0

Shortages of transformers, switchgear, and batteries are the ‘less-glamorous, non-silicon equipment’ that are holding up a growing number of DC builds

In sum, what to know:

• Scarcity of electric gear – though not as high-profile, electrical component shortages are just as important as GPU and HBM shortages when it comes to data center builds and delays.
• ‘Minor’ components with big impact – Nearly half of all data center projects planned in the U.S. are stalled or delayed by shortages of transformers, switchgear, and backup storage components;
• 10 steps to take – project managers and procurement teams are using proactive sourcing, design flexibility, and material innovation to shift from reactive to proactive approaches.

Project managers and procurement teams steeped in supply chain logistics know that the smallest components are what can hold up the biggest projects. With so much focus on GPUs and CoWos (Chip-on-Wafer-on-Substrate), there’s not enough being said about the high-voltage transformers, switchgear, backup generators and batteries that power the massive power density required for AI servers. But that is changing, as planners are shifting from just a “GPU shortage” to a much more critical power infrastructure shortage, where essential, relatively low-cost electrical components are causing massive delays in building AI data centers.  According to Bloomberg, nearly half of planned U.S. data center builds are delayed by shortages of these components.

While roughly 12 to 16 gigawatts (GW) of capacity is planned to go live in 2026, only about one-third of that is actually under active construction because the lead times for electrical gear are getting longer and longer. As a result, data center planners are taking more proactive approaches (see ’10 proactive actions to take at end of article), as well as doing more to capitalize on existing infrastructure and to stockpile components.

Next week, RCRTV AI TechTalk features an interview with Crusoe Energy Systems, and in that discussion, Pritesh Indore, senior pre-construction and infrastructure planning leader, mentions greenfield versus brownfield construction choices. “If a brownfield site has existing transmission infrastructure and a credible path to the megawatts needed within a deployment window, it deserves serious evaluation,” said Indore. In the case of electrical gear shortages, however, Crusoe is more the exception than the rule, known to have procured essential gear ahead of recent tariffs and market disruptions, as well as promoting a modular “compute in a box” approach that addresses the electrical gear supply chain crisis by manufacturing its own electrical components to bypass grid hardware bottlenecks.

The GOES steel and copper squeeze

A common refrain in data center construction right now is that a project can be held up for months by a missing $500 minor circuit breaker or circuit board material. An outspoken proponent of minor-components planning is Supply Technologies’ James Smetham, managing director, Europe and Asia, who ina recent blog mentioned that even fasteners and cable systems are hardware that is increasingly “strategic in the supply chain,”…no longer just “a supporting function,” but rather an essential part of infrastructure delivery.

Indeed, even minor components, like the smallest circuit breaker, can halt an occupancy permit for the largest data center. For small data center components, the big “squeeze” is coming from shortages of specialized steel and copper– the raw materials that have pushed high-voltage transformer lead times from 2 years to 5 years, effectively delaying active construction for more than half of the U.S. data centers planned for 2026.

While distribution transformer availability has improved, large units remain locked above two years. According to analyst Wood Mackenzie, 25 GW  of new data center capacity was added to the funnel in Q4 2025, half of Q3 additions, signaling a challenging development environment and a focus on the existing pipeline. In its “US data center pipeline” report, the US disclosed data center project pipeline reached 241 GW end of 2025, 33% of which is under active development.

The primary physical limit in making data center components is a hyper-specialized metal called Grain-Oriented Electrical Steel (GOES), a highly engineered steel whose magnetic properties are required for transformer cores. Only a few companies in the United States manufacture GOES, such as Cleveland Cliffs, Nippon Steel (which acquired U.S. Steel), and ArcelorMittal.

With raw-materials bottlenecks growing, imports from countries like China are increasingly critical, however, the extreme restrictions and tariffs on direct imports of Chinese power equipment and raw steel are lengthening wait times for high-voltage transformers and other equipment in the U.S. To bypass tariffs, Chinese steel mills are said to be selling raw GOES to manufacturers in third-party countries like Mexico and Vietnam, where steel is stacked and processed into finished transformer cores, which are then exported directly into the United States for data centers and power lines.

Copper squeeze

When it comes to commodities go, copper is one that permeates the entire data center facility footprint. There are massive deficit projections for 2026, with forecasters at organizations like the International Copper Study Group expecting shortages approaching 150,000 to 400,000 metric tons, with declining ore grades at existing mines and severe supply disruptions at massive operational hubs like Cobre Panamá and Grasberg as the culprits.

For perspective, a traditional data center might have required 5,000 to 15,000 tons of copper, whereas modern high-density campuses require up to 50,000 tons of copper. That’s due to the power-dense nature and massive electricity loads for high-performance computing clusters, which require heavy power distribution cabling, grounding, and high-density liquid cooling exchangers – all of which require copper.

According to Wood Mackenzie, copper represents less than 0.5% of the total cost of building a data center, but the  intense competition for data center cables and busways is starving standard electrical gear manufacturers of the copper they need to build switchgear and circuit breakers.   

10 proactive actions to take

The reality is that data center hardware is refreshing in aggressive 12-to-18-month cycles, yet lead times are getting longer as shortages of raw materials and finished, standard electrical gear continue to incrase.

In response, project managers and procurement teams are taking a multi-prong, proactive approach to mitigating delays, including:

• Supplier diversification across regions so there isn’t a reliance on single sources. For example, sourcing transformers from multiple vendors to reduce localized disruptions.
• Stock buffering by warehousing high-risk/long-lead-time components in advance of projects.
• Proactive inventory management, with procurement teams ordering critical items—especially electrical gear—months in advance, and real-time alignment with production (no more “just-in-time” IT hardware procurement).
• Strategic Logistics Planning: Massive transformers require specialized, heavy-load railcars, so project managers are booking heavy transport schedules months in advance of the unit actually being finished.
• Blanket purchase agreements that help “guarantee” factory floor capacity, helping to bypass standard procurement bidding.
• Rolling hardware allocations pre-negotiated with your vendors to ensure you aren’t boxed out by massive cloud providers and hyperscalers.
• Re-engineering designs to reuse or make use of available parts. For example, engineers can work with distributors to reconfigure standard, available gear, creating universal “shells” for panel boards, reducing customized, long-lead production. When a specific project gets close to its build date, the breakers and ancillary parts are customized to bypass the 18 to 30-week factory lead times.
• Component Standardization: Project managers are pushing utilities to accept standardized, modular substation builds rather than demanding highly customized, site-specific transformer blueprints that slow down production lines. 
• Material Substitutions: To avoid shortages of highly specified copper wire, some designs are using aluminum windings or advanced natural ester fluids to allow equipment to run hotter and last longer with less bulk.
• 3D Printing and hollow core transformers, which require significantly less GOES.        

These are some of the steps project managers and supply chain managers are using to move away from “just-in-time” models and toward longer lead times. By using proactive sourcing, design flexibility, and material innovation, there can be a shift from a reactive (crisis-management) approach to a proactive (strategic) approach.