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Transformers and paperwork are the new critical path

Transformer lead times now approach three years, and tax credit funding depends on supplier certifications, physical work records and continuity evidence held by different teams. Leading solar and wind developers are managing equipment milestones and compliance files as one critical path, with an owner and a daily cost on each.

Solar and windSegeta Insights
Solar and wind
The number143 wks

average wait for a generator step-up transformer

What is at stake

A 60-day equipment and funding slip on a 300 MW solar project can put about $$11.7 million at risk.

Where days are lost
  1. Factory slots and acceptance tests
  2. Shipping, customs and site receipt
  3. Compliance evidence for funding

Two queues now govern the final year of a US solar or wind project. The first is physical: a slot in a transformer or breaker factory, followed by acceptance tests, heavy-haul logistics and customs. The second is documentary: the supplier certifications, cost records and beginning of construction evidence that tax equity investors and credit buyers require before they fund. Each queue is managed by a different team, and the commercial operation date (COD) and the funding date depend on both.

Both queues have lengthened at the same time. Wood Mackenzie data show that average lead times for generator step-up transformers passed 160 weeks in the first quarter of 2026, up from 143 weeks in 2024,1 while new foreign entity of concern (FEOC) rules require documentation from suppliers that once had no role in financing. The critical path now runs through procurement, tax and legal teams as much as through the site, and this article examines where long lead equipment and compliance evidence lose days and what procurement heads, project directors and CFOs can do now.

Equipment queues and tax credit rules have tightened together

Demand for grid equipment has grown faster than the factories that build it. Wood Mackenzie estimates that US demand for generator step-up transformers rose 274 percent between 2019 and 2025,2 and that imports would supply about 80 percent of US power transformers in 2025, a year in which it expected a 30 percent supply deficit.3 Lead times for high-voltage circuit breakers reached 125 weeks in the second half of 2025, up from 77 weeks in 2023.1

The evidence burden has grown on the same timeline. Under Notice 2026-15, a solar or wind facility that begins construction in 2026 must reach a material assistance cost ratio of at least 40 percent, supported by supplier certifications signed under penalties of perjury.4 A federal district court vacated Notice 2025-42 in June 2026 and restored the 5 percent safe harbor, yet advisers expect an appeal and recommend records that support both beginning of construction methods.5 Tax equity investors are committing about 18 months in advance,6 and Crux reports that prohibited foreign entity rules and permitting helped cut wind's share of the tax credit transfer market from 23 percent to 7.5 percent in the first half of 2026.7

Transformer lead times and evidence files lose days at three handoffs

Long lead equipment for solar and wind passes through three groups of people before it is energized and funded: the factory, the logistics chain and the owner's compliance team. Each keeps its own record, so a date that moves in one system can stay unchanged in the others for weeks.

A generator step-up transformer ordered in mid-2025 took an average of 143 weeks to arrive, more than three times the wait for switchgear.

Exhibit 1Step-up transformers take more than three times as long as switchgearAverage lead time after receipt of order, Q2 2025, weeks
GSU transformer143
Power transformer128
Switchgear44

Source: Wood Mackenzie and American Clean Power, Making the connection: Meeting the electric T&D supply chain challenge, September 2025

01Factory slots and acceptance tests

Wood Mackenzie reports that buyers are being forced to secure production slots further in advance, which leads to delays and cancellations.8 The slot, the design review and the factory acceptance test are tracked by the manufacturer and the owner's engineer, while the EPC schedule in Primavera P6 often carries only a delivery date. A failed or rescheduled test may therefore reach the project director as a late shipment weeks after the factory knew about it.

02Shipping, customs and site receipt

A large transformer that leaves the factory still depends on heavy-haul permits, port handling, customs entry and a crane available at site. With about 80 percent of US power transformer supply imported,3 customs paperwork and tariff exposure sit with a freight forwarder and a trade compliance team whose updates arrive by email. The purchase order in SAP or Oracle may show none of these days until the goods receipt is posted.

03Compliance evidence for funding

Supplier certifications, direct cost data for domestic content and material assistance, physical work invoices and continuity records sit with procurement, tax, legal and site teams. The Notice 2026-15 safe harbor tables exclude substation equipment such as generator step-up transformers, so those units may need their own cost and supplier support.4 When any one file is incomplete at closing, the tax equity investor or credit buyer can hold funding until it arrives.

A connected operating model treats each certificate as a dated obligation

Leading developers are beginning to manage equipment and evidence as one set of obligations, each with an owner, a deadline and a cost for every day it stays open. A live layer reads the purchase orders in SAP or Oracle, the Primavera P6 schedule, vendor test reports, forwarder emails and the tax equity diligence checklist, and runs a four-step loop:

  1. Detect

    a moved factory acceptance test as soon as the manufacturer reports it to the owner's engineer.

  2. Explain

    how the new ship date moves backfeed, COD and the funding condition that depends on the transformer certification.

  3. Recommend

    options with owners and expected impact, such as requesting the supplier certification at once, expediting freight or resequencing the funding draw.

  4. Execute and track

    each agreed action to closure, including the signed certification filed against the right component and facility.

Investors now expect sponsors to share a significant amount of diligence,9 and the same record can give tax equity investors, credit buyers and lenders current status on every evidence item. Manufacturers and forwarders can use one channel for test dates, certificates and shipping documents. Artificial intelligence does the reading, linking and drafting, such as matching a supplier certificate to a purchase order line, while the procurement head, tax director and project director remain accountable for every judgment and signature.

An equipment and funding slip costs a 300 MW solar project about $$196,000 a day

The cost of a long lead equipment delay is the daily exposure created when late equipment or incomplete compliance evidence moves the commercial operation date or the tax credit funding date, including deferred revenue, construction carry and bridge financing on delayed tax equity proceeds.

A 60-day equipment and funding slip on a 300 MW solar project can put about $$11.7 million at risk.

Exhibit 2. Estimated daily cost of an equipment and funding slip for a composite 300 MWac solar project

ComponentBasisEstimate per day
Energy revenue deferred or lostAbout 1,800 MWh a day at a 25 percent net capacity factor, priced at the Q2 2026 solar PPA market average of $$61.40 per MWh 1011About $$110,500
Construction financing carryCapital cost of about $$510 million at $$1.70 per watt AC; assumes 60 percent drawn at a 7 percent all-in rate 10About $$58,700
Bridge carry on delayed tax equity fundingStated assumption: 30 percent investment tax credit on eligible basis of 90 percent of capital cost (about $$138 million), bridged at 7 percentAbout $$26,400
Total before delay damages and tax credit riskSum of the three componentsAbout $$195,600

Source: Segeta estimate based on Lawrence Berkeley National Laboratory and LevelTen Energy data; financing and tax credit assumptions are illustrative.

On these assumptions, a 30-day slip puts about $$5.9 million at risk and a 60-day slip about $$11.7 million, before delay damages owed to the offtaker. Supplier delay damages and EPC liquidated damages may offset part of that exposure, yet they are usually capped and rarely compensate for funding that waits on a missing certificate. The bridge component also applies when the equipment arrives on time and only the evidence is late.

What procurement heads, project directors and CFOs can do now

  1. 01Track factory milestones as schedule activities

    Load slot confirmation, design approval, factory acceptance test and ship dates for every transformer and breaker into the project schedule, with the manufacturer's latest date and its source.

  2. 02Request supplier certifications with the purchase order

    Make material assistance certifications, direct cost data and domestic content support contract deliverables with due dates, so they arrive before the equipment ships.

  3. 03Build the beginning of construction file monthly

    Record custom fabrication starts, binding contracts, invoices and continuity evidence as work happens, and keep support for both the physical work test and the 5 percent safe harbor while the status of Notice 2025-42 remains uncertain.

  4. 04Give every funding condition one owner

    Map each tax equity and transfer closing condition to a named person in procurement, tax, legal or construction, with a daily cost attached.

  5. 05Report signal-to-action time each month

    Measure the days between a supplier's first notice of a slip and the assignment of a recovery action, and review the slowest cases with the supplier.

Developers cannot shorten transformer lead times or settle Treasury guidance on their own, yet they can control how early a moved test date or a missing certificate reaches the person who can act. Those that manage equipment and evidence as one priced critical path are likely to protect both COD and funding dates, and to close future financings with less friction.

Questions leaders ask

How long are transformer lead times in 2026?

Wood Mackenzie data reported by Reuters show that generator step-up transformer lead times passed 160 weeks in the first quarter of 2026, up from 143 weeks in 2024. Power transformers averaged 128 weeks in the second quarter of 2025, and high-voltage circuit breakers reached 125 weeks in late 2025. Developers increasingly reserve factory slots years before notice to proceed.

What is the FEOC material assistance cost ratio for solar and wind projects?

Under Notice 2026-15, a solar or wind facility that begins construction in 2026 must reach a material assistance cost ratio of at least 40 percent, rising 5 percentage points a year through 2029. Developers can rely on supplier certifications signed under penalties of perjury, and must track each manufactured product and component to the facility where it is installed.

What evidence do tax equity investors need for beginning of construction?

Investors typically review binding written contracts, records of custom, project-specific fabrication or onsite physical work, cost support and evidence of continuous construction or efforts. After a court vacated Notice 2025-42 in June 2026, advisers recommend keeping records that support both the physical work test and the 5 percent safe harbor until the appeal position is clear.

How much does a one-day delay cost a utility-scale solar project?

For a composite 300 MWac solar project, a Segeta estimate puts the cost at about $$196,000 a day when late equipment or evidence moves both COD and tax equity funding. That figure combines about $$110,500 of deferred revenue, $$58,700 of construction carry and $$26,400 of bridge carry, before delay damages and tax credit risk.

Notes and sources
  1. Reuters, "US power companies scramble to secure equipment as surging data center demand strains supplies," as republished by American Journal of Transportation, July 2026, ajot.com.
  2. Ryan Kennedy, "US transformer market faces severe supply constraints as lead times extend to four years," pv magazine USA, May 2026, pv-magazine-usa.com.
  3. Wood Mackenzie, "Power transformers and distribution transformers will face supply deficits of 30% and 10% in 2025," press release, August 2025, woodmac.com.
  4. Troutman Pepper Locke, "Treasury and IRS issue FEOC material assistance guidance," February 2026, troutman.com.
  5. PwC, "Invalidated IRS Notice 2025-42 creates uncertainty," Tax Insight, June 2026, pwc.com.
  6. Norton Rose Fulbright, "Cost of capital: 2026 outlook," Project Finance NewsWire, January 2026, projectfinance.law.
  7. PV Tech, "Clean energy tax credit transfers fall in H1 2026, Crux expects up to US$$49 billion in transfer value," August 2026, pv-tech.org.
  8. Wood Mackenzie and American Clean Power, "Making the connection: Meeting the electric T&D supply chain challenge," executive summary, September 2025, powermag.com.
  9. Ryan Kennedy, "Project finance leaders: Market remains 'insanely busy' despite looming tariff and FEOC headwinds," pv magazine USA, June 2026, pv-magazine-usa.com.
  10. Lawrence Berkeley National Laboratory, "Utility-Scale Solar, 2025 Edition," October 2025, emp.lbl.gov.
  11. LevelTen Energy, Q2 2026 North America PPA Price Index, as reported by TaiyangNews, July 2026, taiyangnews.info.