Transformer Oil Market Size, Share & Trends Analysis Report By Product (Mineral-based, Silicone-based, Bio-based), By Application (Small-scale Transformers, Utilities), By Region, And Segment Forecasts, 2023 - 2030

Report Overview

The global transformer oil market size was valued at USD 2.1 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 12.5% from 2023 to 2030. This is attributed to growth in the global power sector and advancement of electric grids in emerging countries. Every power and distribution transformer is filled with dielectric insulating fluid, which has a strong resistance to electricity and keeps the transformer cool. Bio-based products are more fire resistant than other types of products, thus expected to witness the highest growth over the forecast period. Additionally, the connection of new transformers has been compelled by the rising global demand for power, which is estimated to accelerate the market expansion.

Since bio-based products are fully non-toxic and free of PCBs, 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 performance and safety of both new and existing transformers, which is expected 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 the 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.

Covid-19 had a mixed impact on the market owing to the reduction in crude oil prices, which enabled manufacturers to achieve reduced raw material cost. However, they faced a major challenge related to logistics and procurement as a result of disruption in the supply chain.

Product Insights

Mineral-based oils dominated the market with a revenue share of over 70.0% 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 the market 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 are produced from vegetable oil feedstock. This kind of oil does not contain halogens, silicone, and petroleum hydrocarbons. They are non-toxic in nature 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.

Currently, most of the products are produced from wax-free naphthenic mineral oil due to its various advantages such as low cost, easy availability, high efficiency, and thermal cooling capacity. However, non-biodegradability resulting in environmental pollution and handling risk associated are projected to restrain the demand for naphthenic-based mineral oil products over the projected period.

Application Insights

Small-scale transformers dominated the global market with a revenue share of over 45.0% in 2022. This is attributed to the use of small transformers to fulfill the need for electricity in rural areas and small localities. An increase in electrification and urbanization in countries such as India and Bangladesh is expected to contribute to the segment growth.

Large-scale transformers are in high demand owing to the growth of the industrial sector across the globe. Additionally, rise in the consumption of eco-friendly transformers owing to stringent government regulations has resulted in higher energy efficiency and lower carbon emission. Rise in industrial output, technological advancements, and increase in R&D activities to generate energy are expected to drive the segment. 

Utility-based transformer fluids are generally used in the windmill and solar power plants. This type of oil restores oils by removing sludge, acidity, and soluble oil decay products through fuller’s earth treatment technology. Utility-based equipment require continuous oil maintenance to manage the air pressure and moisture level. This is expected to drive the segment over the forecast period.

Regional Insights

Asia Pacific dominated the market with a revenue share of over 55.0% in 2022. This is attributed to the rise in the demand for electricity in developing countries such as China, India, Japan, and Australia. Additionally, 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. 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 the North American region. Technical upgradation, modernization in existing transformers, and 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 in order to expand their consumer base. These players are also focusing on R&D activities to formulate novel products in order to strengthen their foothold in the market.

Prominent 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. Manufacturers are also increasing their capacities to meet the growing demand for the product. Some prominent players in the global transformer oil market include:

• Sinopec Lubricant Company

• Valvoline

• Cargill Inc.

• Nynas AB

• Ergon International Inc.

• PetroChina Lubricant Company

• Calumet Specialty Products

• Apar Industries Ltd.

• Engen Petroleum Ltd.

• Hydrodec Group Plc.

Transformer Oil Market Report Scope

Global Transformer Oil Market 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 the purpose of this study, Grand View Research has segmented the global transformer oil market report on the basis of product, application, and region:

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

  • Mineral-based Oils

    • Naphthenic Base Oils

    • Paraffinic Base Oils

  • Silicone-based Oils

  • Bio-based Oils

• Application Outlook (Volume, Kilotons; Revenue, USD Million, 2018 - 2030)

  • Small-scale Transformers

  • Large-scale Transformers

  • Utilities

  • Others

• Regional Outlook (Volume, Kilotons; Revenue, USD Million, 2018 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • Germany

    • France

    • U.K.

    • Italy

    • Russia

  • Asia Pacific

    • China

    • India

    • Japan

  • Latin America

    • Mexico

    • Brazil

  • Middle East & Africa

    • Saudi Arabia

    • UAE

    • Oman