We’ve all seen the effects of supply chain challenges in products we buy every day. For PPEC, supply chain challenges are also very real and often troubling. Parts and components we frequently need are in short supply, which delays planned upgrades for power reliability and increases the costs of parts and labor.

Co-ops are working together to find innovative ways to deal with supply chain issues. This year, those efforts resulted in a major win regarding updated federal efficiency standards for distribution transformers.

Electric transformers are critical pieces of equipment that help deliver power to consumers. These essential devices adjust electricity voltage, either up or down, to enable safe and efficient power flow.

Late in 2022, the Department of Energy proposed new efficiency requirements for the distribution transformers that deliver power to every home, school, and business in America. Among other provisions, the proposal would have required manufacturers of those transformers to switch to amorphous steel within three years, in place of the grain-oriented electrical steel (GOES) that has long been used. Amorphous steel is chemically altered in ways that may make transformers more efficient.

The National Rural Electric Cooperative Association, the national trade association that represents more than 900 co-ops, is wary of DOE’s expectations for this change in material, especially at a time when transformer manufacturers are already struggling to keep up with demand. Currently, there is only one U.S. producer of this specialty steel.

Federal infrastructure funding is helping co-ops to invest in the capacity, safety, and reliability of the systems delivering electricity to co-op communities. That’s a good thing for co-ops and their members, but it’s increasing pressure on the supply chain.

A recent study by the National Renewable Energy Laboratory projects a tripling of distribution transformer installations by 2050. There are an estimated 60 million transformers in use today. The transformers affected are not only utility-style transformers but also low- and medium-voltage dry-type transformers that many farmers or factories employ.

“The domestic supply chain hasn’t caught up with demand, and the industry is going through a learning curve,” noted Stephanie Crawford, NRECA regulatory affairs director. “It’s going to take some time for manufacturers to retool their production and producers to make enough amorphous steel to meet the need.”

While co-op leaders appreciate the significant amount of federal money available to update local energy infrastructure, that’s also putting the squeeze on supply.

“Everyone across the country is making these investments at the same time, creating demand not just for new transformers, but for all the basic materials and equipment cooperatives need,” Crawford said. “It presents a big problem to ask the industry to make a 100% switch in just three years, when the sole supplier only produces enough for about 5% of today’s market.”

NRECA and electric co-ops joined others in the power industry to educate key contacts in Congress, the White House, and DOE about supply chain challenges, particularly the requirements for the quick shift to amorphous steel.

“After more than a year of advocacy efforts, the DOE issued its final rule, which allows continued use of GOES in smaller-sized transformers,” Crawford explained. “This provides greater certainty with the transformer sizes cooperatives use the most.”

The DOE rule also includes a longer compliance time frame for shifting to amorphous steel.

“Extending the deadline to 2029 allows transformer manufacturers more time to adjust to the new standard and focus on output that electric cooperatives need,” Crawford said.

For the foreseeable future, electric co-ops across the nation will continue to face challenges in securing the supplies and equipment they need. The good news is that we have initiated processes to mitigate and manage those risks so we can continue to meet our members’ needs. While the future availability of larger transformers remains a cause for concern, co-ops are pleased to see investments in U.S. manufacturing facilities, and that’s a hopeful sign.