Joy Ditto, the savvy CEO of the American Public Power Association, keeps close track of what’s on the minds of her municipal utility members. And she reports in an editorial in The Hill last month, what’s on their minds is transformers. It’s a somewhat arcane corner of the U.S. supply chain problems that hasn’t made into the mainstream media but has important implications.
Ditto writes that when APPA surveyed its members at the start of this year, “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.”
She says, “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 U.S., which means limitations on equipment needed to help those impacted by hurricanes and other weather events, such as wildfires.”
Reports from around the nation illuminate APPA’s worries. GV Wire, the Fresno-based online news service covering California’s Central Valley, reported in August, “Electrical transformers are in short supply these days, hampering home construction in the Valley and across the nation and causing some builders to halt projects outright.” The article quoted a local homebuilder, Mike Prandini, who attributes a sharp local decline in new housing permits in part to the lack of transformer availability, which is “a real killer because even if somebody wants to buy a house, they couldn’t move in,” adding that he’s never seen a transformer shortage before now.
Route 50, an online publication for state and local officials, commented in August, “The shortage of the critical grid component is jamming up home building and threatening to cause other problems. In some cases, wait times for the parts are over a year, while costs have spiraled up by over 500%.”
In late October, E&E News reported that “the United States is undergoing a shortage of a range of transformers — spanning smaller, pole-top units on city streets to Virginia Transformer’s massive units — for reasons that vary depending on the equipment. That means utilities could struggle to add enough new wind and solar generation to meet the country’s net-zero goals and to keep the lights on when storms damage their depleted transformer stockpiles.”
In Starkville, Miss., home to Mississippi State University, The Dispatch, the local newspaper, quotes a local official at Starkville Utilities Department, a public power system, that the utility is recycling old transformers. “The new strategy is taking (transformers) that have failed and sending them off to get repurposed because some steel components of them are good,” Edward Kemp said. “You can use them and put them back in service. They’re not as efficient as a brand new transformer, but it’s better than not having one at all. … We’re taking and rehabbing every one that we can that’s failed and trying to find new ones.”
Last month, APPA and the National Rural Electric Cooperative Association wrote Energy Secretary Jennifer Granholm make funding for distribution transformers a priority, diverting some of the money DOE is devoting to pushing electric heat pumps. The Inflation Reduction Act allocates some $250 million to the energy agency under the Defense Production Act to deal with supply chain bottlenecks. In the letter, APPA and NRECA said, ““To our knowledge, the IRA gives DOE discretion to use the funds on any technology invoked under DPA. We respectfully urge you to reconsider your plan to use the entirety of the funds for heat pumps and instead put at least some of the funds to immediately increase distribution transformer production.”
EIA: Coal Going Down, Gas Going Up
The latest analysis from the Department of Energy’s Energy Information Administration (EIA) says coal’s decline as a generating fuel will continue, while combined cycle natural gas generation will grow. In ad Nov. 7 release, EIA says “Due to continued competition from natural gas and renewable resources, 23% of the 200,568 megawatts (MW) of coal-fired capacity currently operating in the United States has reported plans to retire by the end of 2029, according to our Preliminary Monthly Electric Generator Inventory.”
Between 2012 and 2021, says EIA, an average of 9,450 MW of U.S. coal-fired capacity hit the generating graveyard. That’s likely to slow considerably after this year: “The largest amount of capacity retirement we expect over the next seven years is 9,842 MW in 2028.” While the rise of renewables may have a role in coal retirements, old age is the dominant driver. Notes EIA, “Coal-fired generators—especially older, less efficient units—face higher operating and maintenance costs, which make them less competitive and more likely to retire. In addition, some coal-fired power plants must comply with regulations limiting the discharge of wastewater by 2028, which would require additional capital investment, likely influencing the decision to retire some of these coal-fired units.”
On the other end of the fossil fuel fleet, combined-cycle gas will grow this year, according to a Nov. 4 EIA analysis, reversing four years of declines. According to EIA, “Eight new natural gas-fired combined-cycle gas turbine (CCGT) power plants have come online or will come online in the United States this year. These new plants will add 7,775 megawatts (MW) of electric-generating capacity to the U.S. electric grid, based on our estimates and data from our latest Monthly Electric Generator Inventory.” The combined-cycle plants, which generate electricity through combustion turbines and recover heat, which they turn to steam and generate power through steam turbines, turned out 1,326,278 gigawatthours (GWh) in 2021, 32% of total electricity generation last year. “Shares of coal-fired generation (22%) ranked second, and nuclear sources (19%) ranked third in terms of electric-generating capacity and electricity generation in 2021.”