Global Transformer Market Enters a New Supercycle

The global transformer market is entering a new “supercycle,” driven by rising electricity demand, data center expansion, electrification, renewable energy development, and aging power infrastructure.

According to McKinsey analysis, global transformer demand is expected to grow by around 3.5% annually and increase by approximately 40% by 2035, reaching about 5,600 GVA. At the same time, the industry is facing significant supply constraints, with transformer manufacturing capacity struggling to keep pace with growing demand.

The shortage is particularly significant in Europe and North America. The accumulated backlog of unserved transformer demand is estimated at around 1,137 GVA in 2025 and could reach approximately 1,689 GVA by 2030. Long manufacturing cycles, limited production capacity, shortages of specialized labor, and tight supplies of key materials such as grain-oriented electrical steel are making it difficult to close the gap quickly.

Demand is being driven by several structural trends. The rapid expansion of data centers is creating substantial new electricity demand, while the electrification of transportation, buildings, and industry is further increasing pressure on power grids. Meanwhile, the growth of wind and solar generation requires additional transformer capacity because renewable projects are often more widely distributed and located farther from major load centers.

The aging of existing grid infrastructure is another important factor. A significant share of transformers in Europe and North America has reached or exceeded its original design life, creating a growing need for replacement and grid modernization.

Supply constraints are already affecting the market. Transformer lead times have increased from around one year historically to as long as five years in some cases, while prices have risen significantly since 2021. McKinsey estimates that the global transformer market could grow in value from approximately €87 billion in 2025 to €123 billion by 2035.

Overall, the transformer industry is moving toward a new market environment characterized by strong long-term demand, limited supply capacity, extended lead times, and increasing investment in grid infrastructure. Securing manufacturing capacity, reliable suppliers, and long-term supply relationships is becoming increasingly important across the global power sector.