AI data center boom worsens power equipment shortage in the US
The rapid construction of data centers for artificial intelligence systems is worsening shortages of transformers, substations, gas turbines, and cooling systems in the United States. Wood Mackenzie estimates the transformer shortage at 15% this year and the substation shortage at 8%, OilPrice reports.
Demand outpaces production
Transformers, which convert high-voltage electricity from transmission lines into voltage suitable for end users, including data centers, have been in short supply for at least two years. OilPrice attributes this to rapid growth in electricity demand, much of it coming from the technology sector, while grid expansion is failing to keep pace.
A head of a company providing digital infrastructure services told Reuters that industry participants are increasingly interested not in graphics processors, but in delivery times for generators and transformers.
South Korea's Hyundai Electric told Reuters that it has an order backlog extending more than three years ahead. A significant share of production capacity for large power equipment has already been reserved for the next three years. In the first half of the year, the company's order backlog grew by 23% to $8.5 billion.
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Turbines and cooling systems
The shortage of grid equipment is compounded by limited supplies of gas turbines, whose production also cannot quickly meet the needs of major technology companies. Manufacturing turbines and transformers takes time, as does producing cooling systems.
Rising electricity consumption at data centers increases the need for cooling. A senior Bank of America analyst told Reuters that greater electricity consumption means a greater need for cooling because equipment generates heat. McKinsey also forecasts growing demand for such systems in its report.
Wood Mackenzie forecasts that data centers could absorb up to 40% of power equipment supplies in the United States in the coming years. The consulting company warned that urgent demand amid slow production expansion could create a supply chain crisis. In OilPrice's view, the situation could also be complicated by US President Donald Trump's recent order banning imports of large power equipment from China.
