Hitachi Energy has announced a $1 billion investment to scale up its grid infrastructure manufacturing footprint in the US, addressing the power demand from the AI data center sector.

Nearly half of the investment, $475 million, is earmarked for the construction of a new power transformer manufacturing facility in South Boston, Virginia. When built, the facility will become the biggest producer of large power transformers in the US. Construction on the facility is scheduled to start this year, with operations expected to commence by 2028.

The facility will be built alongside Hitachi’s existing campus, creating more than 825 jobs in the region, the company said. It went on to stress the support of “the Trump administration, Governor Youngkin, Virginia’s General Assembly, and the Commonwealth’s congressional delegation” in supporting the construction of the new facility.

“Power transformers are a linchpin technology for a robust and reliable electric grid and winning the AI race. Bringing production of large power transformers to the US is critical to building a strong domestic supply chain for the US economy and reducing production bottlenecks, which is essential as demand for these transformers across the economy is surging,” said Andreas Schierenbeck, CEO of Hitachi Energy. 

In addition, Hitachi intends to expand its breaker and switchgear manufacturing operations near Pittsburgh, Pennsylvania, to further solidify its US footprint. The investment is part of a broader $9bn global investment plan by Hitachi to expand its energy and manufacturing capacity worldwide. As part of its commitment to the US market, Hitachi has secured assurances from the White House to expedite new US power component manufacturing projects.

Transformers play a crucial role in power distribution. They are used to increase or decrease the voltage of alternating current for efficient transmission and distribution. The investment follows a warning from Schierenbeck last year that the transformer supply chain was “overwhelmed” and could no longer meet the demand for grid equipment needed for crucial infrastructure projects worldwide.

Demand across the transformer sector is expected to surge from $48bn in 2024 to $67bn in 2030, significantly driven by the projected load growth emanating from the data center sector. Current lead times for large transformers range from 80 to 120 weeks. As a result, companies such as Hitachi are scrambling to increase production capacity to prevent lead times from increasing.

Hitachi Energy is the energy manufacturing arm of Japanese multinational conglomerate Hitachi. The company's products include high-voltage equipment, transformers, and services for the renewable energy sector.

Hitachi has signed several partnerships within the US market. In June, the firm partnered with regional transmission operator Southwest Power Pool to develop an Nvidia-powered artificial intelligence solution that reduces the duration of interconnection impact studies.