Dive Brief:
- Hitachi Energy will build a $457 million transformer production facility in South Boston, Virginia, and make more than $500 million in other investments to meet the growing need for U.S. grid equipment, the company, state officials and the Trump administration announced Thursday.
- The investment comes as lead times for utilities to procure transformers have stretched from weeks to years, as grid expansion and a shortage of manufacturing capacity have created a bottleneck. In particular, large transformers like the ones Hitachi will make in Virginia can now take up to three years from order to delivery, experts say.
- “Bringing production of large power transformers to the U.S. is critical to building a strong domestic supply chain for the U.S. economy and reducing production bottlenecks, which is essential as demand for these transformers across the economy is surging,” Andreas Schierenbeck, CEO of Hitachi Energy, said in a statement.
Dive Insight:
“Power transformers are a linchpin technology for a robust and reliable electric grid and winning the AI race,” Schierenbeck said.
The U.S. grid now faces rapid load increases following decades of stagnant growth. Data centers could be the source of 44% of U.S. electricity load growth from 2023 to 2028, Bain & Co. estimated in October. They could potentially consume 9% of the United States’ electricity generation by 2030 — double the amount consumed today, according to the Electric Power Research Institute.
Electrification of transportation and buildings, and an industrial expansion, are also creating demand for electricity and a need to expand the power grid.
“Particularly at this critical moment for our growing energy demands, I’m excited to see Hitachi Energy expand their Virginia footprint,” Sen. Mark Warner, D-Va., said in a statement.
The company already owns a transformer production facility in South Boston. And in March, it announced a $250 million investment to expand global production of critical components for electrical transformers, including enhancing production capacity at the company’s factories in Virginia, Missouri, and Mississippi.
Construction on the new facility will begin before the end of this year, and it “should be operational by 2028. We won’t be at full production right away, but will ramp up fairly quickly,” Kurt Steinert, Hitachi head of external communications, North America, said in an email.
The details of the Virginia production capacity expansion are commercially sensitive and cannot be disclosed, he said. But other projects in the $1 billion investment include:
- $106 million for the company’s transformer components facility in Alamo, Tennessee.
- $22.5 million for a capacity expansion at Hitachi Energy’s dry-type transformer factory in Bland, Virginia, and a new supporting facility in Atkins, Virginia.
- $70 million for the expansion of high-voltage components production facilities in and around Mount Pleasant, Pennsylvania.
- And other projects that Hitachi expects to announce later this year.
Extended timelines to procure grid equipment have led to delays in connecting new demand. The President’s National Infrastructure Advisory Council last year recommended the federal government should establish a “strategic virtual reserve” of electric transformers to ensure challenges surrounding U.S. manufacturing of the critical grid components do not slow electrification efforts.
Hitachi Energy said the planned investments are aligned with the Trump administration’s AI action plan. “The United States must develop a comprehensive strategy to enhance and expand the power grid,” that plan concluded.
“If we are going to win the AI race, reindustrialize, and keep the lights on, America is going to need a lot more reliable energy,” Secretary of Energy Chris Wright said in a statement. He praised Hitachi’s investment and said the Trump administration “looks forward to continuing to partner with private industry to ensure the American people access to affordable, reliable, and secure energy and thousands of high-paying jobs."
