Trump’s bulk power order raises questions on data centers

President Trump issued an executive order last week aimed at securing America’s bulk power system by declaring foreign-made equipment a national emergency. The order enables the Department of Energy to block new purchases from around two dozen risky countries and to force removal of already installed equipment. Ben Boucher, principal supply chain analyst at Wood Mackenzie, said the order is not surprising given past protectionist actions but has left companies with open questions about its implementation.

The order cites two risks: potential digital backdoors in foreign equipment and supply chain vulnerabilities from reliance on imports. Boucher noted that 99.9% of the import values affected are tied to China. The list of impacted equipment includes inverters, transformers, battery storage systems, generators, distributed control systems, and associated software and firmware. While hardware dominates the list, Boucher emphasized that the software layer is the primary concern for cybersecurity threats.

The order mirrors a 2020 Trump executive order that Biden later suspended, but this version covers a broader range of technologies and adds the authority to remove existing equipment. Boucher said utilities have already been hesitant to use Chinese equipment due to the earlier order, which may offset some impacts. Trump justified the new order by citing increased load growth from advanced manufacturing, data centers, artificial intelligence, and defense production, which has heightened dependence on reliable electricity.

Three major questions remain unresolved. First, whether the order applies to data center power systems. Boucher said data center equipment typically does not fall under the definition of bulk power, which likely ends at the substation transformer level. However, he noted the order’s wording suggests it may target China-linked AI infrastructure, which could affect hyperscalers and data center developers Trump has supported. Even if not directly applied, Boucher said data centers will still be impacted because power infrastructure to step down voltage will be affected.

Second, how the order will impact battery storage systems. Boucher identified lithium batteries as the biggest concern due to China’s dominance in supply chains and lack of domestic self-sufficiency. While U.S. Battery manufacturing is growing, including conversions of EV facilities, it is not yet sufficient. Restricting Chinese batteries would hinder energy developers and slow data center construction relying on on-site storage for backup power. Boucher questioned whether the removal clause would lead to widespread takedowns, saying it would likely apply only to high-risk suppliers, not a blanket removal of all Chinese batteries, which constitute 95% of U.S. Storage systems.

Third, how the order will affect the ongoing transformer shortage. Boucher said the U.S. Has historically not relied heavily on China for large power transformers, but imports have quadrupled since 2023, a trend linked to data center demand. He warned that the strictness of DOE’s implementation, especially regarding removal of existing equipment, will be the deciding factor. Removing transformers already in place for data centers would worsen the existing shortage, which Boucher called one of the biggest risks from a utility standpoint alongside storage impacts.

The order is currently with the Department of Energy, which has four months to publish implementing rules. Those rules will clarify which products, vendors, and contexts are affected. Until then, industry stakeholders are assessing the potential consequences for grid reliability and energy infrastructure development.