Hitachi Energy, a subsidiary of Japan-based conglomerate Hitachi, will ramp up its global manufacturing capacity for transformers with a $1.5 billion investment by 2027, as a long queue for grid interconnections, particularly from renewables, is driving up demand.

The investment, which comes in addition to a 2020 announcement of a $3 billion injection in manufacturing capacity, will span across Europe, the Americas, and Asia, the company said in a press release.

Transformers are a key component for integrating renewables into the grid as they help regulate voltage and ensure grid stability. They are also used to integrate energy storage systems with renewables.

“The demand for transformers and electrical equipment has grown at an unprecedented scale, and we are investing to address our customers’ mid- and long-term needs,” said Bruno Melles, managing director of the transformers business at Hitachi Energy.

The company said it is expanding two transformer manufacturing facilities in the U.S. and one in Colombia. It invested about €30 million (~$32 million) in the expansion and modernization of its power transformer manufacturing facility in Germany in February of this year.

It also announced an investment of $180 million in a new transformer factory in the Vaasa region of Finland.

Extended lead times to procure transformers are a significant cause of delay in renewable project development.

Hitachi Energy was formed in 2020 when Hitachi acquired a majority stake in ABB‘s Power Grids business. Previously called Hitachi ABB Power Grids, it was later rebranded as Hitachi Energy.

It claims to be the world’s largest transformer manufacturer in terms of installed base and manufacturing capacity, with over 60 transformer factories and service centers.

In 2022, Hitachi Energy’s India arm was awarded a contract by NTPC Renewable Energy to supply power transformers for a 4.75 GW renewable energy park in Gujarat. The company was asked to provide 315 MVA 400/33/33 kV transformers manufactured at its transformers factory in Vadodara.