America’s electric utilities facing transformer shortage crisis

America's electric utilities facing transformer shortage crisis

Many Floridians are still recovering from the devastating impacts of Hurricane Ian, one of the most severe hurricanes to hit the United States in recorded history. The people of southwest Florida bore the brunt of the Category 4 Hurricane, which caused at least 137 fatalities and catastrophic damages estimated at over $50 billion.

We all appreciate the efforts of electric utility workers from across the country who restored power in Florida in record time for a hurricane of this magnitude. The storm, together with a critical supply chain shortage, has depleted the equipment reserves of many utilities that lack adequate distribution transformers and other necessary grid equipment. It is unclear if we have the transformers to rebuild after another significant weather event this year — a situation that is untenable for a country that requires electricity for everything we do.

When we at the American Public Power Association (APPA), serving not-for-profit publicly owned utilities, surveyed our members at the beginning of 2022, transformer delivery times averaged one year, compared to three months in 2018 (before the pandemic). Now, our membership is reporting wait times as high as 18 months to two years, with some manufacturers canceling orders because they don’t have enough available stock to fill them. Decision-makers in Washington and transformer manufacturers must act swiftly to address this shortage of essential equipment without which we cannot provide power to new homes and businesses, nor can we restore power after severe weather events.

Distribution transformer shortages have impacted all regions of the US, which means limitations on equipment needed to help those impacted by hurricanes and other weather events, such as wildfires. While we hope this year’s hurricane season ends with Ian, hope is not a strategy to ensure reliable operation of the electric grid for Americans, including our member utilities that provide electricity to 49 million Americans in 49 states.

Communities depend on public power utilities for necessities like refrigeration, communications, lighting, and comforts like air conditioning and entertainment. Modern society does not work without electricity. Because electricity underpins everything, the electric utility industry has a robust “mutual aid” network and planning process that kicks into motion before, during, and after major storms or other challenges to ensure that the lights stay on — or get back on quickly. Such networks and planning mean that crews of highly skilled utility workers stage themselves in advance of storms and often travel hundreds of miles to help restore power.

Given this willingness to share people and equipment, as soon as the supply chain crisis for distribution transformers emerged, public power utilities sprang into action — banding together with our industry brethren to engage our federal government partners and transformer manufacturers to find solutions. We ramped up mutual aid activities by facilitating material sharing between utilities, leveraging APPA’s existing sharing platforms to do so. Individual public power utilities have also gotten creative by reusing, refurbishing, and delaying the deployment of equipment to protect supplies. But these efforts can only shift around or extend what is already available to us in stock and do not address the real need for more supply to meet the demand.

A step in the right direction is first to clarify the use of the Defense Production Act, as invoked by President Biden, and to expedite the distribution of funds to use the DPA. We urge the Department of Energy to take the critical next step — convening transformer manufacturers to develop concrete solutions to the shortage so that the DPA can be used as a tool to help implement those solutions. Our shared goals of increasing our clean electricity production and electrifying other sectors of the economy are also being hindered by the lack of access to these essential grid components.

The time to act on the shortage of transformers and other critical grid equipment is now.

Joy Ditto is the President and CEO of the American Public Power Association.