WoodMac Sounds Alarm On Transformer Shortage Amid AI Data Center Boom

The AI data center boom could soon face some serious headwinds, and the problem isn’t a shortage of Nvidia GPUs, but America’s fragile power grid.

A combination of disastrous green policies and soaring data center power demand has already sparked a power bill crisis across the Mid-Atlantic states, while a nationwide grid-tightening crisis unfolds. This has triggered a growing wave of discontent among residents in Maryland and New Jersey, who are angered by Democrats’ prioritization of green policies that have retired stable fossil fuel power generation in favor of unreliable solar and wind, resulting in power bill inflation like never seen before.

Making matters worse, AI data centers are counting on an upgraded grid to handle new base loads of power. This massive, multi-layered supply chain needed to upgrade the grid spans raw materials, transmission lines, circuit breakers, cables, control systems, and power generation systems.

Yet one of the most critical components in that upgrade cycle, transformers, is already in dangerously short supply.

A new report from global research and consultancy group Wood Mackenzie highlights that U.S. efforts to upgrade power grids for AI-driven data centers will push transformer demand beyond supply by 30% this year, driving up costs and delaying projects. Analysts warn the shortage will only worsen and persist well into the decade’s end.

The supply deficit, fueled by AI-related data center growth and broader electrification trends, threatens grid reliability and the whole data center buildout.

Viewed as a national security threat, the U.S. production of transformers can’t keep pace, meaning about 80% of units will be imported, mostly from South Korea, Mexico, and other countries.

“We have seen such a large increase in power demand,” said Ben Boucher, a senior analyst of supply chain and data analytics at Wood Mackenzie, adding, “AI is necessitating data center expansion, which is pushing up electricity usage.”

Just weeks ago, we warned that U.S. transformer wait times have ballooned from 50 to 127 weeks, crippling grid resilience, whether it’s upgrading power grids or replacing units damaged by storms, wildfires, or domestic terrorism attacks by radical leftists.

In short, the AI data center boom is colliding with a power grid already under strain from failed green policies, surging electricity demand, and a worsening transformer shortage. This is far from ideal in the era of massive data center buildouts, and wait until outrage over skyrocketing power bills goes fully mainstream. We bet that’s coming.