Dive Brief:

• A coalition of electric utilities, home builders and grid component manufacturers is requesting a meeting with White House clean energy advisor John Podesta to  discuss proposed efficiency rules for distribution transformers, which they say will exacerbate supply chain shortages and slow the clean energy transition.
• DOE proposed new standards for the transformers in December, but opponents say the requirements would add only small gains in efficiency while potentially delaying procurement times by months.
• Efficiency advocates say the new rules would not go into effect for several years, leaving time to address supply chain issues. “Seemingly small changes in transformer efficiency have big savings,” Appliance Standards Awareness Project Executive Director Andrew deLaski said in an email.

Dive Insight:

Opponents of DOE’s proposed standard for distribution transformers say utilities have faced supply chain issues for years and even small improvements in efficiency can worsen the situation.

"Due to the intricate ways transformers are designed and assembled, increasing their efficiency even by a fraction of a percentage point could add months to an already lengthy order cycle,” the groups wrote in their letter to Podesta.

The letter was signed by the American Public Power Association, Edison Electric Institute, National Association of Home Builders, National Electrical Manufacturers Association, known as NEMA, and the National Rural Electric Cooperative Association. The groups say they have been communicating with DOE since 2021 about the supply chain challenges.

“Our organizations agree that energy efficiency standards play an important role in reaching decarbonization benchmarks while transitioning our nation to a clean and increasingly electrified economy,” they wrote. “However, the rule would delay realizing these benefits by worsening supply chain complications already known to DOE.”

The groups also said DOE’s current rules already require distribution system transformers be built to “incredibly high-efficiency standards,” with some models more than 99.5% efficient. 

“The proposed rule would dictate that manufacturers increase the efficiency of distribution transformers by a mere tenth of a percentage point,” they wrote.

But efficiency advocates say because all electricity passes through transformers on the way to consumers, small improvements can have large impacts.

“What matters for transformers is how much energy they use — that's measured by losses and the proposed standards would cut those losses by 36% to 47% depending on the type,” deLaski said.

“The current supply crunch and future efficiency standards are unrelated,” deLaski also said. And if DOE issues a new standard next year it would likely not take effect until 2029, allowing for supply chain investments.

Longer lead times likely: NEMA 

Experts say a lack of investment in steel manufacturing, rising demand for transformers and labor shortages are contributing to shortages of the critical grid equipment. Most distribution transformers use grain-oriented electrical steel cores, or GOES, but DOE’s proposed efficiency rule would largely transition the electric industry to using amorphous steel cores.

There is only one domestic manufacturer of each type of steel, and about 95% of that is currently GOES, said NEMA Director of Government Relations Peter Ferrell. Current lead times to procure distribution transformers are about 30 months, up from about two months a couple of years ago, he said.

NEMA doesn’t have an exact estimate of how much additional lead time new efficiency standards might cause, “but if you had to disrupt and reconfigure an entire supply chain, I'm assuming it would be quite a while. So that can be a big issue,” Ferrell said.

DOE is under a court mandate to finalize any proposed change to the transformer standard by June.

NEMA’s members need clarity before they can make supply chain investments, said Ferrell. Between the uncertainty being created for utilities and home builders and grid component manufacturers, “this is having real world impacts ... The uncertainty is putting our members and their money on the sidelines,” he said.

NEMA has not yet heard back from Podesta’s office. “And with the shutdown, everyone's focus is on that, of course,” said Ferrell. “We're hopeful that we hear back from the White House in some capacity on this.”

DOE typically does not comment on the status of ongoing rulemakings, but an agency spokesperson said in an email that the Biden administration “recognizes the importance of distribution transformers and other critical components to the reliability of our nation’s power grid.”

“The department is working together with the power sector, distribution transformer manufacturers, utilities, and partners from across the federal government to find ways to maximize production with existing assets while finding long-term solutions that ensure America can meet its future energy needs,” the spokesperson said.