Hitachi Energy's existing transformer production facility in South Boston, Virginia.Image: Hitachi Energy
Hitachi Energy has unveiled plans to spend $1 billion to boost energy grid production as the US races to construct new data centers to support the AI boom.
The investments include a previously announced $457 million power transformer factory in South Boston, Virginia, which will be the largest in the US, and expansions of Hitachi Energy's existing facilities throughout the country. The company says the investments will create thousands of US jobs, including $825 million at the Virginia site alone.
The Trump administration released its AI Action Plan in June, calling for streamlining permitting and environmental reviews for data center projects, along with power grid improvements that focus on natural gas, coal, geothermal and nuclear sources. The focus on fossil fuels and exclusion of incentives for wind and solar energy sources drew significant criticism from environmental groups.
AI Driving Unprecedented Data Center Demand
Companies pouring billions into AI adoption are creating unprecedented data center demand. A McKinsey & Company report says businesses will invest $6.7 trillion on data centers globally by 2030, with almost $3 trillion going to real estate and power infrastructure.
Steven Dickens, CEO and principal analyst at HyperFrame Research told Data Center Knowledge that more data center energy deals should be expected, as local governments look to capitalize on demand.
"I expect to see locally elected representatives clamoring to ink these types of deals, as they provide a rapid way to demonstrate innovation and bring long-term tech jobs to their regions," he said in an email interview.
"The longer-term power implications for local communities are less transparent, and many areas will need significant investment in power generation infrastructure to keep up with rampant demand. The US will need to invest in natural gas, and more pertinently, nuclear, to keep up."
Powering Up for Growth
Hitachi said the investments, part of a $9 billion global investment plan, would also bolster domestic electrical equipment supply chains while boosting technologies to support security and resilience for the US power grid.
"The United States is a key market for Hitachi, and this investment reflects our commitment to powering America's energy future to meet the accelerating demands for reliable and sustainable solutions to benefit the nation," Toshiaki Tokunaga, president and CEO of Hitachi, said in a statement.
"We are supporting American manufacturing, the development of critical infrastructure, and the rapid expansion of data centers driven by AI adoption."
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Hitachi Energy, a subsidiary of Japan's Hitachi, has headquarters in Raleigh, North Carolina, and Zurich, Switzerland.
"Bringing production of large power transformers to the US is critical to building a strong domestic supply chain for the US economy and recuing production bottlenecks, which is essential as demand for these transformers across the economy is surging," Hitachi Energy CEO Andreas Schierenbeck said in a statement.
"Power transformers are a linchpin technology for a robust and reliable electric grid and winning the AI race."