AI Data Center Boom Exacerbates US Power Equipment Shortages, Pushing Wait Times to Years

A surge in demand from new artificial intelligence data centers is severely straining the U.S. supply chain for critical electrical grid equipment, exacerbating persistent shortages and forcing utilities to order key components years in advance. The scramble for hardware, particularly power transformers, is driving up costs and creating significant hurdles for an industry already racing to expand capacity.

Worsening Supply Crunch

Shortages of transformers, which adjust voltage levels for electricity transmission, have been an issue for the past five years as demand outpaced supply following pandemic-related disruptions. The AI boom has intensified this pressure, extending wait times for some high-voltage transformers from about one year in 2020 to multiple years now, according to a Reuters report.

Analysis from consultancy Wood Mackenzie highlights the severity of the delays:

• Lead times for generator step-up transformers surpassed 160 weeks in early 2026, up from an average of 143 weeks in 2024.
• Wait times for high-voltage circuit breakers climbed to 125 weeks, a significant increase from 77 weeks in 2023.

"Equipment availability is becoming the biggest concern for developers as they value time to market so highly," said Ben Boucher, a senior analyst with Wood Mackenzie. The firm projects that transformer costs could increase by 4% to 10% over the next year.

Unprecedented Data Center Demand

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The buildout of AI infrastructure is the primary driver of this new demand. U.S. data center capacity is forecast to reach 110 gigawatts (GW) by 2030, a massive increase from approximately 24 GW currently, according to Wood Mackenzie. This rapid growth could see data centers consuming up to 40% of the electrical equipment market, compared to just under 2% in 2020.

This spike in demand complicates efforts to connect new power-hungry facilities to the grid. In response, federal regulators last month ordered grid operators to investigate new protocols to accelerate connections for data centers and other large energy consumers.

Utilities Adapt to a New Reality

To cope with the long delays, utilities and developers are implementing new procurement strategies. Dan Beans, CEO of California’s Roseville Electric Utility, noted his organization now orders equipment for projects five years in advance, a significant shift from its previous one-year timeline. He also observed that about three-fourths of bids for equipment now come from overseas suppliers in countries like China and South Korea, which often quote shorter lead times and lower prices.

Other strategies cited by industry experts include refurbishing older transformers, diversifying suppliers across different regions, and offering more favorable payment terms to secure earlier production slots. However, these solutions are not universally accessible. "They don’t solve everything, particularly for smaller utilities that don’t have the scale," said Louis Finkel of the National Rural Electric Cooperative Association.