Demand for transformers and other grid-connection infrastructure is currently in a “supercycle,” according to Bruno Melles, managing director for transformers at Hitachi Energy.
“Massive electrification of industry and transport, the integration of renewable energy into the grid, and the explosive growth of AI data centers are forcing us to rethink energy,” Melles told pv magazine. “That’s the reason Hitachi Energy is investing in manufacturing capacity, R&D and engineering.”
He said Hitachi Energy has invested $1.5 billion to increase the manufacturing and footprint of its transformer business, as part of an overall $9 billion investment covering manufacturing capacity expansion, R&D, engineering, and partnerships in several business segments.
Increased demand is driving a shortage in key components for solar projects to connect to regional grids. Data from market intelligence provider BloombergNEF show that lead times for supply of large transformers (100 megavolt-amp and above) have more than doubled compared to 2019, and in the US market prices for transformers have increased by 79%.
Though Hitachi Energy and others are investing in additional manufacturing capacity, this takes time to bring online, and many are cautious about estimating long-term demand. This means supply is likely to remain tight in years to come.
“Demand for grid equipment has been somewhat flat in the past decade. Factories for grid equipment have been underutilized and some even closed. Now manufacturers are cautious to invest as they see this as another quick wave,” explained Eva Gonzalez Isla, grids and utilities analyst at BloombergNEF.
Melles confirmed that Hitachi Energy’s investment in new transformer capacity forms part of a long-term business plan that does not rely on peak demand alone. “Longer-term, integrated and holistic planning is necessary for several reasons, including giving technology providers like ourselves visibility across the order pipeline, which is necessary to invest,” he explained.
He added that factory equipment is one constraint on expanding transformer capacity. “Depending on the complexity and specialization of the equipment required, lead times for procurement can range from two to four years,” the Hitachi Energy executive explained. “This is especially true for high-end manufacturing systems used in large power transformer production.”
Gonzalez Isla also noted that transformers often have to be built to bespoke project designs, and the time to train new engineers in this is a constraint in expanding manufacturing, as is securing supply of the grain-oriented electrical steel that forms the core of a transformer.
Grid investment
As grid capacity and connection points become a bigger bottleneck for solar and energy storage projects in many regions, investment is growing. BloombergNEF expects global investment in grids to top $500 billion in 2026. Renewable energy industry players are moving into the sector to ensure timely grid connections for their own projects, and to take advantage of the growing demand. European project developer Sunotec, for example, has acquired a majority share in German substation builder Kaufmann Electric.
“It was a real bottleneck to have all these constraints around getting things onto the grid,” said Sunotec CEO Bernhard Suchland. He explained that the company looked for ways to help speed up construction of grid infrastructure, testing and implementing the approach of taking on substation construction itself first in Bulgaria, before identifying the opportunity to replicate the model through a strategic partnership with Kaufmann Electric in the German market. Here and elsewhere in Europe, Suchland sees plenty of opportunity as grids work to catch up with new demand.
“There is a huge backlog in Europe, and the market is complacent. Nothing has been upgraded as it should be,” said Suchland, noting that along with PV and BESS projects, data centers and other large electricity consumers require medium- and high-voltage transformer stations.
In India, module manufacturer Waaree Energies saw similar market constraints arising from limited grid infrastructure, and in September 2025 invested INR 1.92 billion ($21 million) to acquire a 64% stake in Rajasthan-based transformer manufacturer Kotsons, which it has since renamed Waaree Transpower. “Transformer shortages have strained India’s renewables expansion, delaying project timelines and increasing costs for EPCs. This acquisition strengthens end-to-end offerings from modules to transmission, improves project economics, and meets surging global demand with Kotsons’ 4,000 MVA capacity and UL-certified exports to the US and Canada,” said Sunil Rathi, executive director at Waaree Group. He added that the transformers would be used for Waaree’s own projects as well as to capitalize on the expectation of growth in the transformer market by 2030.
Ramping up
In many regions, grid upgrades allowing solar to maintain its pace of growth have been slow to materialize. “We’ve seen that even with increased investment, there are significant barriers to meeting the needs of new generation and power demand on time,” said Peter Wall, head of grids research at BloombergNEF, in a December 2025 press release.
Since these supply chain and labor constraints inevitably take time to overcome, companies are looking at other ways to ensure the timely delivery of grid connection equipment. In Germany, Kaufmann Electric is integrating and standardizing the many stages of building a new substation and offering this as a service.
“We apply a fully integrated approach, from permitting to connection planning, cable routing, and commissioning of the substation. This is end-to-end capability, which we can offer to accelerate project realization,” said Kaufmann Electric Managing Director Sebastian Holzer.
The company also sees standardization as a route to speedy delivery.
“We no longer design transformers for each project. We use a design that fits about 80% of our projects. This makes us much more flexible,” said Philipp Gau, director grid and substation at Kaufmann Electric. He added that custom designs also lead to a long planning phase and longer lead times from component makers.
BloombergNEF’s Gonzalez Isla pointed to closer collaboration between grid equipment manufacturers and their larger buyers, with framework agreements to better ensure delivery and provide manufacturers with demand visibility. “These agreements work on a target volume instead of a project-by-project basis. The larger orders and volumes are attractive to their supply chains.”
Melles confirmed that Hitachi Energy makes use of such agreements, and that they help the company make decisions on expansion. “We focus on new business models such as frame agreements and capacity reservation contracts which help us make more efficient investment decisions thanks to the long-term visibility they provide,” he said.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.
By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.
Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.
You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.
Further information on data privacy can be found in our Data Protection Policy.