The Indian power sector is going through defining times with significant push given by the government under its various schemes such as ‘Power for All’, ‘One Nation-One Grid’, and its climate change mission statement ‘Panchamrit’, wherein the country realigns its power demand with more focus on alternate sources of power and reduction of its dependence on coal as a raw material to derive electricity. This is in addition to India’s ambitious target to achieve Net Zero Mission by 2070.

Mission 2030
By 2030, the government aims to increase non-fossil fuel-based energy capacity to 500 GW, meeting 50% of its energy requirements by renewable energy sources, and reduce carbon intensity of the economy to less than 45%. As per the latest figures on the National Power Portal (as on March 2022), the total installed capacity stands at 395.80 GW. In terms of the sector-wise division of installed capacity, central sector holds 25.01%, state sector 26.49% and private sector 48.50%. By 2030, the country aims to have 280 GW of installed solar power. To meet this goal, the government has announced allocation of Rs 19,500 crore for Production Linked Incentive (PLI) for manufacture of high efficiency solar modules.

The government has also approved the Green Energy Corridor (GEC) - Intra-State Transmission System Phase-II scheme. The scheme will facilitate grid integration and power evacuation of approximately 20 GW of Renewable Energy (RE) power projects in seven states namely, Gujarat, Himachal Pradesh, Karnataka, Kerala, Rajasthan, Tamil Nadu and Uttar Pradesh. This scheme will enable the country to achieve its target of 450 MW of installed Renewable Energy (RE) power capacity by 2030. Moreover, it will contribute towards long term energy security of the country and promote ecologically sustainable growth by reducing carbon footprint. It will generate large direct and indirect employment opportunities for both skilled and unskilled personnel in power and other related sectors.

In addition to this scheme, the government is already in the implementation mode of GEC-Phase-I in the states of Andhra Pradesh, Gujarat, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan and Tamil Nadu. It will lead to grid integration and power evacuation of approximately 24 GW of RE power and expected to be completed by 2022. It is aligned to the government’s macro initiative of ‘One Nation – One Grid’ wherein it plans to integrate all regional grids to establish a National Grid, and create Smart Grid led by automation, communication and IT systems.

Moreover, the government in Budget 2022 has also announced its plans to provide data centers and energy storage systems infrastructure status. This move is expected to highly benefit the power industry as they see data centers, in specific, as an area of significant revenue opportunity.

The overarching aim of the government is to develop a comprehensive power infrastructure for the country that is smart, integrated and technologically superior and Aatmanirbhar. This would not just solve the country’s energy requirement but also make it more sustainable and firewalled from newer cross-border threats.

Transformer market: Powering growth
The thriving energy market is expected to help the Indian electrical equipment industry, which includes power generation and transmission & distribution (T&D) equipment, to grow from $ 48-50 billion in 2021 to $ 72 billion by 2025. Value of the exports from India is anticipated to grow to $ 13 billion by 2025 from $ 8.62 billion at present with the world looking for India as an alternative to China.

India has set an ambitious target of having 175 GW renewable energy (RE) capacity by 2022 and 450 GW by 2030. Local electrical equipment industry will have to play a crucial role in meeting India's renewable energy targets as well as the overall carbon reduction targets under the Paris agreement. It is estimated that $ 18 billion investment per year will be required to meet the target of 450 GW of RE by 2030 and, if this materialises, then there will be huge demand for new age equipment.

Power & distribution transformers are considered to be one of the major components of the electrical equipment market. India’s power & distribution transformer market is expected to reach $ 4.258 billion by 2030 from $ 2.14 billion in 2020. According to a Research Nester report, "The growth of the market can primarily be attributed to the growing demand for energy in the country across different end-use sectors, followed by the increasing power generation in the country. Moreover, rapid development in the area of deployment of smart grid, and the shift towards renewable energy sources, along with the growing deployment of green transformers, are some of the major factors anticipated to drive the market growth."

The demand for energy in India is growing significantly owing to the rapidly expanding population, growing industrialisation, and increasing urban population, among others. According to the statistics by the World Bank, the urban population of India as a share of total population increased from 27.667% in the year 2000 to 34.926% in the year 2020.

Backed by the growing demand for energy, the government of the country is increasingly focusing on to improve its power infrastructure, which is one of the major factors anticipated to drive the growth of the market in the coming years. Moreover, with the surge in the development of smart cities, the focus on deployment of green and renewable energy transformers and shift towards renewable sources of energy is increasing at a massive pace, which in turn, is anticipated to drive the growth of the India power & distribution transformer market.

Primary growth drivers of the India power & distribution transformer market are:

However, there are also some challenges like:

Market segmentation
The India power & distribution transformer market is segmented by transformer type into core type transformers, shell type transformers, and berry type transformers. Out of these, the shell type transformers segment is anticipated to hold the highest market share and further attain market revenue of $ 1.942 billion by the end of 2030. On the basis of power rating, the market is segmented into small (500 – 7500 KVA), medium (7500 KVA – 100 MVA), and large (100 MVA & above). Out of these, the small (500 – 7500 KVA) segment attained the largest market revenue of $ 969 million in 2020 and is further projected to touch $ 2052 million by the end of 2030. The segment is also anticipated to grow with the highest CAGR of 8.07% during 2021-2030 period.

On the basis of mounting, the market is segmented into pad, pole, and underground vault. Out of these segments, the pad segment is expected to touch the largest revenue of $ 3.512 billion by the end of 2030. Further, the market is also segmented on the basis of phase into single and three phase, out of which, the three phase segment is anticipated to hold the highest market share and also grow with the highest CAGR of 8.09% during the forecast period. On the basis of insulation, the market is segmented into dry and liquid immersed, out of which, the liquid immersed segment is expected to grow with the highest CAGR of 7.75% during the 2021-2030 period. By end-user, the market is segmented into utility, residential, commercial, and industrial. Out of these, the utility segment is anticipated to garner the largest revenue of $ 3.202 billion by 2030.

On a strong growth path
Indian transformer manufacturers witnessed improvement revival in order inflows in FY22 leading to good financial performance inspite of the pressure of high raw material prices. With current uncertainty in the global market due to Russia-Ukraine war, the demand for manufactured products is likely to muted in India; thus, leading to reduction in power consumption. However, the government has announced that it will continue to invest in augmenting the country's infrastructure. This is likely to sustain the demand of transformers in near to medium term provided the planned investments in power sector goes through and the replacement demand remains strong.

Source: CG Power and Industrial Solutions Ltd and Research Nester