US faces transformer supply shortfall as power demand surges, WoodMac says
Demand for certain kinds of transformers – pieces of equipment that step up or down the voltage of electricity to transfer it from power plants to end users – has more than doubled since 2019, as the industry grapples with a growing pipeline of clean energy projects and the need to replace old infrastructure, according to the energy research firm's report.With domestic manufacturing capacity falling behind, utilities are turning to imports of electrical equipment to bring their power projects online.
"This market imbalance is escalating costs and lead times and is delaying our ability to bring generating plants online in pace with the surging energy demand," said Ben Boucher, senior analyst at Wood Mackenzie.
The U.S. power sector has seen electricity consumption increase 7% in the last five years, after a decade of mild declines. The U.S. Energy Information Administration expects commercial electricity demand to grow 3.1% in 2025 and 4.9% next year, primarily driven by demand from data centers.
Rising power demand, also driven by more frequent extreme weather, has left grid operators and utilities scrambling to get more power on to the system as quickly as they can.
Utilities have been stockpiling transformers to ensure they have adequate supply, but are seeing long lead times for some equipment, sometimes forced to place orders three or four years ahead of time, Boucher said.
Meanwhile, new tariffs from the Trump administration are likely to further exacerbate the shortage domestically, he said, given the growing dependence on imports.
Roughly 80% of power transformers and half of the distribution transformers supplied in the U.S. this year will have been imported, per the report.
On the flip side, the passage of Trump's "One Big Beautiful Bill," which cut support for renewable energy projects, could reduce demand for certain kinds of transformers, "although demand will still be well above the 2024 levels so additional capacity will still be required," Boucher said.
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