Column: Market review

Column: Market review

Transformer components and sub-assembly markets

The production of any power or distribution transformers requires the purchase and assembly of many components and materials, some of which are commodity items that are used in a variety of products, and some are tailor-made specifically for the transformer industry. Examples of the former include sheet steel, paint, aluminium and copper section, fixings, etc. and examples of the latter include grain oriented steel, bushings, transformer oil, etc.

We know that the global transformer market has a value in the order of US$40 billion annually. It is therefore computable to estimate the value of the components that are used in the production of those transformers. To save time and computing power, the rule-of-thumb figure is slightly over 50% or US$20 billion to US$22 billion annually. However, this headline figure offers no insights into the dynamics of the market, which components are still manufactured in house, for what types of transformers are components outsourced and geographically, where the markets are situated.

The principal transformer components and materials are defined as:

  • Core steel
  • Transformer oil
  • Sheet steel
  • Steel profile
  • Radiators/cooling
  • Aluminium wire and sheet
  • Copper profile and wire
  • Insulation:glass fibre, Kraft paper, presspan, resin, wood, etc.
  • Porcelain insulators/bushings
  • Miscellanous parts

The principal subassemblies are:

  • Cores: comprising core steel, other core components and assembly costs
  • Chassis: tank, cooling equipment and assembly costs
  • Tap-changer
  • Bushings: HV and LV bushings
  • Miscellaneous components and control
  • Oil/fluid

When the transformer market is disaggregated into these major components and sub-assemblies, an estimation can be made of the market for each sub-assembly. Some assemblies are easily quantifiable, such as bushings, tap-changers and tanks – all products which are commonly traded. Others, such as complete cores, are traded as finished parts but are also an integral part of the assembly of transformers within an OEM transformer producers’ remit. In this article these “sub-assembly” parts have been calculated based on the total transformer market, and the estimates contained herein are therefore the TTM – Total Theoretical Market, rather than the TAM – Total Addressable Market, which may be available to companies supplying pre-wound and assembled windings and cores. The prevalence of buying and selling these sub-assemblies is higher at the lower power end of the market – as commodity items – and becomes increasingly rare at the higher bespoke end of the market.