Saudi Arabia Transformer Market - Growth, Trends, COVID-19 Impact, Forecasts (2022 - 2027)

Saudi Arabia Transformer Market - Growth, Trends, COVID-19 Impact, Forecasts (2022 - 2027)

Saudi Arabia's transformer market is projected to register a CAGR of over 5% during the forecast period.

The market was negatively impacted by COVID-19 in 2020. Presently the market has now reached pre-pandemic levels.

Key Highlights

• Over the medium term, owing to the developments in renewable energy creating a need for upgrading the electricity grid networks is driving the transformer market growth.
• On the other hand, challenges like high initial costs are expected to hamper the market growth in the near future.
• Nevertheless, Innovating transformers for smart grids creates opportunities for the transformer market. In a power supply system, smart transformers can act independently to regulate voltage, monitor and manage power demand fluctuations, and provide feedback. They can also be accessed remotely by utilities.

Key Market TrendsDistribution Transformers Expected to Dominate the Market

• Distribution transformers are also known as isolation transformers. In electric power distribution, this transformer is used to alter high voltages to normal voltages like 240/120V. Different types of transformers are available in the distribution system, such as single phase, three phase, underground, pad-mounted, and pole-mounted transformers.
• In addition to increasing construction activity and the establishment of business hubs, industries, and infrastructure, Saudi Arabia has also expanded its power infrastructure, which has increased the demand for distribution transformers. Furthermore, government initiatives such as Saudi Arabia Vision 2030 and economic diversification policies are expected to boost the transformer market during the forecast period.
• According to the BP Statistical Review of World Energy, the total electrical energy production increased by 5.5% in 2021 with the electricity demand that reached 356,6000 GWh compared to 338,000 GWh in 2020.
• According to General Authority of Statistics, in Saudi Arabia, electricity consumption also increased by 0.21% during 2020 to reach 289,333 GWh, compared to 2019 when consumption was 288,713 GWh.
• In September 2022, Saudi Arabia announced to invest USD 10.6 billion in developing local infrastructure projects. Over 150,000 housing units is expected to be provided across 11 cities under the new agreement, with 90 million square meters dedicated to local infrastructure projects. The project will also allocate nearly 54 million square meters to public areas, facilities, parks, and road networks. The ongoing infrastructure projects in the country are expected to drive the demand for distribution transformers.
• Therefore, based on the above-mentioned factors, the distribution transformer segment is expected to dominate the growth in the transformer market during the forecast period.

Increasing Renewable Energy Deployment is Expected to Drive the Market

• Increasing investment in renewable energy systems is expected to be a significant driver for the transformer market during the forecast period. The country has been investing heavily in renewables in recent years in a bid to move away from energy generation from conventional energy resources like oil and natural gas. Increasing integration of renewable energy in the region’s electricity demand makes the usage of transformers necessary to maintain a steady supply of electricity as power generation from renewable energy systems can sometimes be unsteady.
• Based on Vision 2030, Saudi Arabia is aiming to reduce its dependency on oil revenues, diversify its energy mix, and develop its significant potential of renewable energy, with solar energy holding a major share. The Mutjadedah Program supports the development of the private renewable energy sector, focusing on renewable energy component manufacture, IPPs, and distributed solar electrical generation projects.
• Further, Saudi Arabia has set a new renewable target of developing and installing 27.3 GW of clean energy by 2024 and 58.7 GW by 2030, of which Solar PV includes 40GW of the target. This is expected to increase the demand for integrating renewable sources with the country's transmission infrastructure and smart grid networks.
• According to the International Renewable Energy Agency (IRENA), Saudi Arabia had a total installed solar PV capacity of 439 MW in 2021, up from 109 MW in 2020. Solar PV accounted for more than 87% of the installed renewable capacity in 2021, most of which came from large-scale solar power projects. The rapid growth is a part of the country's efforts toward its ambitious clean energy target and plans to generate 50% of its energy from renewables by 2030.
• In June 2022, Saudi Aramco planned to reduce its upstream carbon intensity by 15% by 2035 and invest in solar PV and wind projects worth 12 gigawatts, and to produce 11 million mt/year of blue ammonia by 2030, as part of its goal of reaching net zero greenhouse gas emissions by 2050 from its assets in scope 1 and scope 2.
• In September 2022, As the principal buyer of electrical energy and capacity for power projects in the Kingdom, Saudi Power Procurement Company (SPPC) unveiled five new renewable energy projects with a combined capacity of 3,300 megawatts (MW). This includes three wind energy projects which are Yanbu (700 MW), Al-Ghat (600 MW) and Waad Al-Shamal (500 MW) generating a total of 1,800 MW and two solar projects with a total capacity of 1,500 MW includes Al-Henakiyah (1,100 MW) and Tubarjal (400 MW).
• Therefore, considering above factors like incereasing investments in renewable energy infrastructure is expected to drive the market.

Competitive Landscape

Saudi Arabia transformer market is moderately fragmented. Some of the major players (in no particular order) include Siemens AG, ABB Ltd, General Electric Company, Mitsubishi Electric Corporation, and Schneider Electric, among others

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• The market estimate (ME) sheet in Excel format
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