# Data centres and Transformers and power electronics

Every data centre sits behind a chain of transformers, switchgear, uninterruptible power supplies and converters, so its build-out competes with utilities for the same scarce equipment. US power transformer supply fell about 30% short of demand in 2025, with lead times of up to four years, and AI racks are now pushing a shift to 800 V DC power distribution.

Source page: https://www.materialinsights.org/links/data-centres-and-transformers-and-power-electronics/

[Data centres](https://www.materialinsights.org/energy/e_data_centres/) (energy) and [Transformers and power electronics](https://www.materialinsights.org/energy/e_power_electronics/) (energy): 5 relationships.

## How they are linked

### 1. The power chain into the server

*Physical flow · Strong · Transformers and power electronics → Data centres*

Grid power arrives at high voltage AC and must be stepped down, conditioned by UPS systems and converted to low voltage DC before chips can use it.

- **1.5%** share of power electronics energy flow going to data centres in the site's data
- **54 V DC** current rack power distribution, using heavy copper busbars

Each conversion step loses a little energy and adds equipment, so the power chain affects both build cost and efficiency. As racks move from kilowatt to megawatt scale, the low voltage chain becomes a limit, which is driving the change in architecture.

Sources: [Material Insights (Energy Institute, IEA data)](https://www.materialinsights.org/energy/); [NVIDIA Technical Blog](https://developer.nvidia.com/blog/nvidia-800-v-hvdc-architecture-will-power-the-next-Generation-of-ai-factories)

### 2. Transformer shortages

*Shared risk · Strong · Transformer supply → data centre connection dates*

Data centres need large transformers at the grid connection and many smaller units on site, and they compete with utilities, solar farms and factories for the same factory slots.

- **30% and 10%** US supply shortfalls for power and distribution transformers, 2025
- **about 80%** share of US power transformers expected to be imported in 2025
- **up to four years** lead times for high-capacity transformers, 2026

Prices for these components rose by roughly 80% over five years to 2026, and demand for generator step-up transformers grew 274% from 2019 to 2025. Utilities are sometimes ordering three or four years ahead, so equipment rather than capital often sets when a data centre can connect.

Sources: [Energy Now (Reuters)](https://energynow.com/2025/08/us-faces-transformer-supply-shortfall-as-power-demand-surges-woodmac-says); [pv magazine USA](http://pv-magazine-usa.com/2026/05/11/u-s-transformer-market-faces-severe-supply-constraints-as-lead-times-extend-to-four-years/); [Wood Mackenzie](https://www.woodmac.com/es/press-releases/power-transformers-and-distribution-transformers-will-face-supply-deficits-of-30-and-10-in-2025/)

### 3. AI load drives equipment demand

*Transition · Rising · Data centre growth → demand for power equipment*

New data centre load needs new substations and on-site power equipment, so the growth in data centre electricity is a direct order book for transformer and converter makers.

- **415 TWh** data centre electricity use in 2024
- **about 945 TWh** IEA projection for 2030
- **1.5 GW IT** India's operational data centre capacity, end-2025

Electricity demand growth in the US is now led by data centres, which is why the transformer shortfall is sharpest there. India's capacity is projected to pass 4 GW IT by 2030, adding to demand on a domestic transformer industry that also serves the renewables build-out.

Sources: [Energy Now (Reuters)](https://energynow.com/2025/08/us-faces-transformer-supply-shortfall-as-power-demand-surges-woodmac-says); [Down To Earth (IEA Energy and AI)](https://www.downtoearth.org.in/energy/energy-demand-for-data-centres-to-double-by-2030-ai-biggest-driver-iea); [The Tribune (Savills India)](https://www.tribuneindia.com/news/business/india-data-centre-capacity-more-than-doubled-to-387-mw-in-2025-projected-to-triple-by-2030-report/)

### 4. Shift to 800 V DC

*Transition · Rising · AI rack density → new power electronics*

Megawatt-scale AI racks make low voltage distribution too heavy in copper and losses, so designers are moving conversion to the edge of the site and distributing high voltage DC.

- **up to 5%** end-to-end efficiency gain of 800 V DC over current 54 V systems
- **45%** less copper than 415 V AC distribution
- **2027** planned start of NVIDIA's 800 V DC transition for megawatt racks

Converting grid power to 800 V DC at the edge of the site removes most intermediate conversion steps, and NVIDIA and partners are weighing conventional and solid-state transformer designs for the job. That could shift value from conventional UPS and low voltage gear towards power semiconductors.

Sources: [NVIDIA Technical Blog](https://developer.nvidia.com/blog/nvidia-800-v-hvdc-architecture-will-power-the-next-Generation-of-ai-factories)

### 5. Price link: power supply

*Cost and price · Strong · Both ways*

The site tracks data centres through the US commercial electricity price and this equipment through the US transformer price index; both respond to grid and building investment.

- **0.21** monthly change correlation, US commercial power price and transformer price index
- **0.66** 12-month change correlation
- **0.54** fitted elasticity

The yearly link reflects a common driver, the wave of grid and data centre investment, more than direct pass-through. It strengthens when transformer shortages push equipment prices up at the same time as data centre construction costs.

Sources: [Material Insights (World Bank, FRED, IMF data)](https://www.materialinsights.org/energy/e_data_centres/correlation/)

## For investors

### Key learnings

1. Transformer and switchgear supply, not capital, often sets when new data centres connect, so makers with factory capacity hold pricing power while shortfalls last.
2. Data centre electricity is projected to more than double to about 945 TWh by 2030, a long order book for power equipment shared with grid and renewables projects.
3. The planned move to 800 V DC from 2027 could shift value towards power semiconductors and solid-state conversion and away from some conventional UPS and low voltage gear.

### What to track

- **Transformer lead times and price indices**: Shorter lead times signal easing shortages and slowing price gains (Monthly · US PPI for transformers (FRED); quarterly · Wood Mackenzie)
- **Order backlogs of grid equipment makers**: Rising backlogs confirm demand from data centres and utilities (Quarterly · company results)
- **Data centre capacity under construction**: Leads demand for transformers and UPS by one to two years (Half-yearly · Savills, JLL, CBRE)

## For policymakers

### Key learnings

1. Transformer shortages can delay both data centres and clean power, so manufacturing capacity for grid equipment is a shared bottleneck for digital and energy plans.
2. The US expected to import about 80% of its power transformers in 2025, which gives exporters with spare capacity, including Indian makers, an opening.
3. Planning grid connections and equipment orders years ahead matters as India's data centre capacity heads from 1.5 GW to over 4 GW IT by 2030.

### What to track

- **Transformer import and export volumes**: Shows whether domestic capacity meets demand or exports are growing (Monthly · commerce ministry trade data)
- **Grid connection queues for large loads**: Long queues signal that equipment or network capacity is binding (Quarterly · state utilities, Central Electricity Authority)

## India

India's data centre capacity reached about 1.5 GW IT at the end of 2025 and is projected to pass 4 GW by 2030, so local demand for transformers and power electronics is rising while global shortages create export openings for Indian makers.

## Sources

1. [Energy flows, Material Insights](https://www.materialinsights.org/energy/), Material Insights (Energy Institute, IEA data)
2. [NVIDIA 800 V HVDC architecture will power the next generation of AI factories](https://developer.nvidia.com/blog/nvidia-800-v-hvdc-architecture-will-power-the-next-Generation-of-ai-factories), NVIDIA Technical Blog (2025)
3. [US faces transformer supply shortfall as power demand surges, WoodMac says](https://energynow.com/2025/08/us-faces-transformer-supply-shortfall-as-power-demand-surges-woodmac-says), Energy Now (Reuters) (2025)
4. [U.S. transformer market faces severe supply constraints as lead times extend to four years](http://pv-magazine-usa.com/2026/05/11/u-s-transformer-market-faces-severe-supply-constraints-as-lead-times-extend-to-four-years/), pv magazine USA (2026)
5. [Energy demand for data centres to double by 2030, AI biggest driver: IEA](https://www.downtoearth.org.in/energy/energy-demand-for-data-centres-to-double-by-2030-ai-biggest-driver-iea), Down To Earth (IEA Energy and AI) (2025)
6. [India data centre capacity more than doubled to 387 MW in 2025, projected to triple by 2030: report](https://www.tribuneindia.com/news/business/india-data-centre-capacity-more-than-doubled-to-387-mw-in-2025-projected-to-triple-by-2030-report/), The Tribune (Savills India) (2026)
7. [Price correlation, Material Insights](https://www.materialinsights.org/energy/e_data_centres/correlation/), Material Insights (World Bank, FRED, IMF data)
8. [Power transformers and distribution transformers will face supply deficits of 30% and 10% in 2025](https://www.woodmac.com/es/press-releases/power-transformers-and-distribution-transformers-will-face-supply-deficits-of-30-and-10-in-2025/), Wood Mackenzie (2025)