Dive Brief:
- The U.S. Department of Energy should finalize new efficiency standards for distribution transformers despite current shortages of the critical grid products, 10 Democratic senators wrote in a Friday letter to the agency.
- DOE proposed new standards for the transformers in December, but utilities have warned new rules could drive costs higher and delay grid upgrades, electrification efforts and storm recovery.
- However, the new standard, “complemented by additional congressional investments,” would ensure a sufficient supply of the transformers, lawmakers told Secretary of Energy Jennifer Granholm.
Dive Insight:
The transformer shortage is real but the potential energy and bill savings associated with a new efficiency standard means DOE should forge ahead with its proposed rule, the group of senators wrote.
“We can all agree that the transformer shortage is happening now and requires timely solutions. We are working with our colleagues in Congress to find ways to increase the availability of transformers in the United States,” said the group, led by Sens. Peter Welch, D-Vermont, and and Martin Heinrich, D-N.M.
A lack of investment in steel manufacturing, rising demand for transformers and labor shortages are contributing to the shortage, experts say.
Most distribution transformers in the U.S. currently use grain-oriented electrical steel cores, while the proposed rule would essentially transition the electric industry to using amorphous steel cores. There is only one domestic manufacturer of each type of steel, however.
“The proposed energy efficiency standard, complemented by additional congressional investments would ensure there is a robust market for a mix of both conventional e-steel and amorphous metal,” the lawmakers said.
The new rule could reduce energy losses by about 36% and 47% for liquid-immersed and low-voltage dry-type transformers, respectively, compared to current transformer models, they said. And the improved efficiency would translate into $15 billion in total energy bill savings over the next 30 years.
“While we urge you to finalize a standard that will achieve meaningful cost savings for working families, we also need to give U.S. manufacturers the time to address current shortages and strengthen domestic supply chains,” the lawmakers wrote.
DOE must finalize any proposed change to the transformer standard by June, but other lawmakers and stakeholders have warned against the stricter efficiency rule.
In June, a bipartisan group of 47 senators warned that “such a standard could come at meaningful cost to grid reliability and national security.” Average time for utilities to procure distribution transformers has risen from eight to 12 weeks in 2020 to more than two years, they said.
DOE is already taking steps to reduce costs and replace older distribution transformers. On Tuesday, the agency announced it is making $20 million available for rebates to utilities, manufacturers, hospitals and other groups to finance equipment upgrades.
The rebates will allow utilities and others to “more affordably upgrade distribution transformers ... as we focus on modernizing our electric grid to meet our growing energy needs and combat the climate crisis,” Granholm said in a statement.
