Transformer lead times: when suppliers are chosen at the framework, the delay risk comes with each order

In an IEA survey of industry players in 2024, large power transformers took up to four years to obtain and cables two to three years to procure, as of February 2025. The report does not say how many companies answered. Average lead times for both had almost doubled since 2021. Buyers, the IEA reports, compete for limited production slots, in many cases from only one supplier, and companies often negotiate years in advance; in Europe and the United States, buyers are booking a manufacturing slot rather than buying material for delivery.¹

Increasingly, their answer is the long-term framework agreement. Once used for smaller equipment on two- to three-year terms, it is being extended to larger equipment and to terms of typically up to five years, and generally carries a fixed price component and a variable one commonly indexed to inflation or raw material prices. The IEA sees the trend especially in Europe; in the United States, contracts are generally still project based.¹

For a supplier of transformers or other long-lead equipment, that splits the bid in two. The contest for the work moves to the framework, sometimes before the projects it will serve are tendered. The exposure to the lead time does not move with it: it arrives with each purchase order, under the framework’s purchase conditions.

Under the Utilities Contracts Regulations 2016, which still apply to a utility’s procurement begun before 24 February 2025, a framework agreement sets the terms, in particular on price, for contracts to be awarded during a given period. Those contracts are awarded on objective rules set out for the framework, which may include a new competition among the suppliers party to it.^{2, 3}

On 13 March 2025, National Grid awarded HVDC supply chain frameworks to six cable suppliers, one of them a consortium, for about GBP 21.3 billion, and to four converter suppliers for about GBP 24.6 billion, each for five years with a possible extension of three. Its converter framework notice, published on 1 December 2023, named Eastern Green Link 4 and Sealink as early projects whose call-offs, given their criticality and the timeframe set by Ofgem’s Accelerated Strategic Transmission Investment framework, would run in parallel with the procurement of the framework itself. Suppliers bidding for them would do so before knowing whether they had a place on the framework, a place being a condition for the award of any call-off contract.^{4, 5, 6}

As the notice set it out, the framework tender was the project tender for those early projects: a converter supplier left off the framework could not be awarded their call-offs, though National Grid reserved its rights to use different procurement routes even for them. A framework place is therefore no guarantee of work: the amounts are the frameworks’ values, not orders, and each contract under them still has to be awarded.

The grid and transmission guide sets frameworks like these beside the qualification systems through which transmission owners appoint their suppliers.

In Great Britain, Ofgem’s decision of 20 March 2025 on an Advanced Procurement Mechanism brings forward about GBP 4 billion in allowances, which would otherwise be approved later as projects reach funding milestones, so that transmission owners can book capacity for equipment and services years before it is needed. In some instances, it notes, supply chain capacity is already booked up several years out. Transmission owners, the decision says, typically wait to reserve equipment until a project-specific cost assessment has taken place; the mechanism lets them place deposits with suppliers on their current estimates of project pipelines, before a specific project’s need or design is settled. To limit stranded procurement (equipment bought early that no project then uses), it favours equipment that can move between many projects and considers more bespoke orders case by case. It sets the threshold of average spending under the mechanism at 20% of the total expected equipment cost.⁷

Ofgem’s final determinations of 2 October 2026 on the mechanism’s 2026 re-opener approved about GBP 835 million of bespoke procurement allowances across the three electricity transmission owners, in 2023/2024 prices, about 20% of the expected contract costs, without changing the overall cap of about GBP 4 billion. They record the lead times the transmission owners reported: between six and eight years for HVDC equipment, and up to 36 months for gas-insulated switchgear. Ofgem confirmed that it had declined bespoke allowances for gas-insulated switchgear for four projects not due to energise until 2034 to 2036, as premature against those lead times, having also noted that the projects’ ongoing need remained subject to alignment with the Government’s Strategic Spatial Energy Plan. Procurement, it said, should not be driven by planning and consenting timeframes; the owners may apply again if lead times create a credible risk to delivery.⁸

The lead times Ofgem records are for HVDC equipment and gas-insulated switchgear, not for power transformers. Where a British transmission owner reserves factory time through the mechanism, the supplier may be holding the slot against a deposit placed on a pipeline estimate, not an order for a settled project.

Elia’s supplier pages say its Group Electrical Equipment Department buys centrally for Elia and 50Hertz, including the bulk of the equipment for the Belgian and north-eastern German grids, mostly through long-term framework agreements under European public procurement rules. Which purchasing conditions apply is set by contract, and the conditions of a main contract apply to every call-off linked to it. Its general purchase conditions for electrical equipment cover transformers and set fixed prices: a price can be revised only by a formula in the contract documents, and never in a contract of one year or less. Other buyers’ terms differ, and each contract can vary them.^{9, 10, 11}

The deadlines are binding, and unless the contract says otherwise, under a framework agreement the time to perform runs from the day after Elia sends the purchase order. Elia’s agreement to a postponement the contractor asks for does not release it from damages for late performance; a postponement that Elia causes gives rise to none.¹¹ Where a contract sets no other rate, Elia’s specific conditions for electrical equipment in Belgium charge 0.2% of the contract amount per working day of delay, up to 10% of the contract amount. Those damages arise automatically, without written notice, from the expiry of any contractual deadline, even a partial one, unless the contractor can validly justify an extension or postponement of its deadline, and they are not subject to the liability caps of the general conditions.¹² The general cap limits the parties’ total liability to the value of the contract, or of the purchase order under a framework agreement, or EUR 5,000,000, whichever is higher, with exceptions such as fraud and gross negligence; liquidated damages are not included in it.¹¹

At the default rate, the damages reach their ceiling after 50 working days of delay. Beside lead times counted in years, that ceiling comes quickly, and the damages need no claim from the buyer to start.¹²

The same general conditions ask the contractor to tell Elia its available production capacity at least twice a year. Any capacity issue that threatens the deadlines must be reported at once, with best efforts towards alternative solutions. Where one root cause delays goods under several purchase orders, the contractor must tell Elia at once, so that the planning is redefined together and it is decided which of Elia’s projects and orders come first. Neither an updated planning nor Elia’s approval of it releases the contractor from the initial deadlines or from its liability.¹¹ Re-planning with the buyer decides which orders slip; it does not stop the damages on them.

The IEA reports that the grain-oriented electrical steel in a large power transformer’s core is more than 20% of the transformer’s total cost, that materials together can come to more than 50%, and that the steel’s price doubled between 2021 and mid-2023.¹ Elia’s hardship clause opens a negotiation over costs only for an unforeseeable event after signature, not due to either party’s negligence, that substantially changes the contract’s balance; an increase of less than 10% in one party’s cost never counts. Where the IEA finds frameworks generally carry an indexed part, Elia’s conditions give one only if the contract documents set a formula. Without one, a supplier that signs a fixed price for delivery years away carries the material price risk itself, and the hardship clause offers nothing while the rise in its own cost stays below 10%.¹¹

The order itself can also go: Elia may terminate a contract or purchase order for convenience, in whole or in part, at any time and without justification, on 30 days’ notice. Its specific conditions for Belgium then pay for the services already rendered, which in Elia’s terms include deliveries of goods, and up to 5% of the ongoing purchase order’s value for duly justified direct damages, excluding loss of profit or margin on the material. Capacity a supplier has held for a cancelled order is recovered, if at all, within that capped compensation, and the margin it expected on the order not at all.^{11, 12}

Elia’s terms are one buyer’s, but the questions they raise apply to any framework: at Elia, the conditions of the main contract follow every call-off, and where a framework’s call-offs go to a new competition among its suppliers, what that competition may reopen is worth knowing as well.

One answer Elia’s conditions do not give: they measure the damages on the amount of the contract but name the purchase order separately when they cap liability under a framework, so which amount a call-off’s damages are measured on is for the framework’s own documents to settle.

ListingMinds, “Transformer lead times: when suppliers are chosen at the framework, the delay risk comes with each order”, 3 October 2026, updated 22 October 2026. https://www.listingminds.com/energy/field-notes/transformer-lead-times-grid-tenders