Unveiling the Role of Electrical Steel in Advancing Smart Energy Infrastructure

The global electrical steel market is projected to generate USD 47.8 billion in 2025 and is expected to reach USD 88.9 billion by 2035, expanding at a CAGR of 6.3% during the forecast period. Electrical steel, a specialty steel known for its high magnetic permeability and low energy loss, is a crucial material in modern power and energy systems. It is primarily used in transformers, motors, and generators to optimize energy efficiency. While most reports focus on its role in conventional power distribution, a lesser-explored yet transformative area is its application in smart energy infrastructure, where electrical steel is emerging as a key enabler of the global shift toward sustainable and intelligent energy networks.

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Market Context

Electrical steel, also referred to as silicon steel or transformer steel, is designed to minimize energy loss during magnetic flux changes. Its market growth is largely driven by increasing electricity demand, renewable energy integration, and the expansion of power grids in emerging economies. With global energy consumption expected to rise by over 25% by 2035, the demand for high-efficiency transformers and electric motors will significantly boost the electrical steel market.

Grain-oriented electrical steel (GOES) and non-grain-oriented electrical steel (NGOES) dominate the product landscape. GOES is widely used in transformer cores for its superior magnetic properties, while NGOES finds applications in rotating machines such as EV motors and industrial equipment. However, beyond these conventional roles, electrical steel is gaining traction in next-generation smart grids and digital power infrastructure, where the focus is on minimizing transmission losses and improving energy efficiency through advanced materials.

The Uncommon Insight: Electrical Steel in Smart Energy Infrastructure

One of the least discussed but rapidly growing areas in the electrical steel market is its integration into smart energy systems. As countries modernize their power grids to support renewable energy and electric vehicle (EV) adoption, the need for high-performance electrical steel is accelerating. Smart grids require transformers and motors that can operate efficiently under variable loads while minimizing energy loss. Electrical steel, with its exceptional magnetic characteristics, plays a pivotal role in achieving these requirements.

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For instance, the global surge in electric vehicle manufacturing is driving demand for NGOES in high-speed motors, where traditional steel would result in significant energy loss due to eddy currents. EV manufacturers like Tesla and BYD have shifted toward specialized NGOES grades to improve motor performance and extend battery life. Similarly, smart power transformers used in renewable energy projects, such as wind and solar farms, rely heavily on GOES to enhance grid stability and efficiency.

The adoption of smart meters, microgrids, and decentralized power generation further underscores the importance of electrical steel. These systems require efficient energy conversion and minimal power loss, making electrical steel an essential material in the energy transition landscape.

Case Studies and Real-World Applications

A remarkable example of electrical steel's role in smart infrastructure is the Shenzhen Electric Grid Project in China, where advanced GOES has been implemented to enhance transformer efficiency and reduce power losses across the city's rapidly expanding smart grid network. This initiative is estimated to cut annual energy wastage by thousands of megawatt-hours, demonstrating the cost-saving and sustainability benefits of using high-quality electrical steel.

In Europe, Siemens Energy has partnered with steel producers to develop transformer cores made from low-carbon, high-grade electrical steel, aligning with the EU's energy efficiency directives and net-zero targets. Similarly, in the U.S., major utility companies have begun upgrading aging grid infrastructure with electrical steel-based components that support bidirectional energy flow, crucial for integrating rooftop solar power and battery storage systems.

The electric vehicle sector is another success story. Leading automakers such as Volkswagen and General Motors are heavily investing in NGOES to produce motors capable of delivering superior torque and efficiency, thereby boosting overall vehicle performance while reducing energy consumption.

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Future Outlook

The future of the electrical steel market is closely linked to the rapid evolution of smart energy technologies. Market experts predict that the demand for NGOES in electric mobility could grow at double the pace of GOES, driven by the exponential rise in EV adoption. According to projections, EV-related electrical steel consumption alone could account for over 20% of the total market by 2035.

Moreover, the global transition toward renewable energy will amplify the need for GOES in wind turbine generators and smart transformers. Countries such as Japan, Germany, and the U.S. are already investing heavily in research to develop next-generation electrical steels with ultra-low core losses. Innovations in amorphous and nanocrystalline steel, which offer superior energy efficiency compared to conventional grades, are likely to disrupt the market landscape.

Policy frameworks like the U.S. Inflation Reduction Act, EU's Green Deal, and India's National Smart Grid Mission will also play a critical role in supporting electrical steel demand. These initiatives emphasize energy efficiency and sustainability, ensuring that electrical steel remains a core material for future energy infrastructure.

Market Segmentation

By Product Type:

The industry is segmented into grain-oriented electrical steel and non-grain oriented electrical steel.

By Application:

The industry is categorized into inductors, motors, and transformers.

By End Use:

The industry is segmented into automobile, manufacturing, energy, household appliance, and others.

By Region:

The industry is divided into North America, Latin America, Europe, Asia Pacific, and Middle East and Africa.

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