Report Warns of Worsening Transformer Shortages Amid Rising U.S. Power Demand

The U.S. power sector is facing mounting strain as demand for transformers outpaces supply, according to a new analysis from Wood Mackenzie. The report projects that by 2025, supply shortages could reach 30% for power transformers and 10% for distribution transformers, creating challenges for utilities and delaying new generation projects.

Wood Mackenzie’s study, Untangling the U.S. Transformer Supply Chain Crisis, notes that demand for power transformers has surged 116% since 2019, while distribution transformer demand has grown 41%. Rising electricity consumption — up 7% since 2020 after a decade-long decline — coupled with aging infrastructure and a surge in clean energy projects, has fueled the pressure.

“Domestic manufacturing capacity simply cannot keep pace,” said Ben Boucher, senior analyst for supply chain data and analytics at Wood Mackenzie. “By 2025, imports are expected to make up 80% of U.S. power transformer supply and 50% of distribution transformer supply. This imbalance is raising costs, lengthening lead times, and delaying critical projects.”

The report also highlights policy and trade developments as complicating factors. New tariffs, including a planned 50% tariff on copper in August, are expected to drive up costs for both imported and domestically manufactured transformers. In addition, recent legislation — including President Trump’s “One Big Beautiful Bill” — is projected to alter demand for step-up transformers by scaling back clean energy incentives.

Despite these challenges, manufacturers have announced more than $1.8 billion in new North American capacity investments since 2023. While those projects may provide some relief, Wood Mackenzie cautions that they will not be enough to fully close the supply gap given the pace of demand growth.

“The U.S. transformer market stands at a critical juncture,” Boucher said. “Without coordinated action on standardization, workforce development, raw material supply, and trade policy, extended lead times and elevated costs could become the new normal — with major consequences for grid modernization and clean energy deployment.”