for the forecast period (2023-2032). Transformer oil, also known as insulating oil, has stability at high temperatures & better electrical insulation properties.
Its major work in transformers is to offer electrical insulation between several live parts while also serving as a protective layer coating to prevent oxidation of metal surfaces. To address ecological concerns & economic expense better alternatives to transformer oils including soybean oil, palm kernel oil, & coconut oil have been figured out & are easily available in nations such as India, Malaysia, & Sri Lanka, etc.
Opportunities in the transformer oil market are growing as global demand for energy infrastructure rises. With electrical grids expanding and the shift to renewable energy, the need for reliable transformer oil is stronger than ever. Additionally, innovations in eco-friendly and fire-resistant oils open up exciting new possibilities for companies to meet evolving industry needs.
Transformer oil plays two important functions in transformers: suppressing arcing & dissipating the heat produced inside the transformers. It also makes sure that the core & windings of transformers are properly dipped for better cooling & insulation. An important feature of insulating oil is its capability to avoid oxidation of the paper insulation made out of cellulose. The dielectric strength of transformer oil, also known as the breakdown voltage, is a vital parameter.
A low breakdown voltage value shows the moisture content & conducting substance’s presence in the oil. For its dielectric strength & electrical properties, mineral-based oils, are mostly employed in several transformers.
Dielectric insulating fluid is an important part present in every power & distribution transformer, providing better electrical resistance & effective cooling for the transformer. Bio-based transformer oils are anticipated to record the highest growth by 2032 because of their better fire resistance & non-toxic features, making them more environmentally friendly.
Recent months have witnessed an exciting movement toward more eco-friendly and high-performance transformer oils. As environmental concerns rise, biodegradable, fireproof, non-toxic oils are becoming more and more sought-after among manufacturers looking to innovate for market needs while meeting global regulatory standards.
As per ec.europa.eu In 2022, the EU’s crude oil production reached its lowest point at 16.3 million tonnes, a significant decline from its peak of 41.7 million tonnes in 2004. Despite rising oil prices due to the Russian invasion of Ukraine, production continued to decrease. Italy, Denmark, and Romania were the leading producers in 2022, contributing 4.5 Mt, 3.2 Mt, and 3.0 Mt, respectively.
Norway, a major non-EU oil producer, saw its production peak in 2001 at 157.6 million tonnes. After a decline, production reached 84 million tonnes in 2022. EU candidate countries like Turkey, Serbia, and Albania produced a combined total of nearly 5 million tonnes in 2022, contributing on a much smaller scale.
Crude oil imports to the EU in 2022 amounted to 479.6 million tonnes, marking a 7.4 percentage point increase from 2021. Imports from Russia decreased significantly by 24.6 million tonnes due to the REPowerEU plan, while imports from Saudi Arabia, the U.S., and Norway rose sharply, compensating for the loss of Russian oil.
Market Dynamic
The Global Transformer Oil Market is witnessing substantial growth, majorly because of its high usage in the power generation sector. The increasing spending on sustainable energy sources globally is a key factor propelling market expansion. Moreover, electricity trade across borders is on the surge in Asia, with various nations setting up electrical grids for efficient exchange of electricity.
The rising number of projects for wind power is also leading to the rise in demand for transformer oil, utilized as lubricant & coolant in transformers & turbines for the smooth working of wind turbines in power generation plants. Moreover, the expansion of T&D (Transmission & Demand) infrastructure in developed nations, to facilitate the incorporation of renewable energy plants, is contributing to market expansion.
Nevertheless, the acceptance of alternative transformer techniques & fluctuations in crude oil prices pose challenges to the market. Strict regulations aimed at mitigating the negative impacts of minerals & crude oil price fluctuations also impede market growth.
Despite these hurdles, the distribution of energy is expanding, driven by rising electricity consumption in urbanizing and industrializing emerging nations like India & China. Moreover, sectors like pharmaceuticals,
agriculture, oil & gas, and automotive in emerging economies offer significant demand drivers, leading to the expansion of electrical grids to meet the growing electricity demand for development of industries.
Research Scope and Analysis
By Type
Mineral-based oils dominate the market, with a maximum share in 2023. This growth can be credited to its requirements in several sectors, such as circuit breakers, capacitors, & high-compatibility areas. They are widely accepted in conditioning & shielding switchgear, transformers, & boilers. They are also deployed for heat transfer & preserving the transformers’ interior field winding.
In recent times, a shift towards bio-based products in the market can be seen. These bio-based products provide better quality performance as compared to other alternatives and are environmentally friendly, as they are obtained from vegetable oils & won’t consist of silicone, halogens, or petroleum hydrocarbons.
They are less toxic & easily degrade during leakage or spillage, making them sustainable options. The rising trend of bio-based products is anticipated to open up new avenues for their market’s growth. Products obtained from naphthenic mineral oil provide various benefits, like easy availability, low cost, high efficiency, & better capacity for thermal cooling. However, their non-
biodegradable nature poses risks of pollution & concerns regarding handling, which could hinder the demand for naphthenic-based mineral oil products demand in upcoming years.
By Rating
The segment of 100 MVA-500 MVA dominates the market segment, accounting for a maximum share in 2023. The growth of this segment is majorly due to its wide range of uses of these transformers in extensive industrial environments, including refineries, power plants, & production sites.
As they are made to deal with a good amount of electrical power, they play a vital role in the transmission, generation, or even distribution of electrical power. Moreover, their ability to tackle higher voltages makes them perfect for power distribution in areas with larger populations, leading to the efficient transfer of power from the source to the desired destination.
Furthermore, the segment of <100 MVA led the market after the 100 MVA-500MVA segment, and is anticipated to exhibit the fastest CAGR by 2032. The reason behind this growth can be the widespread application of <100 MVA transformers in several power distribution channels. These transformers are used to either step down or step up the voltage of electrical power, making its transmission easy over larger distances, and making them a vital part of power distribution networks globally.
By End User
The segment of industrial dominates the market, with a maximum share in 2023. This can be credited to the rising industrialization seen globally, leading to an increased desire for transformers. Several sectors like food processing, chemicals, steel, & automotive depend on transformers to enhance their industrial work, mostly needing various kinds of electrical machinery working at distinct levels of voltage.
For Example, power generation produces electricity at higher voltage levels, resulting in the utilization of polyphase distribution transformers. The growing steel & chemical manufacturing sectors have further contributed to the demand for transformers, thereby driving the requirement for transformer oils to make sure that the functioning is smooth.
Additionally, the segment of residential is anticipated to grow with the maximum CAGR in upcoming years. Mainly due to the increasing population & the further developments of residential regions. The residential segment consists of transformers that are utilized in houses, apartments, villas, etc.
The Global Transformer Oil Market Report is segmented on the basis of the following:
By Type
- Mineral-Based Oils
- Naphthenic Base Oils
- Paraffinic base Oils
- Silicon-Based Oils
- Bio-Based Oils
By Rating
- < 100 MVA
- 100 MVA – 500 MVA
- 501 MVA – 800 MVA
- > 800 MVA
By End-User
- Residential
- Industrial
- Commercial
- Utilities
Regional Analysis
Asia Pacific dominates the transformer oil market, with a significant
share of 55.8% in 2023. This dominance can be credited to the rising electricity demand in economies such as India, China, Australia, and Japan. The growing industrial & commercial sectors are leading to a rise in substations’ number, thereby propelling the demand for transformers in the Asia-Pacific region.
Producers in China have been making strides in the market because of their huge spending in the power sector. Moreover, the region's attention on the expansion of capacity building for renewable energy, especially in China & India, is fueling transformer oil’s demand in the sub-transmission segment. Strong local producers in this area create hurdles for international market newcomers aiming to establish their foothold.
Additionally, in North America, the market is being propelled by the growth of the industrial & manufacturing industries in Canada & U.S. The focus of the region is on advancements in technology & developments of already established transformers for better yield, along with the crude oil market’s decline, which is anticipated to drive the market in these nations.
By Region
North America
Europe
- Germany
- The U.K.
- France
- Italy
- Russia
- Spain
- Benelux
- Nordic
- Rest of Europe
Asia-Pacific
- China
- Japan
- South Korea
- India
- ANZ
- ASEAN
- Rest of Asia-Pacific
Latin America
- Brazil
- Mexico
- Argentina
- Colombia
- Rest of Latin America
Middle East & Africa
- Saudi Arabia
- UAE
- South Africa
- Israel
- Egypt
- Rest of MEA
Competitive Landscape
The market is characterized by a moderate level of fragmentation, with major industry players prioritizing capacity and geographical expansions, as well as engaging in mergers & acquisitions to expand their customer base. These companies are also placing significant emphasis on research and development (R&D) activities to create innovative products that can strengthen their position in the market.
For example, Cargill Inc. recently introduced its FR3r natural ester, a new transformer insulating fluid derived from more than 95% rapeseed oil, which is 100% biodegradable and environmentally friendly. This product launch is expected to provide the company with a competitive advantage.
Leading players in the market are directing their efforts towards the production of bio-based oils and implementing various strategic initiatives, including R&D activities, to develop eco-friendly oils and offer innovative solutions to meet the growing demand for sustainable products.
Some of the prominent players in the Global Transformer Oil Market are:
- Nynas AB
- Calumet Specialty Products
- PetroChina Company
- China Petroleum & Chemical Corporation
- Cargill Inc.
- Shell Plc.
- Ergon, Inc.
- Engen Petroleum Ltd.
- Hydrodec Group Plc.
- APAR Industries Limited
- Other Key Players
COVID-19 Pandemic & Recession: Impact on the Global Transformer Oil Market:
The COVID-19 pandemic and the subsequent recession had a significant impact on the global transformer oil market. The pandemic led to disruptions in supply chains, and manufacturing operations, and reduced demand for various industrial sectors, including the power generation and distribution industry.
Lockdowns and restrictions imposed to curb the spread of the virus resulted in a slowdown of infrastructure development projects and a decrease in power consumption, affecting the demand for transformer oils. Additionally, economic uncertainties and financial constraints during the recession led to the postponement or cancellation of investment plans, further impacting market growth.
However, as the economies recover and industries resume their operations, the demand for electricity and power infrastructure is expected to rebound, driving the transformer oil market's recovery in the post-pandemic period.
Report Details
| Report Characteristics |
| Market Size (2023) |
USD 2,981.5 Mn |
| Forecast Value (2032) |
USD 9,084.9 Mn |
| CAGR (2023-2032) |
13.2% |
| Historical Data |
2017 - 2022 |
| Forecast Data |
2023 - 2032 |
| Base Year |
2022 |
| Estimate Year |
2023 |
| Report Coverage |
Market Revenue Estimation, Market Dynamics, Competitive Landscape, Growth Factors and etc. |
| Segments Covered |
By Type (Mineral- Based Oils, Silicon-Based Oils, and
Bio-Based Oils), By Rating (<100 MVA, 100-500 MVA,
501-800 MVA, and >800 MVA), and By End-Use
(Residential, Industrial, Commercial, and Utilities). |
| Regional Coverage |
North America – The US and Canada; Europe – Germany, The UK, France, Russia, Spain, Italy, Benelux, Nordic, & Rest of Europe; Asia- Pacific– China, Japan, South Korea, India, ANZ, ASEAN, Rest of APAC; Latin America – Brazil, Mexico, Argentina, Colombia, Rest of Latin America; Middle East & Africa – Saudi Arabia, UAE, South Africa, Turkey, Egypt, Israel, & Rest of MEA
|
| Prominent Players |
Nynas AB, Calumet Specialty Products, PetroChina
Company, China Petroleum & Chemical Corporation,
Cargill Inc., Shell Plc., Ergon, Inc., Engen Petroleum
Ltd., Hydrodec Group Plc., APAR Industries Limited
and Other Key Players. |
| Purchase Options |
We have three licenses to opt for: Single User License (Limited to 1 user), Multi-User License (Up to 5 Users), and Corporate Use License (Unlimited User) along with free report customization equivalent to 0 analyst working days, 3 analysts working days and 5 analysts working days respectively. |