Transformers wanted

Unlike the spinning blades of a wind farm, or the vast array of solar panels seen from afar, the humble transformer does not get the attention it deserves. Boxed away in containers, electrical transformers are largely hidden from view. Yet without transformers, the electrical grid would not operate. Large pieces of electrical equipment built from steel, transformers ‘step-up’ or ‘step-down’ power and allow it to be transported across high voltage transmission lines. The US is currently experiencing an unprecedented imbalance between supply and demand for transformers driven by the need for upgrades, increased use of renewable energy and the electrification of industry, transportation, and homes. Wood Mackenzie reported that transformer lead times have been increasing – from around 50 weeks in 2021 to 2.5 years in 2024. Over 80% of US demand is met through imports. However, even if domestic transformer production reaches full capacity, transformer imports would still be required to meet 55% of expected demand by 2030.

Source: Bloomberg New Energy Finance (BNEF), November 2023