About 12 gigawatts of U.S. data center capacity was scheduled to come online in 2026, but only about a third of it was under active construction in the spring, according to an analysis by Sightline Climate reported by Bloomberg in April. The analysis pointed to shortages of transformers, switchgear, and batteries as a main reason many projects were expected to slip, and the reporting put roughly half of the year's planned builds at risk of delay or cancellation. That equipment accounts for less than 10 percent of a data center's total cost, yet a building cannot be energized without it.
The mismatch is one of timing. Large power transformers took 24 to 30 months to deliver before 2020; Bloomberg reported that high-power units can now take up to five years, while AI data center deployment cycles run under 18 months. Wood Mackenzie's second-quarter 2025 supply chain survey, cited by POWER Magazine, put average lead times at 128 weeks for power transformers and 144 weeks for generator step-up transformers, the large units that connect power plants to the grid.
Wood Mackenzie's August 2025 analysis found that U.S. demand for power transformers had risen 116 percent since 2019 and demand for distribution transformers 41 percent, against projected supply deficits of 30 percent and 10 percent in 2025. Imports were expected to supply 80 percent of power transformers and 50 percent of distribution transformers. “Utilities are routinely turning to the import market to meet project timelines,” said Ben Boucher, a senior analyst at Wood Mackenzie, adding that this was escalating costs and lead times. Bloomberg reported that U.S. imports of high-power transformers from China rose from fewer than 1,500 units in 2022 to more than 8,000 in 2025. Data centers are one demand driver among several: POWER Magazine, summarizing Wood Mackenzie data, also cited roughly 40 million distribution transformers past their expected service life, about 55 percent of the U.S. fleet, along with renewable energy interconnections and a 77 percent rise in power transformer prices since 2019.
Manufacturers are building more capacity, but not quickly. Wood Mackenzie counted $1.8 billion in announced expansions by major equipment makers since 2023. Hitachi Energy said in September that it will build a $528 million transformer factory in Gallman, Mississippi, more than twice the size of its nearby Crystal Springs plant, with construction expected to begin late in 2026 and production scheduled to start in 2029. Siemens Energy announced a $150 million factory in Charlotte, North Carolina, its first U.S. large power transformer plant, citing $3.9 billion pledged to expand and update the U.S. grid within two years. A plant announced in 2026 that begins producing in 2029 does little for a campus being planned for 2027.
Washington has started to respond. On April 20, 2026, President Trump issued a determination under Section 303 of the Defense Production Act describing U.S. capacity to produce transformers, high-voltage transmission components, and other grid equipment as “dangerously limited,” opening the way for federal purchasing and financial support. Utility Dive reported that about $323 million remained available in fiscal 2026 DPA funds, a figure attributed to Jean Su of the Center for Biological Diversity that the White House did not immediately confirm. Spencer Pederson of the National Electrical Manufacturers Association called the move a “step in the right direction” while noting that funding and implementation details were unclear; Su said the funding is “just not that much.”
Not everyone agrees the shortage is a manufacturing problem. In POWER Magazine's reporting, Patrick Tarver of Bolt Electrical argued that “there is not a shortage,” claiming standard substation power transformers can be delivered in 12 to 14 months once engineering approval is complete, and that the real bottleneck is how utilities and engineering contractors structure procurement, with qualification rules and approved-vendor lists that keep alternative suppliers from reaching decision makers. He also said industry messaging was exaggerated to drive pricing. That view sits against the Wood Mackenzie survey data, and the two are not easy to reconcile from the outside.
Whichever account is closer to the truth, the gap that matters to data center developers is the one between schedules. AI data center deployment cycles run under 18 months, while the grid equipment that feeds them is ordered on a clock of two years or more, in a market where imports fill much of the shortfall and new domestic plants are years from output. For now, the pace of the AI buildout is being set less by chip deliveries than by how fast a handful of factories can wind copper around steel.
- Yahoo Finance (republishing Tom's Hardware): “Half of planned US data center builds have been delayed or canceled, growth limited by shortages of power infrastructure and parts from China” (citing Bloomberg and Sightline Climate)
- POWER Magazine: “Transformers in 2026: Shortage, Scramble, or Self-Inflicted Crisis?”
- Wood Mackenzie: “Power transformers and distribution transformers will face supply deficits of 30% and 10% in 2025”
- Hitachi: “Hitachi deepens commitment to U.S. manufacturing with $528 million Mississippi transformer factory”
- Siemens Energy: “Siemens Energy addresses the shortage of US power transformers and invests in new factory”
- Utility Dive: “What does Trump's wartime powers flex mean for transformers and other grid equipment shortages?”