The United States faces a dire shortage of electrical transformers, the unsung heroes of the power grid that regulate voltage for electricity transmission and distribution. With lead times stretching to four years, prices skyrocketing, and demand surging from electrification, data centers, and renewables, the crisis threatens grid reliability and energy transition goals. This article examines the manufacturers addressing the shortfall, quantifies the transformers needed, details investments in key companies, and proposes a plan to meet projected demand growth through 2030.
This is also a global crisis, Kathryn Porter out of the UK Posted on X:
Global transformer shortages are threatening the energy transition (and stability of aging legacy grids)
“There hasn’t been a focus on investing in the supply chain for making transformers over the past 20 years, and shortages are likely to get worse. “That’s really coming… pic.twitter.com/OAErP5xF8C
— Kathryn Porter (@KathrynPorter26) June 5, 2025
The Crisis at a Glance
Transformers are critical to the U.S. grid, with 60–80 million units managing 3 terawatts of capacity. Large power transformers (LPTs) handle 90% of power flow, while distribution transformers serve local needs. The shortage is driven by:
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Extended Lead Times: Delivery times have ballooned from 50 weeks in 2021 to 120–210 weeks in 2024, with distribution transformer prices up 4–9 times pre-2022 levels.
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Aging Fleet: Most transformers are 38 years old, nearing their 40-year lifespan, requiring mass replacements.
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Demand Surge: Electricity demand is forecast to grow 2% annually through 2050, with a 13–16% increase by 2030 due to EVs, data centers, and renewables.
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Supply Chain Woes: Only 20% of transformers are made domestically, with 80% of LPTs imported. Limited grain-oriented electrical steel (GOES) production and labor shortages exacerbate the issue.
The National Renewable Energy Laboratory (NREL) projects a 160–260% increase in transformer capacity by 2050, with immediate needs already straining utilities and delaying renewable projects.
Who’s Manufacturing Transformers?
A handful of companies dominate U.S. transformer production, though capacity lags demand. Key players include:
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Virginia Transformer Corporation: The largest U.S.-owned manufacturer, producing distribution and power transformers, recently expanded with a new facility.
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Siemens Energy: Building a $150 million LPT plant in Charlotte, NC, to produce 24–57 units annually.
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Hitachi Energy: Committing $500 million to U.S. manufacturing by 2027, part of a $1.5 billion global plan, with expanded facilities in Canada.
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Prolec GE: Investing $85 million in a Monterrey, Mexico, plant for pad-mount transformers and $29 million in Shreveport, LA, for renewable energy units.
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Schneider Electric: Spending hundreds of millions on capacity and smart transformer R&D.
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ERMCO: A Tennessee-based distribution transformer manufacturer, scaling up production.
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Sunbelt Solomon: Expanding repair and recycling to extend transformer lifespans.
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Cleveland-Cliffs: The sole U.S. GOES producer, critical for transformer cores, but supply is limited.
These firms produce only a fraction of the needed transformers, with imports from Canada, Mexico, and Asia filling the gap. High capital costs and technical complexity deter new entrants.
How Many Transformers Do We Need?
Estimating transformer needs involves accounting for replacements, new demand, and resilience. Based on NREL and industry data:
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Current Inventory: 60–80 million transformers, with 3 terawatts capacity.
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Replacements: 60–80% of transformers (36–64 million) need replacing by 2050, or 1.2–2.1 million annually. In 2025, expect 1.2–1.5 million replacements.
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New Demand (2025–2030): A 13–16% demand increase by 2030 requires 390–480 gigawatts of new capacity, equivalent to 9.75–12 million distribution transformers (at 40 kVA each) or 9,750–12,000 LPTs (at 40 MVA each).
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Annual Needs (2025): Combining replacements and 2% demand growth, the U.S. needs 1.5–2 million transformers, including 300,000–500,000 for new demand.
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Weather Impacts: 60,000–80,000 units annually replace storm-damaged transformers, with hurricanes like Helene (2024) highlighting vulnerabilities.
By 2030, total needs could reach 10–12 million new and replacement transformers, assuming steady demand growth and no major disruptions.
Investments to Meet Demand
Recent investments signal progress, but the scale remains inadequate. Key commitments include:
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Siemens Energy: $150 million for the Charlotte LPT facility, creating 559 jobs and boosting domestic LPT supply.
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Hitachi Energy: $500 million for U.S. expansion, focusing on power and distribution transformers.
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Prolec GE: $114 million ($85 million in Mexico, $29 million in Louisiana) for renewable and distribution transformers.
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Schneider Electric: Hundreds of millions for capacity and IoT-enabled transformers, including $23.8 million in South Carolina.
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Federal Support:
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Defense Production Act (2022): Prioritizes domestic production, with unspecified funding.
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Proposed $1.2 Billion: Industry groups seek 2024 congressional funding for manufacturing, GOES, and workforce development.
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Total investments are ~$2 billion, but $5–10 billion is needed by 2030 to close the gap, including new factories and supply chain enhancements.
The Plan to Bridge the Gap
A comprehensive strategy is critical to avert a grid crisis and support 2% annual demand growth:
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Boost Domestic Production:
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Offer tax credits and grants via the Inflation Reduction Act to fund new plants.
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Subsidize Cleveland-Cliffs and new GOES producers to secure core materials.
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Fast-track permitting for manufacturing facilities.
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Strengthen Supply Chains:
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Create a federal “virtual strategic reserve” to guarantee demand, encouraging investment.
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Promote long-term utility-manufacturer contracts for stable production.
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Reduce reliance on non-allied imports (e.g., China) while leveraging allies like Canada.
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Build Workforce Capacity:
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Fund vocational training for transformer manufacturing and engineering.
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Partner with trade schools to address labor shortages.
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Innovate and Recycle:
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Develop modular transformers to streamline production.
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Invest in solid-state transformers for efficiency and scalability.
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Expand Sunbelt Solomon’s recycling to refurbish 10–20% of aging units.
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Enhance Forecasting and Resilience:
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Refine NREL’s demand models with utility input.
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Bolster “storm stock” reserves and mutual aid networks for rapid outage response.
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Conclusion
The U.S. transformer shortage is a ticking time bomb, with supply chains strained, lead times at historic highs, and demand set to soar. Investments by Siemens Energy, Hitachi Energy, and Prolec GE are steps forward, but $5–10 billion more is needed to meet 2025–2030 needs. By scaling domestic production, securing materials, and innovating designs, the U.S. can ensure grid reliability and power the electrified future. Time is of the essence—policymakers and industry must act now.
