Power bottleneck slows AI data centres
Shortage of transformers and electrical gear delays nearly half of planned US data centres amid surging AI demand.
Image for illustrative purposes
USA: A large data centre complex is under construction in Abilene, Texas. It will consist of eight buildings and consume around 1.2 GW of electricity, which is enough to power nearly one million US households.
As the global race for AI intensifies, companies are rushing to construct data centres at speed. Money is not the issue, with major tech firms committing over $650 B this year. However, key components are in short supply.
Nearly half of the data centres planned in the US this year are expected to be delayed or even cancelled. A major reason is the lack of essential electrical equipment such as transformers, switchgear and batteries. These are needed not only for AI facilities but also for expanding the power grid as demand rises from electric vehicles and heat pumps.
Domestic manufacturing cannot keep up, forcing developers to rely on imports. This dependence persists despite efforts over the past decade to boost US production.
Transformers are especially critical, as they convert high-voltage electricity for use in data centres. Delivery times, once around two to two and a half years, can now stretch to as long as five years, which is far beyond what AI companies need.
To cope, some developers are ordering early or even refurbishing old transformers from closed power plants. But even though electrical systems make up less than 10 % of total costs, without them, projects simply cannot proceed.
Source: Bloomberg
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