The U.S. power transformer market is under growing strain due to surging demand, aging infrastructure, and persistent manufacturing constraints, according to a new report by Wood Mackenzie.

Authored by Devin Thomas, Vice President of Supply Chain Data & Analytics, and Benjamin Boucher, Senior Analyst, the report outlines a stark picture: transformer supply deficits currently stand at 30% for power transformers and 6% for distribution units.

The spike in demand has been driven by a 7% rise in electricity use since 2020, data center expansion, a boom in manufacturing projects, and broader electrification trends. Compounding the issue, more than half of the country’s 40 million distribution transformers are over 33 years old—well past their expected service life.

US manufacturing capacity is lagging. Imports now account for 80% of power transformer supply and 50% of distribution transformers. Lead times have risen sharply, and prices have jumped up to 95% since 2019, especially for higher-voltage models.

The report identifies key bottlenecks: a reliance on a single domestic supplier for grain-oriented electrical steel (GOES), labour shortages, copper supply issues, and a lack of standardized transformer specifications. Meanwhile, policy uncertainty—especially around tariffs and clean energy funding—has discouraged investment in domestic production capacity.

Despite OEMs announcing $1.8 billion in expansions since 2023, Wood Mackenzie warns that much more investment is needed to restore balance to the market.