Mind the gap: tackling supply-chain challenges in the electric T&D sector

Since 2020, a confluence of factors has caused a surge in demand for electrical transmission and distribution (T&D) equipment, leading to persistent supply shortages. 

In a recent study conducted in partnership with American Clean Power, Wood Mackenzie analysts took a look at what is causing the US electric T&D supply-chain challenges and what can be done to resolve them. Fill in the form at the top of the page to download a complementary extract from our slide deck and read on for a brief introduction.  

Cause and effect 

Demand for electrical T&D equipment has ballooned in recent years, growing by 35% to 274% between 2019 and 2025 depending on the equipment in question, resulting in significant supply shortfalls. There are a six main factors behind the surge: 

• Electrical load growth. US electricity demand is estimated to have increased by 7% between 2019 and 2024, reversing a 1% decline between 2010 and 2020, necessitating increased investment in T&D infrastructure. This has led to soaring demand for power transformers, distribution transformers, switchgear and breakers, and wire. 

• The expansion of clean energy generation. The ballooning pipeline for clean energy projects is stimulating demand for equipment, with annual solar deployments increasing by upwards of 400% between 2019 and 2025. This has increased demand for power transformers, switchgear and breakers. 

• Ageing infrastructure and grid modernisation. A recent US Department of Energy study found that 55% of in-service distribution transformers (around 40 million units) were more than 33 years old, well beyond their expected service life. This has caused a surge in demand for power and distribution transformers. 

• Extreme weather events and grid hardening. The frequency of billion-dollar weather events in the US increased from 8 in 2014 to 27 in 2024, resulting in increased damage to utility infrastructure. This has added to the demand for power transformers, distribution transformers, switchgear and breakers, and wire. 

• Data-centre and manufacturing investment. Manufacturing construction spending has soared 96% over the past three years, while the data-centre pipeline totalled more than 125 GW in Q1 2025, with monthly additions of 226 MW over the past two years. This has boosted demand for distribution transformers, switchgear and breakers, and wire. 

• Electrification (heat pumps and electric vehicles). The increasing adoption of electric vehicles and heat pumps is further hiking demand for electrical equipment, most notably distribution transformers, switchgear and breakers, and wire. 

Since 2019 in the US, generation step-up transformers (GSUs) have experienced the largest surge in demand due to the growth of renewable deployments, each of which requires a GSU to step up voltage to transmission levels. As a result, the market has fallen into a large deficit, with 2–3-year lead times forcing developers to order further and further ahead.  

These long lead times, combined with a hefty pipeline of project developments, are increasingly causing a supply crunch as developers and utilities are forced to secure production slots further in advance, leading to delays and cancellations. 

There have been some recent improvements in GSU and power transformer lead times, but waiting times remain lengthy. GSUs saw a slight decline quarter over quarter in Q2, easing to 143 weeks on average, although the Trump administration’s trade tariffs could well undo any improvements here, as supply chains will take time to adapt. 

Power transformer lead times also eased in Q2, falling by 10 weeks to an average of 128 weeks, while switchgear edged down to an average of 44 weeks. Other key categories ‒ including pad-mount one- and three-phase transformers, reclosers, and wire and cable ‒ all recorded steady increases in Q2, however. 

Risks remain 

Strong demand for transformers has prompted increased investment and a ramp-up in capacity, although industry challenges remain and additional investment will be needed to help address the market shortage.  

Electrical steel prices remain volatile, with prices rising by more than 20% in recent months, resulting in price shifts in contracts linked to an adjustment formula. Copper wire used in transformer windings, meanwhile, has been cited as a bottleneck in transformer production due to limited supply for the specifications required.  

What’s more, US tariffs will make imported units less price competitive, resulting in increased competition for domestic production slots. The US’s high import dependence and exposure to high-tariff countries means the effects of the tariff policy will vary significantly and could be upwards of 20% for some products. Trying to second-guess future policy developments has made project planning something of a rollercoaster ride. 

Not all doom and gloom 

There are glimmers of hope, however. Declining support for renewable generation and expanding production capacity, for instance, are expected to ease market pressures on medium-voltage and high-voltage transformers, with GSU shortages projected to narrow to just 140 units by 2030, compared with over 700 in 2025. 

To find out more, fill in the form at the top of the page to download your complimentary extract from our recent multi client study.