South Africa’s energy transition and similar efforts around the world are driving unprecedented demand for power transformers as countries upgrade and expand their power grids to meet rising energy needs. This global shift towards renewable energy is exposing a critical infrastructure gap: a severe shortage of transformers. As nations race to expand generation capacity and decarbonise their grids, the demand for transformers, essential for transmission and distribution, has surged beyond current global supply capabilities, says Mervyn Naidoo, Group CEO of ACTOM.
Unlike legacy fossil fuel plants, renewable sources such as solar and wind are geographically dispersed and located far from existing grid infrastructure. This mismatch has created an urgent need for new transmission lines and substations, which is driving demand for transformers at a pace manufacturers are struggling to meet.
Delaying grid upgrades
Factory slowdowns, supply chain bottlenecks and procurement delays during the COVID-19 pandemic left manufacturers with limited capacity to ramp up production. Transformer shortages are delaying grid upgrades, stalling renewable energy projects and deterring investment in new generation capacity. Without the ability to connect new plants to national grids, energy security and decarbonisation goals are at risk.
The shortage is also linked to systemic uncertainty in infrastructure demand and fragmented procurement practices. While energy transition plans signal long-term need, the absence of firm, bankable orders has stifled investment in manufacturing capacity. In South Africa, procurement cycles have often been ad hoc and reactive, creating uncertainty for multi-year demand. This lack of visibility hinders manufacturers, particularly in transformer production, where high overheads require consistent throughput.
The global shortage presents a strategic opportunity for South African manufacturers. International markets are facing lead times of up to four years, which is creating an opening for local producers to position themselves as reliable alternatives, especially if they can deliver within 12-18 months. Government support through export incentive programmes, similar to those implemented abroad, could help mitigate the impact of tariffs and position South Africa competitively.
Opportunity to re-enter global supply chains
South Africa has the industrial base and engineering expertise to meet this challenge but coordinated action is required. This includes policy support for bankable capacity expansion, procurement reform to provide demand visibility and targeted skills development to meet international standards. Strategic procurement is essential to reduce lead times and enhance grid reliability.
Local manufacturing offers clear advantages. Shipping a failed transformer overseas for repairs and back to South Africa can cost up to R40 million. Local facilities reduce downtime and costs while domestic technical teams improve reliability and strengthen supply chains, making them less vulnerable to global disruptions.
Globally, nations are increasingly prioritising domestic participation. Rising tariffs threaten export competitiveness, which places pressure on countries like South Africa to strengthen local supply chains. By leveraging these shifts, South Africa can build a resilient, self-sustaining industrial base.
