The Transformer Gap: U.S. Grid Faces a 30% Shortfall as Data Centers Pile On

The equipment that steps electricity up and down between power plants, transmission lines and customers has become one of the tightest bottlenecks in the U.S. power build. Wood Mackenzie has warned that the country faces supply deficits of 30% for power transformers and 10% for distribution transformers in 2025, as demand from data centers, factories and new generation outruns domestic production. "This surging transformer demand has created a significant supply deficit, with domestic manufacturing capacity unable to keep pace," said Ben Boucher, a senior analyst in the firm's supply chain data and analytics team.

"Utilities are routinely turning to the import market to meet project timelines." In a new analysis published on October 15, the firm said demand for electrical transmission and distribution equipment grew by between 35% and 274% from 2019 to 2025, depending on the item, leaving significant supply shortfalls across the sector. Since 2019, U.S. demand for high-voltage power transformers has risen 116% and demand for generator step-up transformers, which connect power plants to the transmission system, has risen 274%, according to EE Power's summary of the report.

Boucher said imports will account for about 80% of U.S. power transformer supply in 2025 and about 50% of distribution transformer supply. Lead times for power transformers and step-up units have exceeded 100 weeks since 2023. In an earlier analysis, Wood Mackenzie said unit costs had climbed 45% since 2019 for step-up transformers, 77% for power transformers and 78% to 95% for distribution transformers, depending on specification. Data centers are one of several drivers, but they hit the categories that are already short.

The EIA, cited by EE Power, expects commercial electricity sales to rise 3% this year and 4.5% in 2026, driven by data center demand. Boucher argued that easing the shortage will require action on several fronts. For grid planners, the lesson is that interconnection queues and generation shortages are only part of the story.