Transformer monitoring market seen doubling to $8.56 billion by 2035

The transformer monitoring system market is projected to rise from $3.71 billion in 2026 to $8.56 billion by 2035, driven by grid reliability rules, aging transformers and faster grid spending. Asia-Pacific leads the market now and is also expected to grow the fastest as utilities shift from periodic checks to continuous, AI-assisted monitoring.

Why it matters: - Transformer monitoring is moving from a maintenance add-on to core grid infrastructure spending. - Utilities can avoid major outage costs by detecting failures early, including an estimated $1 million in replacement power and restoration costs from averted forced outages on a 230 kV unit. - Grid reliability mandates, rate-base recovery and rising interconnection demands are making monitoring budgets easier to justify. - The market outlook also reflects pressure to extend transformer life and reduce replacement emissions.

What happened: - The transformer monitoring system market reached $3.40 billion in 2025 and is forecast to rise to $3.71 billion in 2026. - The market is projected to reach $8.56 billion by 2035, representing a 9.75% CAGR. - Hardware held 64.8% of market revenue in 2025, led by multi-gas dissolved gas analysis modules and fibre-optic winding probes. - Asia-Pacific led 2025 revenue with 38.5% share and is also projected to grow fastest at 11.2% CAGR. - North America held 25.4% of revenue, and Europe held 23.6%. - More information is available in the sample report.

The details: - Transformer monitoring systems combine hardware and software to track dissolved gases in oil, winding temperature, partial discharge, bushing condition and load history. - Continuous monitoring supports condition-based maintenance, predictive diagnostics and longer asset life. - Online continuous monitoring contributed $2.04 billion in 2025. - Offline and periodic monitoring held 40.1% share, reflecting cost sensitivity in distribution-class assets. - Three-phase systems held 75.4% share, while single-phase systems are growing at 9.1% CAGR. - Edge architecture accounted for 47.7% share because of cyber isolation requirements. - Cloud and hybrid deployments are the fastest-growing segment at 13.5% CAGR. - Power transformers above 72.5 kV held 55.8% share. - Distribution transformer monitoring was valued at $1.10 billion. - Oil and dissolved-gas analysis remained the largest service category at 35.1% share. - Partial-discharge monitoring is the fastest-growing service segment at 11.3% CAGR. - Power utilities made up 60.5% of end-user demand.

Between the lines: - The market is shifting away from annual lab sampling and periodic thermography toward always-on sensing tied to asset-performance software. - Software is becoming the higher-value layer. Recurring analytics revenue is expected to approach one-third of total market value by 2035. - AI-assisted diagnostics are moving beyond alarm thresholds toward failure-mode classification, with autonomous maintenance work orders expected by 2030. - Falling hardware costs have helped adoption, but software subscriptions now carry gross margins above 60%. - The strongest buying case is no longer just equipment health. It is grid reliability, regulatory compliance and avoided outage costs. - Interoperability is emerging as a competitive advantage as utilities try to manage mixed-vendor fleets.

What's next: - FERC Order No. 1920 is expected to keep long-term transmission planning tied to diagnostic spending. - The EU Grid Action Plan commits EUR 584 billion of grid investment through 2030, supporting more monitoring deployments. - Utilities are expected to expand continuous monitoring in aging fleets as transformer lead times remain long. - By 2030, leading platforms are expected to generate maintenance work orders automatically, with engineers reviewing exceptions. - Software-led services, fleet analytics and monitoring-as-a-service are likely to capture more value than hardware alone.

The bottom line: - Transformer monitoring is becoming a planning requirement, not a discretionary upgrade, as utilities face reliability mandates, aging assets and a faster pace of grid buildout.