Prices and procurement times for essential components like power transformers and cables have almost doubled in four years, according to the IEA report, creating significant hurdles for grid developers.

The supply chain challenges facing the sector come as the world moves towards what the IEA calls “the Age of Electricity”, with global power consumption set to increase strongly in the years ahead.

While permitting remains the primary cause of delays in transmission projects, the IEA notes, particularly in advanced economies, supply chain issues have also emerged as a critical limitation. An IEA survey of industry leaders found that procurement now takes two to three years for cables and up to four years for large power transformers – twice as long as in 2021.

Specialised components face even longer delays, with lead times for DC cables extending beyond five years. The price increases for components are equally concerning, says the IEA. In real terms, cable costs have nearly doubled since 2019 while power transformer prices have increased by around 75%. Underlying materials like copper, aluminium and grain oriented electrical steel have also experienced price increases.

Competing demand from grid expansion projects that are underway simultaneously across multiple regions is exacerbating the bottlenecks.

The increased development of offshore wind power projects has further increased demand for specialised high-voltage subsea cables, putting additional pressure on already strained supply chains.

The report shows that manufacturers are responding with plans and investments to increase production capacity, but these expansions will take time to implement, and uncertainty remains regarding future demand levels and the availability of skilled workers. The report finds that around 8 million people worldwide are currently employed in constructing, maintaining and operating grids, and this workforce will need to grow by at least 1.5 million by 2030 to meet projected demand.

Supply chain constraints come at a particularly challenging time, with more than 1600 GW of solar and wind projects at the advanced development stage awaiting grid connections. At the household level, connections to the grid have picked up in recent years, but 750 million people remain without access to electricity around the world – 80% of which are in sub-Saharan Africa.

More than one-third of the global transmission grid expansion over the last decade took place in China. China constructed more than 500 000 km of lines, including ultra-high-voltage (UHV) connections that link renewable energy-rich northern and western provinces to eastern demand centres. Over the same period, India added nearly 180 000 km of transmission lines, a 70% increase, and Brazil expanded its grid by more than 100 000 km, a 50% expansion.

In 2023, China invested around USD 40 billion in high-voltage transmission and remains committed to expanding its ultra-high-voltage (UHV) network under the 14th Five-Year Plan, with 38 UHV lines already operational in 2024.

Advanced economies have seen a more gradual expansion of their transmission networks, with a 9% increase in the past decade, about 130 000 km of new lines.

This reflects the relative maturity of electricity markets and infrastructure in these economies, along with higher population densities in countries such as Japan and Korea that reduce the need for extensive grid expansion. This also means that the average age of grid infrastructure in advanced economies is higher than in EMDE (= Emerging Market and Developing Economies other than China).

As a result of these differences, there is a greater emphasis in advanced economies on the replacement and modernisation of ageing transmission lines to ensure reliability, to accommodate digital solutions, and to integrate renewable energy sources effectively. Meanwhile, investment strategies in EMDE are more focused on expanding transmission networks to meet growing electricity demand and to ensure access.

The report notes that while global investment in power transmission grew by 10% in 2023 to reach $140 billion, this figure would need to exceed $200 billion annually by the mid-2030s to meet rising electricity demand.

Timely investment in the supply chain requires confidence among manufacturers as to the level of future demand for networks and components, says the IEA.

To this end, it recommends enhancing the visibility of future infrastructure needs via transparent and credible advance planning, encouraging proactive grid investment, designing effective procurement frameworks, and ensuring a skilled workforce across the sector.

Additional recommendations include streamlining permitting processes, optimising the use of existing grid infrastructure through digital technologies, and measures by policymakers to encourage greater diversity and resilience in supply chains.

The report, which was developed under the Regulatory Energy Transition Accelerator (RETA) initiative, which aims to enhance the capacity of regulators to increase the speed of clean energy transitions, emphasises that co-ordinated efforts across the entire supply chain will be essential to overcome bottlenecks and enable reliable power system development for the future.

Building on analysis described in a previous IEA report, Electricity grids and secure energy transitions, the new report identifies “actionable strategies” to address challenges related to the supply chain for grid infrastructure, with a focus on transmission lines with voltages that exceed 66 kV. These can be summarised as follows:

  • Enhance visibility on future demand: Integrated, credible visions for electricity sector development at country and regional level, including transparent project pipelines and long-term transmission investment plans, provide essential guidance for manufacturers on the required quantity and types of transmission components. Clear timelines and structured master plans, incorporating technical and regulatory requirements, enhance confidence across the supply chain.
  • Strengthen the industry dialogue: System planning is becoming more complex as renewable and distributed generation grows. This underscores the importance of improved co-ordination among governments, transmission system operators, regulators, developers and manufacturers to underpin well-grounded assessments of demand for transmission projects and components, and their timely delivery.
  • Encourage proactive grid investment: In a world where electricity demand is rising fast and some new sources of generation can be built within a few years, the pace of grid investment needs to step up to prevent bottlenecks, including a regulatory framework that supports anticipatory expansion and modernisation.
  • Design effective procurement frameworks: Long-term agreements provide certainty on prices and supply volumes, encouraging manufacturers to expand capacity and enabling buyers to secure essential components. Standardising procurement procedures across markets enhances transparency and simplifies bidding processes. Aligning procurement policies to national
  • Streamline permitting: Transmission expansion projects are complex and prone to delays, with permitting remaining a key uncertainty. Maintenance of essential safeguards needs to be combined with removal of unnecessary administrative barriers and prioritisation of key infrastructure projects.
  • Maximise existing grid infrastructure: Optimising the use of existing grid infrastructure through digital technologies enhances efficiency and maximises the use of existing assets, providing a safety valve for networks and supply chains.
  • Solutions such as real-time monitoring and operational performance improvements allow transmission lines to function more effectively, alleviating the pressure on some new infrastructure investments. Additionally, performance-based regulation drives the development and adoption of digital technologies, fostering innovation and operational efficiency.
  • Promote diverse, resilient and sustainable supply chains: The supply of certain grid components is concentrated among a few top-tier suppliers, hindering diversification, particularly in emerging and developing economies. Governments can support this by pooling procurement needs and collaborating with local or second-tier suppliers.
  • Ensure a skilled workforce: The demand for skilled workers is increasing across the supply chain. Building a strong talent pipeline and integrating digital skills into training are essential. Skilled labour is key to development of infrastructure projects.

Hitachi Energy invests to address escalating transformer shortage

In March 2025, Hitachi Energy announced additional investments of more than $250 million by 2027 to expand global production of critical components for transformers. This rapid follow-up to the recently announced $6 billion USD investment across the company portfolio reflects the escalating transformer shortage, which continues to increase, says Hitachi Energy.

As the electrification of industries, particularly data centres, and AI, drives unprecedented demand for electricity, the need for transformers has surged beyond initial projections, notes Hitachi Energy. To keep pace with this accelerating demand, Hitachi Energy says it is expanding its commitment to scale up production and strengthen supply chains in the USA and worldwide.

These investments aim to bolster Hitachi Energy’s manufacturing capabilities across the US, enhancing production capacity at the company’s transformer factories in Virginia, Missouri, and Mississippi. It includes transformer components such as bushings and insulation as Hitachi Energy says it is a critical supplier to other transformer manufacturers.

The investments will also help alleviate the broader, ongoing transformer supply shortage, says Hitachi Energy, ensuring increased production capacity and supply-chain resilience. The company’s global investment programme will also strengthens Hitachi Energy’s manufacturing capabilities in Asia, South America, and Europe.

This article first appeared in Modern Power Systems magazine.