Grid transformers face significant supply deficits, says Wood Mackenzie

Power transformer supply may fall short 30% this year, while distribution transformers may reach a 10% supply deficit in 2025, said the firm.

August 14, 2025 Ryan Kennedy

Image: Famartin, CC BY-SA 4.0

With U.S. electricity demand surging, two critical grid infrastructure components may be facing a significant supply shortage in 2025, said a report from Wood Mackenzie.

Since 2019, power transformer demand has increased 119% and distribution transformer demand has increased 41%. The firm expects a supply deficit of 30% for power transformers in 2025 and 10% for distribution transformers.

Wood Mackenzie attributes this demand spike to growing electricity consumption, which has increased 7% since 2020, reversing a 1% decline from 2010 to 2020.

The report said the United States lacks manufacturing capacity to keep pace with demand.

“Utilities are routinely turning to the import market to meet project timelines. In 2025, imports will account for an estimated 80% of U.S. power transformer supply and 50% of the distribution transformer supply,” said Ben Boucher, senior analyst, supply chain and data analytics, Wood Mackenzie.

The market imbalance is causing escalated costs and lead times, delaying the United States ability to bring generating plants online in pace with surging demand, said Boucher.

Policy shifts, including new rules under the One Big Beautiful Bill, are expected to exacerbate the shortage, pushing transformer prices higher.

“Transformer costs are expected to increase due to new tariffs, as both imported and domestically produced units will be subject to higher unit costs due to the wide array of new tariffs, with more, including 50% on copper, set to come into effect in August, further intensifying the cost increases,” said Boucher.

However, some relief may be on the horizon. Manufacturers have announced $1.8 billion in capacity expansions since 2023 in the North American market. Wood Mackenzie said further expenditure will be needed to rebalance the market.

The report said the convergence of accelerating electricity demand, aging infrastructure and supply chain vulnerabilities will persist well into the 2030s.

Boucher recommended that utilities embrace standardization to unlock manufacturing efficiencies, while policymakers are recommended to balance trade protection with supply security. Investment in workforce development and raw material supply chains also prove important, said Boucher.

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