Hitachi Energy pours $1.5 billion into transformers

Hitachi Energy’s latest investment represents the latest high-profile attempt to mitigate the ongoing transformer shortage. 

• The top line: Today, Hitachi Energy announced its plan to invest over $1.5 billion in global transformer manufacturing over the next three years. As the world’s largest transformer manufacturer — boasting over 60 factories and service centers globally — Hitachi is claiming the funding can curb the production-to-market timeline for transformers, even as demand continues to grow. 
• The market grounding: Transformers convert direct current power into alternating current power, which is used by the grid for everything from EV chargers to utility-scale renewable energy projects. Demand for the equipment is soaring as electrification projects abound, but supply is still struggling to catch up. 

A report by Wood Mackenzie found that lead times on building transformers can be two years or more, and prices just keep climbing. With such long timelines and unpredictable pricing, transformer access has become a question mark for renewables developers — and in some cases the uncertainty about when they’ll be able to access the equipment can throw off their own investors.

Hitachi Energy aims to meet the growing demand by ramping up its existing transformer production efforts, in the hopes that this increase in capacity will help reduce time to market and help de-risk customer investments. Additionally, it said the funding has the potential to create over 4,000 new jobs globally.  

Along with the $1.5 billion transformer investment, Hitachi Energy also pledged $180 million toward the creation of a nearly 323,000 square foot transformer factory on Finland’s western coast, the company said today. The factory is expected to come online in 2027 and could enable Hitachi Energy to double both its production and testing capacities. 

“Growing the service and digital capabilities is part of [our] efforts to help utilities and industries operate and maintain their electrical assets,” Hitachi Energy said in a press release. “Digitalization enables efficient operations across the whole value chain [by] enabling reliability-centered asset management programs to help our customers extend the transformers’ life cycle.”

The funding comes on the heels of the company’s $3 billion investment in electrification efforts that concentrated on manufacturing and R&D. 

The company also poured over $30 million into modernizing a German transformer plant earlier this year as part of its global expansion efforts. A $37 million Virginia transformer is currently under construction and is set to address growing data center electricity demand. Outside of the U.S., Hitachi Energy also recently completed projects in Australia, China, Colombia, and Vietnam.