Transformers Market Overview - Power Technology Research...•Global Market Overview •North America Market Specifics •Europe Market Specifics •Supply-Demand Situation ... •Capacity

© Power Technology Research LLC

Grid Performance: An Overview of European and North American Power Transformers Markets

Saqib Saeed, Principal Analyst

Transmission & Distribution Equipment

Power Technology Research

Presented at:


Agenda

• Global Market Overview

• North America Market Specifics

• Europe Market Specifics

• Supply-Demand Situation


Power Technology ResearchWho Are We

Customers are component manufacturers,

OEMs, distributors, energy-focused EPCs.

Focus on Power and Industrial markets.

20 years of combined

experience.

Syndicated and custom

research.


Type of WorkWhat Can We Do to Support Our Customers

Market

Sizing &

Forecasting

Competitive

Analysis

Market

Accessibility

Installation

Base

Annual

Market

Growth

Forecast

Market

Shares

SWOT

Analysis

Benchmarking Cost

Breakdown

Business

Practices

Regulatory

Landscape

Product &

Market Trends

Sales Channel

Analysis

Project

Specific

Business

Development

Support


Large Power TransformersWe consider 100kV, >60MVA as LPTs


LPTs Market AnalysisWhy Separate Power Transformers from Distribution Transformers

A globally traded product

• Demand impacts the supply beyond regional boundaries

Highest efficiency requirements

Long lead times

• A custom designed equipment

Special raw materials• Electrical Steel and its impact on the prices


Global Market Situation


• India and China to stay largest markets

• 292 GVA of new substations capacity in India

• 30GW wind, 60GW solar by 2020 in China

• Indonesia large and dynamic market

• 500 generation and transmission projects till 2025

• Qatar and UAE seeing a lot of movement

• World Cup in Qatar

• Expo 2020 in Dubai

Global Market Overview - AsiaIndonesia emerging as largest market After India & China


Global Market Overview - AfricaYear on year growth expected in African market

• South Africa still the largest market

• Delayed start of transmission projects

• Nigeria getting funding for existing projects

• Focus of all tier-1 players shifting to Africa

• New manufacturing units in the region

• Agreements with governments

• China plans to invest in African utilities

• Strong edge for Chinese manufacturers


Significant Markets GloballyMarkets to Keep an Eye on in the Coming Years


Global OpportunitiesTurnkey Tenders Ratio to Increase in Years to Come

Blanket agreements spanning multiple years

Increased partnerships between EPCs and

utilities

Huge potential in HVDC market

Transformer Oil Alternatives


North America MarketUnited States & Canada Market Assessment


Annual Power Transformer RevenueUS and Canada Market to See a Slight Growth Beyond 2019

2

2.2

2.4

2.6

2.8

3

3.2

3.4

3.6

3.8

4

2016 2017 2018 2019 2020 2021 2022 2023

Billio

n $

North America Market Size 2016-23 (B$)



2

2.2

2.4

2.6

2.8

3

3.2

3.4

3.6

3.8

4

2016 2017 2018 2019 2020 2021 2022 2023

Billio

n $




2

2.2

2.4

2.6

2.8

3

3.2

3.4

3.6

3.8

4

2016 2017 2018 2019 2020 2021 2022 2023

Billio

n $



North America Market – Market DriversRenewable Capacity Addition and Replacements to Drive Market

• Utility scale renewable additions/retirements of coal based plants

• New transmission capacity needed

• Capacity additions from 2016-2020:

• Aging infrastructure in US grid

• More than 65% of power transformers in US grid are more than 25 years old

Technology Capacity Additions (MW) Generator Additions

Solar thermal and

Photovoltaic

10840 466

Wind 9416 102

Conventional Hydro 462 41


Power Transformer Revenue by Voltage100-200kV Largest Segment of the Market in the Future

47%

23%

14%

16%

Revenue Split by Voltage 2016-17

100-200kV 201-300kV

301-400kV 500kV and above

42%

20%

15%

23%

Revenue Split by Voltage 2018-23

100-200kV 201-300kV

301-400kV 500kV and above


Grid Performance and Market GrowthFailure Rates of Power Transformers Decreasing Due to Replacements

0

0.005

0.01

0.015

0.02

0.025

0.03

0.035

0.04

2012 2013 2014 2015 2016 2017 2018 2019 2020

Nu

mb

er

of

Ou

tag

es

Per

Tran

sfo

rmer

(>200kV

)

Outages per Transformer by Year

Source: NERC, Power Technology Research


North American Market – Key TrendsDigital Substations and Asset Health Monitoring to Increase

High Pure-EPC

Involvement in

Turnkey Projects

Asset Health

Monitoring to

increase

Digitalization

of Substations

Physical

protection of

Transformers

Utilities investing in

bushing monitoring

solutions

Back up reserves

at Utility and

Industrial Scale


Power Transformers Lead TimesLead Times Can Vary Depending on a Range of Factors

• Need Assessment

• RFP (2 months)

• Bidding (2 months)

• Negotiation & Technical Specs. (2 months)

• Design (3-4 months)

• Purchase materials (3-4 months)

• Production (3-4 months)

• Testing (2 weeks)

• Onsite installation (Up to few months)

Typical

9-12

Months


Power Transformers Lead TimesLead Times will reduce in long term

0

10

20

30

40

50

60

2016 2017 2018 2019 2020 2021 2022 2023 2024

Weeks

North America Lead Times 2016-24 (Weeks)

Shipping Manufacturing Raw materials Design


EU-28 Market28 Countries Currently in European Union


EU-28 Market - Annual RevenueEU-28 Market Experiencing a Steady Growth

0.5

0.6

0.7

0.8

0.9

1

1.1

1.2

1.3

1.4

2016 2017 2018 2019 2020 2021 2022 2023

Billio

n $

EU-28 Market Size 2016-23 (B$)


EU-28 Market - Annual RevenueRenewable Capacity Addition is Driving Growth at the Moment

0.5

0.6

0.7

0.8

0.9

1

1.1

1.2

1.3

1.4

2016 2017 2018 2019 2020 2021 2022 2023

Billio

n $

Growth Due to Renewable Addition 2016-18 (B$)

Renewable additions

Grid Adaptation


EU-28 Market - Annual RevenueE-Vehicle Infrastructure to Impact the Grid Beyond 2020

0.5

0.6

0.7

0.8

0.9

1

1.1

1.2

1.3

1.4

2016 2017 2018 2019 2020 2021 2022 2023

Billio

n $

Impact of E-Vehicles on Grid Infrastructure 2021-23 (B$)

E-vehicles

Replacements


EU 28 Market – Market DriversRenewable Additions and Grid Adaptation Key Market Drivers

• New additions more than the replacements

• Central European countries saw 6% annual increase in 2017

• Grid adaptation and renewable generation

• Onshore and offshore wind power projects

• At the moment growth is driven by units

• Prices have gone down 2016 onwards

• From 2014 to 2016, Growth because of price increase


EU 28 Market – Key TrendsInterconnected Grids and Digital Substations to Affect the Market

Germany to be the

biggest market

2017-23

Asset Health

Monitoring to

increase

Interconnected

grids

Digitalization

of Substations

Tier-1 players

dominating the

market


Power Transformers Lead TimesLead Times to be Stable in Years to Come

0

10

20

30

40

50

60

2016 2017 2018 2019 2020 2021 2022 2023 2024

Weeks

EU-28 Lead Times 2016-24 (Weeks)

Shipping Manufacturing Raw materials Design


Power Transformers Lead TimesComparison between EU and North America

0

10

20

30

40

50

60

2016 2017 2018 2019 2020 2021 2022 2023 2024

Weeks

EU-28 Vs North America Lead Times (Weeks)

EU-28 North America


Supply Side Analysis


Supply and Demand – Short TermGlobally there is a Surplus in Manufacturing Capacity

• Tier 1 players operating at 75-80% capacity utilization

• Can be broken down to regional level

• Delays in India’s generation plans

• Overcapacity is expected to increase in next 2 years

• New manufacturing facilities in emerging markets


Supply and Demand – Long termSupply-Demand Gap will Narrow Down in the Long Term

• Strict efficiency requirements will help tier 1 players to ramp up the capacity utilization

• Tier-1 players will shift their capacities towards emerging markets

Utilized

81%

Idle

19%

2025 Capacity Utilization

Utilized

70%

Idle

30%

2016 Capacity Utilization


Supply and DemandGlobally there is a Surplus in Manufacturing Capacity

0

500

1000

1500

2000

2500

2017 2018 2019 2020 2021 2022 2023 2024 2025

GV

A

Global Supply-Demand Gap

Supply Demand


Company ProfilesABB

Largest installed base

of power transformers

globally

Focus on African

markets

HVDC and EHV/UHV

applications

Part of grid resilience

initiatives

R&D in rapid fault

idtentification


Company ProfilesSiemens

Sales in U.S improved

significantly in 2016

(33% to 43%)

European orders

remained same in

2016

Success in HVDC

projects in Europe

R&D investment for

eco-friendly

transformer oil

solutions

Power transformers

orders from middle

east

Siemens has also been

involved in

partnerships with

utilities in Africa

Expected to win more

offshore wind projects

with UK


Key Take-aways

• Penetration of renewables at tarnsmission level

• Transformer asset health monitoring

• Preventive maintenance

• Supply demand gap to reduce in long term


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America and RoW); +49 (0)89 12250950 (EMEA).

Saqib Saeed

Principal Analyst – T&DT. +49 (0)89 12252374

M. +49 (0)176 43408939

M. +1 408 622 0564

[email protected]

Contact Details

Sunnyvale,

CA, USA

Munich,

Germany

mailto:[email protected]

mailto:[email protected]

Documents

Transformers Market Overview - Power Technology Research...•Global Market Overview •North America Market Specifics •Europe Market Specifics •Supply-Demand Situation ... •Capacity