Transformers and switchgear have become some of the hardest items for American utilities to buy, with waits stretching into years as data centers, electrification and storm repairs compete for the same orders. The federal government is now directing money at the bottleneck. The Energy Department opened a funding opportunity worth more than $230 million intended to strengthen the domestic supply chain for grid equipment, expand U.S. manufacturing, reduce reliance on foreign suppliers and hold down electricity costs, the department said in its announcement.
The effort runs through the department's Office of Electricity and is split into two tracks. Funded under the fiscal 2026 energy and water spending law, the program, called SCALED, covers equipment from distribution and power transformers to circuit breakers, switchgear, insulators and high-voltage bushings; one track pays to reclaim and refurbish gear retired from projects or damaged in storms, and the other helps U.S. manufacturers adopt technically mature, domestically sourced alternative materials and subcomponents, according to the funding notice. Rebuilding an existing transformer typically takes far less time than ordering a new one, which is why utilities have leaned on the practice during the shortage.
Applicants will have to bring their own money. Awards take the form of cooperative agreements, recipients must cover at least half of total project costs, and the department expects to pick winners in mid-2027 after concept papers due in November and full applications early next year. Foreign entities are generally excluded.
The shortage the program addresses has been building for years. Artificial intelligence data centers have since added another layer of demand that is deepening the squeeze, Reuters reported in July.