A very revealing article in the Bloomberg Green Newsletter on April Fool’s Day reported that fully half of the data centers on the drawing boards of the Silicon Valley “hyperscalers” of artificial intelligence are going to be cancelled or dramatically slowed down by the lack of sufficient production of electric power equipment in the United States.
“There’s no lack of money chasing these projects…. Yet neither ambition nor capital is enough to materialize all the necessary components…. One big reason is the shortage of electrical equipment, such as transformers, switchgear and batteries. They are needed not just for powering AI, but also for building out the grid…. U.S. manufacturing capacity for these devices cannot keep up with demand.”
When power demand, driven by data centers, rose quickly in 2021-22, imports of electrical equipment surged, but since then even this demand has not been able to keep that surge going, or to clear up the bottlenecks which remained, primarily in the production of electrical transformers. Now, those production failures are leading to the abandonment of projects; there’s not enough supply, and it is not being produced fast enough, by half—ready in 24-30 months, even when imported, but needed in 12-18 months.
