GE Vernova’s $9B Planned Buy of Trench Group Targets Grid Equipment Crunch

Trench makes bushings, instrument transformers and coils used in transformers, switchgear, substations and high-voltage direct-current transmission systems. The company employs more than 3,000 people at 11 factories in eight countries.

GE Vernova currently sources most of its transformer bushings externally, CEO Scott Strazik told investors during the company’s Oct. 28 earnings call. After the acquisition closes, he said, the company expects to source a larger share from Trench factories.

Bushings typically account for about 5% to 8% of a transformer’s bill of materials, Strazik said. Large-transformer customers also frequently specify which manufacturer’s bushings they want incorporated into the equipment.

“This gives us a lot more control over the critical technology in the supply chain to meet the growing backlog that we see with differentiated technology,” he said.

Bringing Trench’s operations in-house also allows GE Vernova to align component supplies with customer project schedules better, Strazik added..

The German manufacturer’s only U.S. factory is a newly opened plant in Charlotte, N.C., where production of high-voltage bushings rated up to 765 kV is expected to begin in late 2027.

“Once fully operational, the plant is poised to initially produce up to 3,500 HSP bushings per year,” Trench Vice President of Communications, Marketing and Investor Relations Ulrich Künster told ENR. “There is room to more than double production capacity from the initially planned 3,500 to 10,000 bushings per year, reflecting Trench Group’s commitment to the growing North American market.”

High-Voltage Equipment Crunch

Equipment shortages are already constraining U.S. grid construction. A U.S. Department of Energy-funded study cited by ENR in August found that procuring a typical 100-MVA large power transformer takes 2.5 to three years; extra-high-voltage units can take up to five. Constrained components include bushings, grain-oriented electrical steel, copper conductors and on-load tap changers.

Bushings safely route high-voltage electricity into and out of transformers, switchgear and substations. Trench makes transformer bushings rated up to 1,200 kV and other products up to 800 kV. GE Vernova says its components are used in most HVDC transmission lines worldwide.

The acquisition comes as GE Vernova works through a rapidly expanding order book. Its electrification backlog reached $46.1 billion at the end of the third quarter, up 55% from a year earlier. Strazik said that figure is up from about $7 billion at the beginning of 2022.

Trench has about $5 billion in combined backlog and framework agreements and expects revenue to rise from around $1.4 billion this year to $1.9 billion in 2028. About half of the $5 billion is covered by roughly 80 framework agreements representing volume commitments, some extending into the 2030s, Parks said.

Grid Demand Drives Expansion

GE Vernova projects more than 55,000 U.S. transmission substations will need to be completely rebuilt or upgraded to higher voltages over the next decade, Strazik said.

That work comes on top of new infrastructure needed to accommodate growing electricity demand. GE Vernova estimates the global high-voltage equipment market will grow about 8% annually from approximately $90 billion in 2025 to $130 billion by 2030, with North American demand growing about 9% annually.

Data centers are among the drivers. ENR reported in May that grid interconnection timelines in some regions have stretched to five or six years or longer, while hyperscale data centers can be built in roughly 2 to 2.5 years.

In northeastern Kentucky, American Electric Power subsidiary Kentucky Power plans a new 765-kV substation and two 765-kV transmission lines to connect TeraWulf’s planned 1-GW Muskie Data Campus to the regional grid. Substation construction is scheduled to begin in February 2027, followed by transmission-line construction later that year.

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Trench has also secured multiple agreements with hyperscalers over the past two years, Strazik said. Parks said the company’s hyperscaler business grew significantly this year.

Those customers represent a much broader market than GE Vernova, which currently accounts for only a small portion of Trench’s approximately $1.4 billion in annual revenue, Strazik said.

“Yes, GE Vernova will continue to serve Trench’s existing customers as Trench does,” Adam Tucker, GE Vernova director of financial communications, told ENR in an email. “We believe strongly in the value of this transaction for all current and future customers.”