Transformer shortage fuels grid investment
Transformer lead times double and US prices jump 79 % as AI data centres and renewables strain manufacturing capacity.
Image for illustrative purposes
The global energy transition is running into a hardware squeeze. Demand for transformers and grid connection equipment has entered what Hitachi Energy calls a manufacturing “supercycle”, driven by industrial electrification, renewable integration and the rapid rise of AI data centres.
Bruno Melles, managing director for transformers at Hitachi Energy, said the company has invested $1.5 B to expand transformer production, part of a wider $9 B programme covering manufacturing, R&D, engineering and partnerships.
According to BloombergNEF, lead times for large transformers of 100 MVA and above have more than doubled since 2019. In the US, prices have climbed 79 %. Yet expanding capacity is slow. Specialised factory equipment can take two to four years to procure, and skilled engineers must be trained to handle bespoke designs. Supplies of grain-oriented electrical steel remain tight.
Grid investment is rising in response. BloombergNEF expects global spending on grids to exceed $500 B in 2026. Developers are moving upstream to secure connections. European solar firm Sunotec has taken a majority stake in German substation builder Kaufmann Electric to speed up delivery.
In India, Waaree Energies has acquired a controlling share in transformer maker Kotsons, now renamed Waaree Transpower, citing shortages that have delayed renewable projects.
To ease bottlenecks, companies are turning to framework agreements, capacity reservations and standardised transformer designs, aiming to secure supply and cut lead times as grids race to catch up with demand.
Source: PV Magazine
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