17 August 2026
Executive Summary
A critical infrastructure component is becoming an increasingly serious project and business-continuity bottleneck.
Electrical transformers.
Heron Power, a US technology company led by former Tesla executive Drew Baglino, announced plans last week for a new $100 million California manufacturing facility as the United States struggles with shortages of grid equipment.
Baglino told Reuters that obtaining a conventional transformer can now involve a delay of up to four years, with many critical grid components imported.
This is not an isolated warning.
Reuters previously found developers buying manufacturing slots years in advance, refurbishing existing equipment and looking overseas because transformer demand has overwhelmed available manufacturing capacity.
The US Department of Energy also identifies transformers as a significant supply-chain vulnerability, citing material constraints, labour shortages and lengthy procurement periods.
The corporate lesson is wider than electricity:
The replacement time for a critical asset may now be far longer than the business’s recovery plan assumes.
UK Impact
UK companies should consider this particularly when assessing:
- Electrical infrastructure.
- Manufacturing machinery.
- Generators.
- Switchgear.
- Industrial motors.
- Specialist pumps.
- Refrigeration equipment.
- Boilers.
- Telecommunications equipment.
- Bespoke production equipment.
Many business-continuity plans assume damaged equipment can simply be ordered and replaced.
That assumption becomes dangerous when lead times are measured in years.
Insurance arrangements can also become relevant.
A policy may fund replacement of damaged equipment, but the availability of money does not create manufacturing capacity.
Businesses can therefore be fully insured financially while remaining operationally unable to recover.
Global Impact
US electricity demand is expanding rapidly as data centres, electrification and industrial development place greater demands upon grids.
Reuters reports that some large transformer demand categories have increased dramatically since 2019, while prices for some equipment have risen substantially and manufacturing capacity remains constrained.
The US Department of Energy describes transformers as fundamental building blocks of electricity infrastructure and continues to work with industry on supply-chain resilience.
The issue also creates secondary concentration risk.
When every utility, data centre and industrial project requires the same scarce equipment, businesses are competing for:
- Manufacturing slots.
- Specialist steel.
- Copper.
- Skilled labour.
- Transport capability.
- Installation engineers.
A disruption therefore does not need to destroy the entire electricity network.
Damage to one difficult-to-replace component can create prolonged interruption.
Our View
Businesses should identify equipment whose replacement lead time exceeds their maximum tolerable outage.
Companies should ask:
- What machinery would stop the entire facility if it failed?
- How long would replacement actually take today?
- Has that lead time been checked recently?
- Does the manufacturer still produce the same model?
- Are spare units held anywhere?
- Can equipment be repaired rather than replaced?
- Are interchangeable alternatives technically approved?
- Could critical spares be shared between locations?
- Does the insurer understand current replacement lead times?
- Would the indemnity period remain long enough if replacement takes several years?
This is an important distinction.
The critical asset is not necessarily the most expensive machine in the building.
It is the machine for which there is no quick substitute.
Risk Indicator: HIGH
Disclaimer
The information contained within these Market Alerts is provided for general market awareness and informational purposes only. It does not constitute financial, legal, investment, regulatory or insurance advice. Whilst every effort has been made to ensure accuracy at the time of publication using multiple reputable and independently verified sources, geopolitical events, legislation, regulation and market conditions may change rapidly. Readers should obtain appropriate professional advice before acting upon any information contained herein.
Invictus Risk Solutions LLP – Helping organisations stay ahead of emerging risks through informed insight and independent analysis.