Europe Distribution Transformer Market Size & Share Analysis - Growth Trends & Forecasts (2023 - 2028)

Key Highlights

• Over the medium term, increasing energy demands from industries and upgrading old transmission and distribution systems will likely drive the Europe distribution transformer market.
• On the other hand, fluctuations in the price of raw materials needed for the manufacturing of distribution transformers are expected to restrain the Europe distribution transformer market.
• Nevertheless, a smart grid is a highly efficient and economical technology that can reduce carbon emissions. Such up-gradation for existing networks in the region can create several opportunities for the Europe distribution transformer market in the future.
• Due to its increasing demand for electricity and the rising renewable energy installation and connecting them to the country's grid, Germany is expected to be the fastest-growing European distribution transformers market.

Europe Distribution Transformer Market Trends

500 kVA - 2500 kVA Segment Expected to have a Significant Share in the Market

• Large or demanding applications often require distribution transformers with rated capacities between 500 KVA and 2500 KVA to provide more power than smaller transformers. These distribution transformers are used in the textile, automotive, pharmaceutical, metal, power and food industries and the oil and gas industry, including offshore and onshore platforms, refineries, and pipelines.
• The European automobile industry is one of the region’s largest and most significant industries. German car manufacturers are known for producing high-quality, innovative, popular vehicles worldwide. The German government played an essential role in supporting the automobile industry’s growth, providing financial incentives for research and development, and promoting policies encouraging electric vehicle adoption.
• According to Federal Motor Transport Authority, Germany has seen a significant increase in the number of new electric cars registered in recent years. In 2022, 470,559 new electric cars were registered, representing a growth of 32.19% compared to the previous year.
• Furthermore, automobile manufacturing is anticipated to create a vast demand for distribution transformers owing to the growing investments and expansion plans in manufacturing automobiles in Europe. For instance, in December 2022, Ford announced that it would invest an additional GBP 149 million (approximately USD 180 million) to raise electric vehicle power unit capacity at its factory in northern England by 70%, accelerating its push to go electric. According to the company, Ford plans to boost the electric drive unit production capacity at the Halewood plant to 420,000 units annually from 250,000 units starting in 2024.
• Furthermore, the steel industry is a major contributor to the European economy and a significant supplier to the automotive, machinery, and other sectors. According to the European Steel Association (EUROFER), the crude steel production in the region bounced from 132.2 million tons in 2020 to 136.2 million tons in 2022.
• Due to the growing investments and expansion plans in European steel production, the steel industry is expected to create a great demand for distribution transformers. For instance, in March 2022, ArcelorMittal announced an investment of more than EUR 300 million, with the support of the French government, to create a new production unit for electrical steels at its Mardyck site in the north of France.
• Hence, owing to the above points, the 500 kVA - 2500 kVA segment will likely have a significant share in the Europe distribution transformer market during the forecast period.

Germany Expected to be the Fastest-Growing Market

• The German industrial sector is a significant demand driver for distribution transformers. As one of the world's leading industrial economies, Germany has a diverse manufacturing base that spans various sectors, such as automotive, machinery, chemicals, electronics, and more. These industries rely heavily on a reliable and stable power supply to operate efficiently.
• The German industrial sector requires substantial electricity to power manufacturing processes, machinery, and equipment. The growing manufacturing activities in the country contribute to an increased demand for distribution transformers to distribute electricity effectively within industrial facilities.
• Additionally, expanding and establishing new industrial facilities further contribute to the demand for distribution transformers. As companies grow their production capacity or set up new manufacturing units, they require additional distribution transformers to meet their electricity needs.
• For instance, in April 2023, according to the federal statistical office, German industrial production experienced a greater-than-expected increase in February, primarily driven by the automotive manufacturing sector. In addition, production rose by 2.0% compared to the previous month.
• Further, the German renewable energy sector is projected to experience significant growth due to the country's ambitious emission reduction targets. Germany aims to reduce emissions by at least 65% by 2030 and at least 88% by 2040.
• Moreover, renewable energy sources typically generate electricity at different voltage levels than the standard grid voltage. Distribution transformers play a crucial role in transforming the voltage of the electricity generated by renewable sources to match the voltage requirements of the distribution network. This ensures compatibility and seamless integration into the existing grid infrastructure. According to International Renewable Energy Agency, the installed renewable energy capacity reached 148.37 GW in 2022.
• Hence, owing to the above points, Germany is expected to be the fastest-growing market for Europe's distribution transformer market during the forecast period.

Europe Distribution Transformer Industry Overview

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