BY SCOTT FLOOD
From grocery store shelves to repair parts for vehicles, we’ve all had firsthand experiences with supply chain issues in recent years. Parts and components electric co-ops use every day are also in short supply, which delays planned upgrades for power reliability and increases the costs of parts and labor.
Cooperation among cooperatives
Electric co-ops are working together to find innovative ways to address supply chain issues. This year, those efforts resulted in a major win regarding updated federal efficiency standards for distribution transformers, which has co-op leaders breathing more easily.
Electric transformers are critical equipment that help deliver power to consumers. These essential devices adjust electricity voltage, up or down, to enable safe and efficient power flow.
In 2022, the U.S. Department of Energy (DOE) proposed new efficiency requirements for distribution transformers. 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 (NRECA) is wary of the DOE’s expectations for this change in material, especially when transformer manufacturers are already struggling to keep up with demand. Currently, there is only one U.S. producer of this specialty steel.
The availability of federal infrastructure funding is making it possible for co-ops to invest in the capacity, safety and reliability of the systems delivering electricity to co-op communities. That’s good for co-ops and their members, but it’s increasing pressure on the supply chain.
“The domestic supply chain hasn’t caught up with demand, and the industry is going through a learning curve,” notes Stephanie Crawford, NRECA regulatory affairs director. “It will take some time for manufacturers to retool their production and for producers to make enough amorphous steel to meet the need.”
Creating a squeeze on supply
While co-op leaders appreciate the significant federal money being made available to update local energy infrastructure, it is also putting a squeeze on supply.
“Amid all the challenges co-ops are already facing, 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,” Crawford adds.
NRECA and electric co-ops joined others in the power industry to educate key contacts in Congress, the White House and the 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 explains. “This provides greater certainty with the transformer sizes cooperatives use the most, particularly in the residential segment.”
The DOE rule also includes a longer compliance timeframe for shifting to amorphous steel.
“Extending the deadline to 2029 will help manufacturers adapt for the future,” Crawford adds.
Scott Flood writes on a variety of energy-related topics for the National Rural Electric Cooperative Association, the national trade association representing nearly 900 electric co-ops.
