Report Overview: Data Center Transformer Market
The global data center transformer market size was valued at USD 4.68 billion in 2020 and looks set to grow at a compound annual growth rate (CAGR) of 5.2% from 2021 to 2027. A transformer is an electrical device that transforms and distributes electrical energy from one circuit to another. The function of a transformer is to step up (increase) or step down (decrease) the voltage levels before distributing it to the next circuit. Transformers used in data center facilities are typically three-phase medium voltage step-down transformers. Increasing number of data centers across different industries, such as IT and telecom, BFSI, retail, and government and defense, is expected to drive the market for data center transformer over the forecast period 2021-2027.
The data centers have witnessed unprecedented growth in technologies and services over the years. There has been an increase in IT spending of the organizations to simplify the operations and data storage capabilities. Rapidly growing data traffic is driving data storage demand, which has resulted in the continuous expansion of the global data center market. Data center structures are associated with more power consumption and are increasing in proportion and size day by day. Furthermore, growing workload on the data centers has, in turn, increased the demand for better quality power supply. These factors further justify the presence of transformers in a data center and have been contributing to the growth of this market.
The data center industry measures a facility’s efficient use of electrical energy in terms of power usage effectiveness (PUE). The PUE value is impacted negatively if there are a high number of electrical losses in the distribution of power. Therefore, data center manufacturers across the U.S. are focused on providing energy efficient equipment by constantly making improvements in the transformer designs to meet the requirements of the U.S. Department of Energy (DOE) set in the year 2016. Changes in design with respect to impedance, in-rush current, and short-circuit current are expected to improve the efficiency of the transformers by reducing the electrical losses. These design improvements are expected to propel the adoption of data center transformers in the near future.
Need to ensure effective power distribution across data centers has led to the advent of smart transformers. Smart transformers are equipped with intelligent electronic devices and control systems that allow the operator to remotely monitor the behavior of transformer core, bushings, windings, among other components of the transformer. Smart transformer also has a system that sends feedback about the power fluctuations to the grid so that voltage can be optimized according to the load requirement. The transformer also responds instantly to the fluctuations across the grid and acts as a voltage regulator, thus ensuring an optimum amount of voltage distribution across the data center. Thus, the market is anticipated to witness an elevated demand for smart transformers over the next few years.
Data center architecture is becoming more and more complex owing to the implementation of energy efficient equipment. The complex designs have increased the overall cost and resulted in high initial investment, which is expected to pose a challenge to the data center transformer industry. However, increased efficiency and life of transformer promise the shorter payback period, thus justifying the high initial cost. Increase in the adoption of mobile phones and cloud computing services by several businesses require a large amount of data storage. This has led to the development of IT facilities and increase in the construction of hyperscale data centers, which is further expected to support the growth of this market. Additionally, several colocation service providers have increased the production of data centers owing to rising demand for edge data centers across the globe. For instance, in 2019, Google has invested USD 3.3 billion to expand its data center presence in Europe.
Insulation Insights: Data Center Transformer Market
The liquid segment lead the data center transformer market with 78.1% share of the overall revenue in 2019. The liquid type insulation transformer offers effective heat removal, thus reducing the electrical losses and optimizing the performance of the system. It also ensures low noise levels, resulting in quieter operation. The liquid type transformer is designed to work at higher loads and offers better efficiency and service life, which is expected to increase the segment growth.
The dry insulation segment is projected to expand at the highest CAGR of 7.2% during the forecast period. Dry type insulation transformer ensures a safe working environment with zero fire hazard risks as it uses air as a cooling medium. Additionally, the dry insulation type transformers have no moving parts, thus need less maintenance. Although the initial investment cost associated with dry insulation is high, it offers long term cost benefits and is considered to be a one-time investment by the users. Moreover, the dry type transformers use Underwriter Laboratories (UL) and CSA Group (CSA) based environmentally safe temperature insulation systems and are eco-friendly, which is expected to bolster the growth of the dry type segment.
Regional Insights: Data Center Transformer Market
North America emerged as the largest shareholder in 2019 with more than 35.0% share of the global revenue. This is attributed to the presence of major players such as Eaton and General Electric. Advanced technological development and technical awareness amongst the users in the region are also expected to have a positive impact on market growth. Moreover, the presence of several data centers in the region is a crucial factor expected to drive the regional market.
Asia Pacific is the fastest growing regional market for data center transformer with a CAGR of 8.9% over the forecast period. Increasing demand for data storage and cloud based applications is contributing to the growth of the regional market. Implementation of cloud based services in sectors, like education and healthcare, coupled with support from the governments, has increased the construction of data centers in this region. Furthermore, high penetration of smartphones and internet availability, along with increased demand for mobility, is projected to increase the number of data centers in this region, which is expected to directly contribute to the growth of market.
Key Companies & Market Share Insights: Data Center Transformer Market
The market is moderately consolidated and the established players are trying to sustain their market position by making strategic investments and engaging in strategic partnerships and mergers & acquisitions. For instance, Siemens plans to acquire C&S Electric Limited in India, which is a manufacturer of electronic components, such as switch gears and transmission and distribution components. Moreover, several market players are engaged in product innovations for making the transformers more efficient and advanced. For instance, companies like Eaton and Legrand have introduced dry type cast resin transformers, which are eco-friendly, constructed with non-flammable material, and have high short circuit strength. Similarly, a Switzerland-based company named ETH Zurich has introduced smart transformers that are compact and extremely efficient. Some of the prominent players in the data center transformer market include:
Key companies Profiled: Data Center Transformer Market Report
The report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2016 to 2027. For the purpose of this study, Trusted Business Insights has segmented the global data center transformer market report based on insulation and region:
Insulation Outlook (Revenue, USD Million, 2016 - 2027)