Power grid investment projected to hit $2 trillion by 2050

By EPN Staff

Major manufacturers have invested in multiple new factories to address the U.S. shortage of power transformers, but it will likely still take years to catch up with exploding demand.

Some 55% of the nation’s 60-million-plus transformers are at least 33 years old and nearing the end of their lives, according to the National Renewable Energy Lab. Between that and heavy growth in energy demand, companies expect an infrastructure bonanza.

Siemens, whose executives told Reuters in June they expect their new transformer facility in Charlotte, NC, to come online in 2027, predicts $2 trillion in total U.S. power grid investment by 2050.

Why it matters

Transformers change electricity voltage to allow the efficient flow of power from generation to end user. There are many kinds; in fact, a lack of standardization is one of the reasons manufacturers are struggling to keep up with demand.

Supply chain problems during the COVID-19 pandemic started a snowball effect that, combined with increasing demand, pushed turn-around times for transformers from months to up to 4 years, according to the National Infrastructure Advisory Council, which advises the president and issued a report on transformers last year.

Transformer prices are 80% higher since the beginning of the pandemic, according to the NIAC, which said last year that “strong action is needed to increase the capacity of transformer production to ensure resiliency of national infrastructure, withstand storms, promote stability and growth of the U.S. electric grid, and to avoid the broad economic disruptions that would result from power outages and delays.”

The bigger picture

The NIAC said the transformer industry has struggled to attract and retain qualified workers, and the previous cyclical nature of the industry left manufacturers “wary of increasing capacity despite rising demand.”

Private capital is catching up to the problem though:

• Siemens Charlotte facility was announced last year, with the company saying it would invest $150 million in the factory, and Siemens officials told Reuters in June that there’s room to expand further if needed.
• Trench Group announced a $60 million factory in Charlotte, NC, in May, with production slated to begin in early 2026.
• A South Korean manufacturer announced plans to expand its U.S. manufacturing headquarters in Memphis.
• Hitachi plans to expand two U.S. facilities – one in Virginia and one in Pennsylvania – and build a new facility in Mexico.
• An Italian transformer manufacturer broke ground in Ohio last year on its first U.S. plant

Additional details

The NAIC said last year that a reliance on foreign components “presents a significant national security risk that must be addressed” and that increased domestic production should be “a top priority.”

The group made seven recommendations to address the shortage, including having the federal government step in as a buyer of last resort, should the transformer market collapse, to give companies the confidence to increase production.

Companies seem confident in the market already though.

"This time we expect a longer boom cycle for grid expansion than the usual two to three years,” Siemens Energy board member Tim Holt told Reuters. “The market is very positive right now.”