The energy transition has a bottleneck that rarely makes headlines. Not a shortage of wind turbines or solar panels. Not a lack of capital or political will. A structural shortage of power transformers, switchgear, and high-voltage direct current (HVDC) connections. The physical components that move electricity from where it is generated to where it is needed.
Two companies control the critical chokepoints of that infrastructure in Europe: Siemens Energy and Hitachi Energy. Currently, they are being asked to supply the same scarce components to two competing customers: the energy grid and the AI data center industry.
That conflict has no clean resolution, and almost nobody in the energy policy sector is discussing it.
The Dutch Grid Is Already Breaking Under the Strain
The Netherlands offers one of the clearest illustrations of what happens when grid infrastructure falls behind demand. The second progress report of the National Grid Congestion Action Programme (LAN), published in March 2025, confirms that the Dutch government, together with grid operators and regulators, is working on more than 100 targeted measures to address congestion and prevent a systemic failure.
The queue keeps growing. Grid congestion is now cited as one of the main challenges in the Dutch business climate. 90% of Dutch businesses experience direct or indirect consequences, affecting expansion plans, renewable energy development, and the electrification of industrial processes.
Grid operators are investing up to €8 billion per year from 2025 to expand the network. Eneco High-voltage projects carry lead times of 8 to 12 years. In 2024 alone, the Netherlands installed 2,419 transformers and nearly 2,000 km of low-voltage cabling. Still, the system struggles to keep pace. (source Strategicenergy)
This is not a Dutch peculiarity. It is the most visible symptom of a global supply problem centered on two companies.
Siemens Energy: the Widest Portfolio, the Hardest Position
Siemens Energy has the broadest product range in the grid infrastructure market: power transformers, gas-insulated switchgear, HVDC systems, substations, and an emerging digital layer called Noedra. Its transformers are deployed across a wide range of applications, from renewable energy and industrial operations to urban infrastructure, engineered for performance, reliability, and sustainability.
In the European market, and particularly in Germany, the Netherlands, and the UK, Siemens Energy is the dominant supplier for the transmission infrastructure operated by grid operators such as TenneT. It’s estimated that European grid revenue sits between €8 and €10 billion, with a market share of roughly 20 to 25%.
Siemens Energy invested €220 million in expanding its transformer factory in Nuremberg, targeting a 50% capacity increase to secure supply for grid reinforcement and offshore wind integration. That sounds substantial. In practice, even with this expansion, European capacity alone will not fully meet demand before 2027.
The commercial pressure on Siemens Energy is acute. Richard Voorberg, President of Siemens EnergyNorth America, put it bluntly: “I’ve been in this industry for 32 years. I’ve never seen something like this going up at such a rate .” Electrical Trader
That rate is being driven by two competing customers. The energy grid needs transformers to connect offshore wind, reinforce congested networks, and replace aging infrastructure. AI data centers need the same transformers to connect 100 to 300 MW campuses to the grid. According to Wood Mackenzie, hyperscalers are actively outbidding grid suppliers on transformer units. Tom’s Hardware
Siemens Energy’s order book benefits from both. The production capacity to serve both does not exist.
Hitachi Energy: the HVDC Specialist the Energy Transition Cannot Do Without
Hitachi Energy occupies a more focused but arguably more strategically critical position. The company, formed from ABB’s power grids business and acquired by Hitachi in 2020, is the undisputed global leader in HVDC technology and grid automation.
Hitachi Energy delivers complete HVDC transmission solutions and advanced converter technology worldwide, playing a crucial role in promoting grid stability, reducing transmission losses, and simplifying cross-border energy commerce. Spherical Insights
For the North Sea energy transition, where TenneT, Elia, and National Grid are building the offshore transmission corridors that will carry gigawatts of wind power to the European mainland, Hitachi Energy is the backbone supplier. There is no credible alternative at scale for large HVDC converter stations.
According to ARC Advisory Group’s Grid Automation Market Study 2024 to 2029, Hitachi Energy is the world’s number one provider of grid automation products and services, with market leadership in grid control and management, outage management, and AI applications. Hitachi Energy
On the digital side, Hitachi Energy’s Network Manager platform covers the full stack: SCADA, Energy Management System (EMS), Advanced Distribution Management System (ADMS), and Generation Management System (GMS). Its Nostradamus AI platform, the industry’s first dedicated AI solution for grid management. ABI Research provides forecasting for wind and solar generation, energy demand, and market prices.
Hitachi Energy is also expanding production aggressively. Its major investments in Canada and the United States represent one of the most aggressive capacity expansion strategies in the industry, reducing exposure to geopolitical risk and logistics delays. Npcelectric But like Siemens Energy, expansion timelines are measured in years, not months.
Schneider Electric and GE Vernova: Different Lanes
Two other players round out the European market, though with narrower relevance to the supply crisis at hand.
Schneider Electric dominates the distribution segment and the software layer above the grid. ABI Research ranked Schneider Electric first in its 2025 Energy Grid Digitalization Technologies Competitive Ranking, ahead of Siemens AG and GE Vernova, based on its comprehensive portfolio of ADMS, DERMS, virtual substations, and cybersecurity offerings. PR Newswire For Dutch DSOs like Liander and Stedin, Schneider Electric’s EcoStruxure and GridOS platforms are the operational backbone of network management.
GE Vernova is the fourth significant player, strong in large transmission substations and TSO projects, with a growing ADMS portfolio and a strategic focus increasingly on the US market.
The Raw Material Conflict: Copper, Steel, and a Supply Chain Serving Two Masters
The competition between grid infrastructure and AI data centers is not abstract. It runs through a specific, traceable supply chain, primarily copper and grain-oriented electrical steel (GOES).
According to Wood Mackenzie, hyperscalers are outbidding grid suppliers on transformer units, piling significant pressure on producers. Large AI campuses are designed around 50 to 150 MW blocks, with copper use estimated at roughly 27 to 33 tonnes per megawatt of installed capacity. Tom’s Hardware
Estimates suggest over 4.3 million tonnes of copper could be associated with data centers and adjacent power infrastructure by 2035, with industry outlooks warning of a 25 to 30% copper shortfall by that year. World Economic Forum
The transformer market is the point of collision. Large power transformers now require two to three years to procure, compared with weeks before 2020. Data halls can remain fully built yet idle for months while awaiting delayed grid-connection equipment. World Economic Forum
The European Data Centre Association warned in its State of European Data Centres 2026 report that energy availability is already the main bottleneck to sector growth, citing network congestion, long connection times, and increased demands from AI workloads. Cloudnews
The IEA adds a geopolitical dimension. China remains the world’s largest producer of electrical equipment necessary both for internal data center infrastructure and for the external grid systems that supply these centers, meaning the bottleneck affects not just a single supplier but the entire ecosystem. Cloudnews
GOES, the specialized steel essential for transformer cores, faces its own bottleneck, with limited output constraining transformer production across all manufacturers. Northfieldtransformers
The Conclusion Policymakers Are Avoiding
In 2025, global transformer demand is growing at 7 to 9% annually, while production capacity is expanding at only 3 to 4% (Source Taishan Transformer). That gap does not close itself. It closes when somebody decides not to get served.
Approximately 25% of renewable energy projects globally are already delayed due to transformer shortages (source: OilPrice.com) The Dutch LAN programme has more than 100 measures in motion and an €8 billion annual investment commitment. But utilities increasingly recognize transformers not as standard equipment but as strategic assets that can delay or accelerate entire projects. Npcelectric
Here is the uncomfortable arithmetic: every 100 MW AI data center that Microsoft, Google, or a hyperscaler connects to the Dutch grid consumes transformer capacity, copper, and Siemens Energy engineering hours that could have gone to TenneT’s next substation. Both customers are real, both are paying, and both are in the queue.
The Dutch grid cannot wait 48 months for a transformer. A hyperscaler with €500 million in annual capex can outbid a grid operator on the open market. Under current market conditions, it frequently does.
If Siemens Energy has to allocate the next large transformer batch, does it go to a new AI campus or to the substation that powers the next 50,000 Dutch homes and businesses?
The energy transition requires the substation. The digital economy wants the data center. The market is already making that choice, with no policy framework, no allocation priority, and no strategic reserve.
That is not a technology problem. It is a governance failure hiding behind a supply chain story.
For TenneT, Liander, and Stedin, transformer procurement is no longer a logistics function. It is strategic risk management. Contracts need to be placed years earlier, supplier relationships need to be formalized at the executive level, and the Dutch government needs to decide explicitly whether grid infrastructure carries priority access to critical components over commercial data center customers. Waiting for the market to resolve this will not work. The market is already making the choice, just not in our favor.
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