Long delivery delays for electric grid transformers won’t ease up anytime soon unless utilities, tech companies, and other buyers change their strategy, the CEO of the top global manufacturer of the equipment told Semafor. Andreas Schierenbeck of Hitachi Energy said the handful of companies capable of manufacturing transformers and other grid hardware are still catching up to the new reality of the “big race going from molecules to electrons,” after many years of tepid demand growth for those products. “Nobody wants to overinvest” in new production facilities, he said, even though it’s clear that demand is growing.
Hitachi has adopted a strategy of only investing in new transformer manufacturing capacity when it has customers to back them up, like a recent $700 million deal with the German utility E.ON. Tech companies that need hardware for data centers are also showing a willingness to accept standardized, rather than highly bespoke, equipment, which will help ease the AI power bottleneck. Deals with US customers have allowed Hitachi to plan $1 billion in new US manufacturing capacity, he said, “but that’s probably not enough to close the gap between supply and demand… There are still customers who are just in the old world with transactional behavior, and they’ll have to be lucky to get a slot.”