Transformer Oil Market Size, Share & Trends Analysis Report By Product (Mineral-based, Silicone-based), By Rating, By End-use (Utilities, Industrial), By Region, And Segment Forecasts, 2023 - 2030

Report Overview

The global transformer oil market size was valued at USD 2.5 billion in 2022 and is anticipated to grow at a compound annual growth rate (CAGR) of 12.1% from 2023 to 2030. This is attributed to the growing power sector across the globe along with advancements of electric grids in emerging countries. Every power and distribution transformer contains dielectric insulating fluid that has strong electricity resistance and the ability to keep the transformer cooler. Bio-based products are more fire resistant than other types of products, thus expected to witness the highest growth over the forecast period.

Since bio-based oils are fully non-toxic, which further facilitates disposal, they provide reliable and cleaner products. The demand for bio-based products is also anticipated to grow as a result of the increase in installation of transformers occurring around the world. The power utilities are also focusing on upgrading the safety and performance of both new and existing transformers, which is predicted to boost the demand for bio-based products globally.

Stringent regulation imposed by government bodies concerning energy wastage is expected to be the major challenge for product demand. For instance, the U.S. Environmental Protection Agency has set up some strict regulations on demand for oil to control electricity wastage. Additionally, developed and developing economies are shifting towards green and environmental-friendly technologies, thus expected to restrain the growth of products based on minerals.

Product Insights

Mineral-based oils dominated the market with a revenue share of over 76% in 2022. This is attributed to its wide range of applications in capacitors, circuit breakers, and high compatibility. Mineral-based products are utilized in conditioning and shielding transformers, switchgear, and boilers. Additionally, it can be used for thermal transfer and to safeguard the interior field winding of transformers. Such wide usage of mineral-based oils is expected to drive growth over the forecast period.

Bio-based products have recently gained demand in the market. They perform better than other products as they are eco-friendly. Bio-based products use vegetable oil as a feedstock. This kind of oil does not contain halogens, silicone, and petroleum hydrocarbons. They are non-toxic and can quickly degrade in case of leakage or spill, which is expected to create opportunities for the growth of bio-based products in the market.

Products produced from wax-free naphthenic mineral oil have various advantages such as low cost, easy availability, high efficiency, and thermal cooling capacity. However, non-biodegradability that results in environmental pollution and handling risk associated is projected to restrain the naphthenic-based mineral oil products demand over the projected period.

Rating Insights

The 100 MVA to 500 MVA segment dominated the market with a revenue share of over 22% in 2022. This is attributed to its application in large-scale industrial settings, such as power plants, refineries, and manufacturing facilities. These transformers are designed to handle significant amounts of electrical power and are crucial components in the generation, transmission, and distribution of electrical power. Also, they are suited for power distribution in areas with large populations owing to their capability in handling high voltages, making them ideal to transfer power from the source to the desired destination.

The <100 MVA segment held the second largest position and is predicted to grow at a CAGR of 12.0% over the forecast period. This is attributed to its application in a variety of power distribution systems to step down or step up the voltage of electrical power, allowing it to be transmitted over long distances.

End-use Insights

The industrial segment dominated the market with a revenue share of over 48% in 2022. This is attributed to the growing industrialization across the globe leading to an increased number of transformers. Industrial end-use includes transformers used in chemicals, food processing, steel, and automotive industries. Industrial processes require different types of electrical machinery that operate at discrete voltage levels. Power generation facilities typically generate electricity at high voltages, requiring the use of three-phase distribution transformers.

Thus, the advancing steel and chemical manufacturing industries worldwide have increased demand for transformers used in them which in turn will drive the demand for transformer oils used for the efficient functioning of these transformers.

The residential segment is expected to grow at the highest CAGR of 12.7% over the forecast period. This is attributed to the growing residential areas across the globe owing to the increasing global population. The residential end-use segment includes transformers used in villas, apartments, and residential housing. In residential spaces and villas, typically single-phase transformers are used for individual homes, and three-phase distribution transformers for larger residential areas.

Regional Insights

Asia Pacific dominated the market with a revenue share of over 54.0% in 2022. This is attributed to the rise in the demand for electricity in developing countries such as China, India, Japan, and Australia. Additionally, the growth of the commercial and industrial sectors is anticipated to increase the number of substations, which, in turn, will fuel the demand for transformers in the near future.

Increasing investment in the power sector is enabling Chinese manufacturers to penetrate the market. Moreover, significant growth in renewable capacity in countries such as India and China is fuelling the demand for the sub-transmission segment. The presence of strong domestic manufacturers is a major challenge for foreign markets to enter the Asia Pacific region.

Growth of the industrial and manufacturing sectors in the U.S. and Canada is driving the market in North America. Technical upgradation, modernization in existing transformers, and the decline of the crude oil market are anticipated to drive the market in the country.

Key Companies & Market Share Insights

The market is moderately fragmented with key industry participants focusing on capacity and geographical expansions and mergers & acquisitions to expand their consumer base. These players are also focusing on R&D activities to formulate novel products to strengthen their foothold in the market. For instance, in May 2023 Cargill Inc. launched its FR3r natural ester, a new 100% biodegradable and environment-friendly transformer insulating fluid derived from more than 95% rapeseed oil. This new product launch will provide the company with an edge.

Key players in the market are focusing on bio-based oil production, along with various strategic initiatives, such as R&D activities, to develop eco-friendly oils and create innovative goods and solutions. Some prominent players in the global transformer oil market include:

• China Petroleum & Chemical Corporation

• Cargill Inc.

• Shell Plc.

• Nynas AB

• Ergon, Inc.

• Engen Petroleum Ltd.

Transformer Oil Market Report Scope

Global Transformer Oil Market Report Segmentation

This report forecasts revenue and volume growth at the global, regional, and country levels and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the global transformer oil market report based on product, rating, end-use, and region:

• Product Outlook (Volume, Kilotons; Revenue, USD Billion, 2018 - 2030)

  • Mineral-based Oils

    • Naphthenic Base Oils

    • Paraffinic Base Oils

  • Silicone-based Oils

  • Bio-based Oils

• Transformer Oil Rating Outlook (Volume, Kilotons; Revenue, USD Billion, 2018 - 2030)

  • <100 MVA

  • 100 MVA to 500 MVA

  • 501 MVA to 800 MVA

  • >800 MVA

• Transformer Oil End-Use Outlook (Volume, Kilotons; Revenue, USD Billion, 2018 - 2030)

  • Utilities

  • Industrial

  • Residential

  • Commercial

• Transformer Oil Regional Outlook (Volume, Kilotons; Revenue, USD Billion, 2018 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • Germany

    • France

    • UK

    • Italy

    • Russia

  • Asia Pacific

    • China

    • India

    • Japan

    • South Korea

    • Australia

    • Indonesia

  • Central & America

    • Brazil

    • Argentina

  • Middle East & Africa

    • Saudi Arabia

    • South Africa

    • Turkey