Transformer Oil Market Report 2025

The transformer oil market size has grown strongly in recent years. It will grow from $2.35 billion in 2024 to $2.52 billion in 2025 at a compound annual growth rate (CAGR) of 7.2%. The growth in the historic period can be attributed to rise in power demand, aging power grids, electrification projects, industrialization and urbanization, expansion of renewable energy, stringent regulations on transformer efficiency.

The transformer oil market size is expected to see strong growth in the next few years. It will grow to $3.34 billion in 2029 at a compound annual growth rate (CAGR) of 7.3%. The growth in the forecast period can be attributed to transition to smart grids, focus on fire safety, demand for biobased transformer oils, emergence of compact and efficient transformers, resilience planning for extreme weather events. Major trends in the forecast period include replacement of aging transformers, digitalization and IoT in transformer monitoring, growing popularity of dry type transformers, strategic alliances in the oil industry, technological advancements in transformer designs.

The growing number of power generation and distribution projects is expected to drive the expansion of the transformer oil market. Power generation and distribution projects involve facilities that ensure safe, secure, reliable, and sustainable electricity generation, transmission, and distribution. The rise in these projects leads to an increased demand for transformers, switches, capacitors, and circuit breakers, which, in turn, boosts the demand for transformer oils. For example, in November 2022, the Energy Information Administration (EIA), a US government agency that collects, analyzes, and disseminates energy information, reported the launch of eight new natural gas-fired combined-cycle gas turbine (CCGT) power plants in the US electricity market. These new plants are expected to add 7,775 megawatts (MW) to the US electric system. Therefore, the increasing number of power generation and distribution projects is propelling the growth of the transformer oil market.

The growing adoption of renewable energy sources is significantly driving the growth of the transformer oil market. Renewable energy is derived from natural sources that replenish themselves more quickly than they are consumed. Several factors, including the depletion of natural resources, rising fuel prices, increased pollution, and elevated carbon levels, are contributing to the heightened adoption of renewable energy sources. The transformer oil market plays a vital role in facilitating the expansion of renewable energy. As sustainable practices gain traction worldwide, the demand for transformer oils is fueled by the rising installation of transformers in renewable energy projects, such as wind and solar power. Transformer oils are crucial for insulating and cooling transformers, ensuring their reliable and efficient operation. These oils enhance the longevity and performance of transformers, thereby supporting the integration of renewable energy into the electrical grid. For instance, a report by the International Energy Agency, an autonomous intergovernmental organization based in Paris, indicated in December 2022 that global renewable power capacity is expected to increase by 2,400 gigawatts (GW) from 2022 to 2027. This growth is 30% higher than the previous forecast in 2021, underscoring the rapid shift in government policies favoring renewables. Renewables are projected to account for over 90% of global electricity expansion in the next five years, surpassing coal to become the largest source of global electricity by early 2025. Therefore, the increasing adoption of renewable energy sources is anticipated to propel the growth of the transformer oil market.

Product innovation is a significant trend in the transformer oil market. Key companies in this sector are concentrating on creating innovative products to enhance their market position. For example, in October 2022, Nynas AB, a Sweden-based manufacturer of specialty naphthenic oils and bitumen products, introduced the NYTRO RR 900X, a circular transformer fluid produced using advanced re-refining technology. The outstanding performance of NYTRO RR 900X makes it suitable for various electrical applications, including high-voltage and high-power transformers. This new product meets the IEC 60296 standard, which requires that the feedstock for the re-refined fluid must be entirely sourced from power equipment. With a 100% recycling rate, NYTRO RR 900X lowers greenhouse gas emissions by at least 70% throughout its lifetime compared to traditional transformer oil.

Leading companies in the transformer oil market are forming partnerships to enhance their market presence. A strategic business partnership refers to a structured relationship between two or more commercial entities, typically established through one or more business agreements or contracts. For instance, in March 2023, BBGI, a biofuel energy and products company based in Thailand, collaborated with SCG Chemicals and QTC Energy. This partnership aims to jointly develop and manufacture bio transformer oil for production trials for the first time in Thailand. SCG Chemicals is a petrochemical company also based in Thailand, while QTC Energy is a transformer manufacturing company in the country.

In January 2024, Shell U.K. Limited, a UK-based subsidiary of Shell plc focused on energy production, distribution, and petrochemical services, acquired MIDEL and MIVOLT from M&I Materials Ltd. for an undisclosed amount. This acquisition aims to enhance Shell's global lubricants portfolio by integrating synthetic and natural ester-based transformer fluids. It supports Shell's strategy to bolster its position in transformer oils, which are essential for power distribution, offshore wind farms, utility companies, and traction power systems. M&I Materials Ltd. is a UK-based company specializing in the development and supply of advanced materials, including transformer fluids and other industrial solutions.

Major companies operating in the transformer oil market are Royal Dutch Shell PLC, Exxon Mobil Corporation, Repsol SA, Ergon Inc., Nynas AB, PetroChina Company Limited, Apar Industries Limited, Calumet Specialty Products Partners L.P., China Petroleum & Chemical Corporation (Sinopec), San Joaquin Refining Co. Inc., Gandhar Oil Refinery Limited, Savita Oil Technologies Limited, Hydrodec Group PLC, Engen Petroleum Limited, Castrol Limited, Chevron Corporation, TotalEnergies SE, Fuchs Petrolub SE, Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited, Bharat Petroleum Corporation Limited, Gulf Oil Corporation Limited, Petroliam Nasional Berhad, CNOOC Oil & Petrochemicals Co. Ltd., SK Lubricants Co. Ltd., GS Caltex Corporation.

Asia-Pacific was the largest region in the transformer oil market share in 2024. North America was the second-largest region in the transformer oil market analysis. The regions covered in the transformer oil market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the transformer oil market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

Transformer oil is a specialized oil known for its stability at high temperatures and excellent electrical insulation properties. It is produced through the distillation of refined crude oil, typically within the temperature range of +300°C to +400°C (752°F). The quality of the base stock oil, derived from different sources, significantly influences the characteristics of the resulting transformer oil.

Primary types of transformer oil include naphthenic oil, paraffinic oil, silicone-based oil, bio-based oil, and other variants. Naphthenic oil, categorized as a Group V base oil, is manufactured by hydro-treating sweet crude distillates under high pressures exceeding 2500 psi. It exhibits a low pour point, high solubility, minimal wax content, and low aromatic content. Naphthenic oil serves various functions such as insulation, cooling, lubrication, and chemical stabilization. It finds application across residential, commercial, and industrial sectors, catering to transmission and distribution systems, railways, power generation facilities, and other end-user industries.

The transformer oil market research report is one of a series of new reports that provides transformer oil market statistics, including transformer oil industry global market size, regional shares, competitors with a transformer oil market share, detailed transformer oil market segments, market trends and opportunities, and any further data you may need to thrive in the transformer oil industry. This transformer oil market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenario of the industry.

The transformer oil market consists of sales of alkanes, cycloalkanes and aromatic hydrocarbons. Values in this market are ‘factory gate’ values, that is the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors and retailers) or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD, unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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