieties: paraffin and naphthalene-based. The transformer oils have the right electrical qualities, including low viscosity, high insulation resistance, flash point, and specific heat capacity for improved heat conductivity that doesn't interfere with a transformer's cooling. The main factor increasing the transformer oil market's size annually is industrialization's development.
Transformer Oil Market Drivers
Bilateral international relations indicate that progressive industrialisation and urbanisation in the global south significantly affects energy consumption and structures development. They have grown in size and with that the demand for electricity has risen and hence have called for the placement of new transformers to enhance distribution. Hence, high installation of transformers tends to boost the demand for transformer oil, which plays crucial roles like insulation and cooling of transformers. The International Energy Agency predicts that India's urban population will increase dramatically by 2040, adding an estimated 270 million new residents.
Transformer oil consumption is rising due to the world's increasing need for power, particularly with implementing hybrid grid systems and impending renewable energy initiatives. According to the specific estimates of Enerdata, the ‘total electric end-use energy’ of the global world has risen, only, by 3 percentage from the years 2010 to 2022. Currently, China and India are the biggest electricity consumers with the later growing at well over 7 percent per year. Transformer oil demand is expected to increase during the projected period due to the expanding need for power and the launch of new renewable energy projects.
Transformer Oil Market Segment Analysis
The market for transformer oil is mainly influenced by the oil and exploration industry since transformers are vital for many procedures in the industry such as drilling, transportation, exploration, and refining. That is why transformer oil provides the insulation and the cooling that transformers require. More specifically, transformer oil consumption increases resulting from new transformer installations prompted by the world’s increasing demand for gas and oil. According to the International Trade Administration, government-owned enterprises have played a significant role in India's oil and gas industry. These businesses are responsible for over 80% of the country's total oil and gas output, and they have nearly 70% of its refining capacity.
Large equipment commonly used in mining include excavators, haul trucks and crushers among others. The industrial units tend to use these types of transformers most often to distribute power within those units and to modulate voltage. This transformer oil helps to maintain the insulation as well as the cooling of such transformers and given the fact that with increasing mining activity comes increased demand for transformers, there is a correlated and proportional demand for transformer oil.
Due to Europe’s enormous electrical infrastructure, well-established and expanding industrial sector, and significant emphasis on integrating renewable energy sources, it is regarded as the global leader for transformer oil. According to the Federal Ministry for Economic Affairs and Climate Action, the European Commission increased real industrial GDP share to EU 20/20 in other words, the industrial share of the EU GDP to 20% by 2020. Shows the achieved goals, policy and strategy of the Commission of EU for supporting and further development of industrial sector.
The dry-type version, seemingly on its way to wide acceptance in the transformer business, is one that simply uses solid insulating materials instead of liquid transformer oil. Some of the considerations driving this move include perceived benefits of dry-type transformers with increased safety, lesser maintenance requirements, and environmental advantages. Dry-type transformers are better at some applications since they eliminate possible oil leaks, fire hazards, and the requirement for oil containment systems. This growing trend of dry-type transformers reduces demand for traditional transformer oil, ultimately changing market dynamics in the transformer oil sector.
Transformer Oil Market Key Developments
Transformer Oil Market Players and Products
| Report Metric | Details |
|---|---|
| Study Period | 2021 to 2031 |
| Historical Data | 2021 to 2024 |
| Base Year | 2025 |
| Forecast Period | 2026 – 2031 |
| Report Metric | Details |
| Growth Rate | CAGR of 7.88% |
| Study Period | 2019 to 2029 |
| Historical Data | 2019 to 2022 |
| Base Year | 2024 |
| Forecast Period | 2024 – 2029 |
| Forecast Unit (Value) | USD Billion |
| Segments Covered |
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| Companies Covered | |
| Regions Covered | North America, South America, Europe, Middle East and Africa, Asia Pacific |
| Customization Scope | Free report customization with purchase |
Segmentation