While Hitachi Energy, the world’s largest transformer manufacturer, reported that the industry is overloaded and they are having difficulty meeting the increasing demand, this situation is expected to cause delays in green transformation projects.
It is difficult to increase capacity
Hitachi Energy CEO Andreas Schierenbeck stated that transformer manufacturers will have difficulty ramping up production quickly enough to renew grids, and supplies are under pressure due to the increasing needs of data centers for artificial intelligence. “Increasing capacity is definitely a problem. It’s not easy and it probably won’t increase fast enough,” Schierenbeck said.
Manufacturers avoid excessive investment
Transformers are vital to changing the voltage of electricity and ensuring it flows efficiently from power plants to end users. These transformers, which are the size of a house, can weigh between 400 and 500 tons. Their production is a labor-intensive process and requires years of specialized machinery. Additionally, manufacturers try to avoid excessive investments.
Hitachi Energy became a major growth engine by acquiring ABB Power Grids, which had a value of $11 billion in 2020. The company aims to reach $30 billion by targeting annual revenue growth of $1-2 billion by 2030.
Market size will increase to 67 billion dollars by 2030
While transformer supply times could be achieved within six to eight months for years, the demand of the $48 billion market has suddenly increased. According to Rystad Energy, the market size is expected to reach $67 billion by 2030. Schierenbeck said energy companies should wait three to four years for critical electrical infrastructure.
The supply chain bottleneck poses a challenge for energy systems struggling with surges in electricity generation and aging infrastructure. The increasing share of renewable energies requires more equipment in electricity transmission.
This makes the need to update the grid urgent to meet the demands for connection to the networks for new projects. “The transformer industry is experiencing unprecedented pressure,” said Edvard Christoffersen, senior analyst at Rystad Energy, predicting that prices have increased by 40 percent since 2019 and that the supply shortage will continue until at least the end of 2026.
Hitachi Energy plans to invest $6 billion and employ 15,000 more people over the next three years to expand production capacity and strengthen other key services. Schierenbeck ruled out the possibility of the industry falling into overcapacity any time soon, adding that it would be a long time before Chinese rivals pose a threat.
Source: www.dunya.com
