Power Transformer Supply Chain Crisis

In April this year, global research and consultancy firm Wood Mackenzie issued a warning about the increasing delivery times for transformers. The average lead time for transformers has now risen to 115 to 130 weeks, which is over two years. For large transformers, including substation power transformers and generator step-up (GSU) transformers, delivery times have surged to 120 to 210 weeks, equivalent to 2.3 to 4 years. Additionally, driven by the rise in raw material costs since January 2020, transformer prices have increased by an average of 60% to 80%, depending on their size and application. The price of grain-oriented electrical steel (GOES) has nearly doubled since the onset of the pandemic, despite its volatility, and copper prices have soared by over 40%.

The power grid is undergoing an unprecedented transformation, driven by three main factors: decarbonization, the necessity to replace aging infrastructure, and the urgent expansion required to meet growing demand. This includes new loads such as data centers, and the electrification of industrial, commercial, transportation, and residential sectors.

According to Joshua Yun, Senior Vice President of Sales and Marketing at Virginia Transformer (the largest US-owned transformer manufacturer in North America), the current market gap for transformers stems from a "perfect storm" of driving factors. The pent-up demand post-pandemic has triggered a "tsunami," impacting various segments from energy to Bitcoin mining and artificial intelligence.

Faced with unprecedented delivery times and soaring costs, the transformer supply chain crisis threatens the backbone of the power industry, highlighting the urgent need to increase manufacturing capacity and develop innovative solutions.

Pear Electric is a leading manufacturer of power transformers, providing high-quality and highly reliable transformers to the scarce transformer market with the fastest delivery times. Our offerings include oil-immersed power transformers up to 150MVA, cast resin dry-type transformers up to 30MVA, and substation solutions for emerging markets such as station-type photovoltaic power plants and compact wind farm substations.