Hitachi Energy announced plans to invest $155 million to expand its transformer and switchgear manufacturing capacity in North America, which will include factories in Virginia and Pennsylvania as well as in Mexico.
The investment in South Boston, Virginia will help expand the production capacity for large distribution transformers and is expected to create about 100 new jobs. In addition to its own funds, Hitachi Energy received financial support from the Commonwealth of Virginia and Halifax County where the facility is located.
The company intends to double production capacity in its Mount Pleasant, Pennsylvania facility, where it makes high-voltage switchgear and breakers, including dead tank breakers, gas-insulated switchgear and hybrid switchgear. This investment is expected to create around 100 new jobs.
“Demand for electrical equipment, including transformers and switchgear, is surging globally, and significantly in North America, and one of our highest priorities is making sure that we are growing our capabilities to address our customer’s present and future needs,” said Andreas Schierenbeck, CEO of Hitachi Energy.
In April Hitachi Energy announced plans to upgrade and modernize its power transformer factory in Varennes, Canada and other facilities in Montreal.
Transformers as well as high-voltage switchgear and breakers have been in short supply in the U.S. and that shortage has hindered the buildout of clean energy throughout the country. Transformers are a necessary piece of the energy puzzle, as they manage the flow of electricity along the power grid by changing high-voltage electricity from transmission lines into low-voltage electricity before it reaches consumers. to help address the great transformer shortage in North America.
In a report by National Renewable Energy Lab (NREL), researchers said that reasons for the shortages include increased raw material demand, pandemic-related shortages and backlogs, labor constraints, shipping issues, and geopolitical tensions. They found that utilities are experiencing extended lead times for transformers of up to two years (a fourfold increase on pre-2022 lead times) and reporting price increases by as much as four to nine times in the past 3 years.
The NREL study found that the increased demand is due to increased electrification, increased clean energy going to the grid as well as an aging electric infrastructure that needs replacement. Preliminary analysis estimates that overall stock capacity needs to grow 160% to 260% by 2050, compared to 2021 levels to meet increasing energy demands across residential, commercial, industrial and transportation sectors.
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