Opinion Piece by Mervyn Naidoo, Group CEO of ACTOM
South Africa’s energy transition – and similar efforts worldwide – has accelerated demand for power transformers as nations race to expand and modernise their grids. Yet, the world is facing a critical shortage. Transformer supply simply cannot keep up with the pace of renewable energy rollouts.
Unlike centralised fossil fuel plants, wind and solar farms are widely dispersed, often far from existing grid infrastructure. This requires new substations and transmission lines, all dependent on transformers. But global production capacity remains constrained by the aftershocks of Covid-era supply chain bottlenecks, long procurement cycles, and under-investment in manufacturing. Lead times for new transformers can stretch up to four years in Europe, stalling grid upgrades, delaying renewable integration, and discouraging investment in generation.
South Africa’s Strategic Opportunity
While this shortage is a challenge, it is also a rare opening for South African manufacturers. If local industry can position itself as a reliable alternative with competitive delivery windows of 12–18 months, South Africa could re-enter global supply chains as an agile supplier.
To seize this opportunity, however, requires coordinated national effort:
- Policy support for bankable capacity expansion.
- Procurement reform that provides demand visibility.
- Export incentives to counter rising tariffs in international markets.
- Skills development to ensure local production meets global standards.
Why Strategic Procurement Matters
One of the biggest hurdles in South Africa is the ad hoc, reactive nature of procurement cycles. Manufacturers face uncertainty in multi-year demand, making it difficult to invest in consistent production capacity. Transformers are capital- and skills-intensive to build – without steady throughput, factories face idle resources, under-recoveries, and financial strain.
Strategic procurement, on the other hand, can turn procurement from a cost centre into a competitive enabler. By signalling long-term demand and enabling manufacturers to pre-stock critical components, lead times can be shortened, reducing risks for grid projects and improving investor confidence.
The Case for Localisation
Localisation isn’t just about jobs or pride – it’s about resilience:
- Faster turnaround: Repairing a failed large transformer locally avoids the R40 million cost of shipping it overseas for repairs.
- Better support: Local technical teams can monitor, service, and improve reliability in real time.
- Lower risk: Dependency on volatile global markets is reduced, protecting energy security.
By building local manufacturing capacity, South Africa not only supports its own grid expansion but also strengthens its ability to export into Africa and beyond.
Responding to Global Protectionism
Globally, protectionism is on the rise. Countries are using tariffs, incentives, and localisation policies to secure their own industrial futures. South Africa must respond in kind with an “SA Inc” mindset – and an “Africa Inc” vision.
That means:
- Prioritising domestic procurement to sustain local factories.
- Building regional manufacturing ecosystems to service the continent.
- Leveraging transformer production as a driver of job creation, industrial growth, and economic resilience.
The transformer shortage is not going away anytime soon. But for South Africa, it’s a call to action – a chance to leverage our industrial base, engineering expertise, and strategic geography to meet both local and global demand.
By aligning policy, procurement, and production, South Africa’s transformer manufacturers can not only close infrastructure gaps at home but also compete on the global stage. The opportunity is clear: invest now, or risk being left behind.
