Two big
constraints bottlenecking power projects are gas turbine wait times and power
transformer wait times. Transformer wait times of four years are common.
According to PV Magazine:
“Data from Wood Mackenzie indicates that demand for
generator step up transformers increased by 274% between 2019 and 2025. During
that same period, demand for substation transformers rose by 116%. The growth
is fueled by a massive influx of new load from artificial intelligence data
centers as well as the ongoing transition toward electrified transport and
industrial manufacturing.”
Prices for these components
have climbed 80% over the past five years. Two strategies have emerged: 1)
ordering transformers ahead of project finalization, and 2) using refurbished
equipment until new transformers become available.
The limited availability of
grain-oriented electrical steel and copper is a major factor in the transformer
supply crunch. Domestic construction of grain-oriented steel is lacking, so
much of it needs to be imported.
“In response to the domestic supply gap, manufacturers
are ramping up investment in U.S. production facilities. Hitachi Energy
recently announced over $1 billion in investment, including a new plant in
South Boston scheduled to come online in 2028. Siemens has also increased its
manufacturing commitment in North Carolina to $421 million for a transformer
factory in Charlotte.”
“Despite these investments, the supply and demand
imbalance is expected to persist for years. Large scale data center developers
are increasingly looking toward on site power generation to bypass the long
queues for grid connections, while utility scale renewable projects face the
risk of becoming stranded assets if they cannot secure transformers in time for
project completion.”
Heron Power announced in August
that it plans to build a $100 million factory in California to make advanced
transformers for the U.S. power grid. The company plans to produce Heron Link,
a 5-megawatt medium-voltage power conversion system for large-scale energy and
data-center projects. Heron offers an integrated solid-state transformer for
data centers.
Heron’s CEO Drew Baglino is a
former Tesla executive. The company has begun building its first factory in
California. It plans to begin production in the second half of 2027 and
eventually ramp up to 40 gigawatts of capacity, or about 10,000 of its “Heron
Link” systems. It will produce a new kind of
transformer. According to Latitude Media:
“Heron Power promises to combine multiple pieces of
power conversion equipment into a single modular, software-controlled unit for
both data centers and solar and battery storage projects looking to get
interconnected.”
Heron is still developing its
manufacturing process and testing components. It is doing its first commercial
pilot in California where labor costs are higher, but also where more engineers
can manage the manufacturing process. They are also doing field testing at data
centers and solar sites.
“Then there’s the actual design differences between
solid-state transformers {SSTs} and traditional oil-filled technology. Heron
Link promises that its SST has higher energy efficiency, which could translate
into greater revenue for renewable energy project owners, or lower electricity
costs at a data center.”
“Heron also uses high-frequency silicon-carbide
semiconductors to convert power electronically — the costs of which have
dropped dramatically thanks to the ramp up of the EV industry, Baglino said.
That enables SSTs to be controlled remotely for voltage regulation and load
smoothing. By contrast, legacy high-voltage transformers rely on oil to cool
copper coils and require in-person maintenance.”
“Ultimately, Heron Power estimates that its system will be
5% to 6% more valuable than alternatives “over the lifespan of a project.”
In any case, the cost at
least looks comparable to the older technology, with added advantages. However,
like a lot of renewable energy projects, it is likely to have higher upfront
costs.
References:
Heron
Power plans $100 million factory for advanced electric grid equipment. Tim
McLaughlin. Reuters, August 13, 2026. Heron
Power plans $100 million factory for advanced electric grid equipment
U.S.
transformer market faces severe supply constraints: Severe shortages of power
transformers are stalling grid expansion as developers face skyrocketing prices
and four year wait times for critical equipment. Ryan Kennedy. PV Magazine. May
12, 2026. U.S.
transformer market faces severe supply constraints - pv magazine Global
How
Heron Power plans to scale first transformer factory to 40 GW: CEO Drew Baglino
on the company’s plans to ramp production in the coming years — and combat the
U.S. power equipment shortage. Catherine Boudreau. Latitude Media. August 24,
2026. How
Heron Power plans to scale first transformer factory to 40 GW | Latitude Media
Heron
Power. Website. Heron Power | Built for the
grid ahead
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