Transformer shortages: New bottleneck of the energy storage supply chain

While the BESS supply chain has stabilized in terms of prices and supply of raw materials, lead times for certain components, such as transformers, have greatly extended.

“While global battery supply eased in 2023, after experiencing tightness in supply the previous year, the limited supply of transformers has become the new bottleneck of the energy storage supply chain,” says Kevin Shang, a senior research analyst in Wood Mackenzie.

Transformers are critically important as they enable the BESS connection at all grid levels by stepping up the output voltage to the same level as the grid voltage. Presently, the global transformer market is observing shortages and subsequent increases in prices, mainly due to increased raw material demand, pandemic-related shortages and backlogs, labor constraints, shipping issues, and geopolitical tensions. In some parts of the world, the shortages are acute.

“We have seen a significantly tight supply of transformers in the US and European markets. The prices of transformers used to trend with metal prices. Nowadays, the prices of transformers are more driven up by demand and the industry will have to pay whatever is needed,” Shang tells pv magazine.