The Global Transformer Oil Market is witnessing a severe threat because of the adoption of dry distribution transformers such as vacuum pressure impregnated (VPI), vacuum pressure encapsulated (VPE), epoxy coated, epoxy cast, and gas-filled because of how safe they are.
VPI transformers have a low risk of fire and are exceptionally economical in medium-voltage distribution. Gas-filled transformers are non-flammable and are widely installed in dry docks to provide local power for ship building. VPE transformers find wide application in harsh indoor and outdoor environments, mainly because of their high resistance to humidity and caustic environments.
For those that aren’t up-to-speed, transformer oil acts as a dielectric medium in oil-filled transformers. These oils are used to cool and insulate the transformer windings and core. There are three types of transformer oils: mineral-based, silicone-based, and bio-based.
On top of competing with dry distribution transformers, the increasing cost of crude oil is posing a major hurdle for vendors. Crude oil is an essential raw material used in producing transformer oil. Petroleum distillates are refined with the help of selective solvents such as phenol, furfural, sulfuric acid, or by hydrogenation.
The process of extracting oils from raw materials containing paraffin hydrocarbons includes de-waxing. The high fluctuation of crude oil prices because of global macroeconomic factors such as political turmoil in oil exporting countries is expected to pose a challenge to the growth of the Global Transformer Oil market during the forecast period.
Fortunately, the Global Transformer Oil Market is still expected to post a CAGR of 9.10 percent for the 2013-2018 period. This is due in part to the worldwide adoption of renewable sources of energy such as hydropower, geothermal power, and wind energy. The increasing demand for renewable sources of energy directly increases the demand for power and distribution transformers, which in turn increases the demand for transformer oils.
According to the global status report on renewable energy, an estimate of 19 percent of the global final energy consumption in 2011 was contributed by the renewable sources of energy. In 2012, total renewable power capacity worldwide exceeded 1,470 GW, which was an increase of 8.5 percent from 2011.
In addition, energy-saving practices are supported by legislation in various countries. For instance, countries such as Japan offer zero-interest loans to renewable energy companies. In addition, the US government aims to reduce carbon emissions by 83 percent by 2050. Hence, the demand for transformer oils that can reduce carbon emissions is expected to increase and thus drive the growth of the market.
