Solving the Gridlock: America’s Electric Supply Chain Opportunity

The US electric grid faces severe supply chain constraints, with lead times for large power transformers reaching up to four years and prices for power line cables doubling since 2019. Domestic production is insufficient, meeting only 20% of demand for large power transformers in 2025. To address this, the document proposes a three-pronged federal strategy: easing near-term bottlenecks through allied partnerships and production ramps; expanding domestic capacity via manufacturing tax credits and low-cost scaling capital; and promoting innovation in next-generation grid hardware. It also highlights subnational opportunities for states to attract investment through tailored workforce training and industrial clustering.

• Demand for grid hardware has increased significantly since 2019, leading to higher prices and extended lead times; for instance, large power transformers may have lead times of up to four years, and cable costs for power lines have doubled since 2019.
• The United States relies heavily on imports for grid equipment, with domestic production meeting only 20% of the demand for large power transformers (LPTs) and approximately 50% of distribution transformer demand in 2025.
• Domestic production of transformers is estimated to be 10%–25% more expensive than imported versions due to higher labor and material costs and a lack of economies of scale.
• Several structural barriers hinder the expansion of US grid manufacturing, including limited domestic refining capacity for copper, a lack of electrical steel suppliers, technical labor shortages, and high levels of equipment customization (over 80,000 transformer types).
• The US government has begun responding with funding and policy actions, including a $375 million allocation to the DOE's Office of Electricity in January 2026 and a Defense Production Act (DPA) determination in April 2026 to expand capacity.
• Proposed federal interventions to expand capacity include expanding manufacturing tax credits (such as 48C and 45X), providing low-cost loans through the Energy Dominance Financing Program, and using DPA Title III for grants and loan guarantees.
• Subnational economic development can be driven by mapping industrial bases to grid production and creating flexible workforce programs, as seen in North Carolina, South Carolina, Tennessee, and Virginia.

APA

RMI (2026). Solving the Gridlock: America’s Electric Supply Chain Opportunity. https://rmi.org/resources/solving-the-gridlock-americas-electric-supply-chain-opportunity/

Chicago

RMI. Solving the Gridlock: America’s Electric Supply Chain Opportunity. 2026. https://rmi.org/resources/solving-the-gridlock-americas-electric-supply-chain-opportunity/.

Wikipedia

{{cite report |author=RMI |title=Solving the Gridlock: America’s Electric Supply Chain Opportunity |date=8 May 2026 |url=https://rmi.org/resources/solving-the-gridlock-americas-electric-supply-chain-opportunity/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2026solving, author = {{RMI}}, title = {{Solving the Gridlock: America’s Electric Supply Chain Opportunity}}, institution = {RMI}, year = {2026}, month = may, url = {https://rmi.org/resources/solving-the-gridlock-americas-electric-supply-chain-opportunity/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }