APPA Offers A Number Of Recommendations To DOE On Energy Supply Chain Issues

January 24, 2022

by Paul Ciampoli
APPA News Director
January 24, 2022

The American Public Power Association (APPA) and the Large Public Power Council (LPPC) recently provided comments including recommendations to the Department of Energy (DOE) in response to a request for information (RFI) that DOE issued on energy sector supply chain issues.

Among other things, APPA and LPPC said that DOE should utilize a risk-based framework for supply chain security and further recommended that DOE study domestic and international supply of both distribution and bulk electric system transformers and the components needed to manufacture these transformers.

Background

DOE was instructed to issue a report on supply chains for the energy sector industrial base in Executive Order (EO) 14017, “America’s Supply Chains,” issued last February. DOE will use the information gathered from the RFI to compile its report to the White House by February 24, 2022, as directed by the EO.

DOE sought input from stakeholders on “approaches and actions needed to build resilient supply chains for the energy sector,” with a focus on 14 categories.

While most, if not all, of the categories are of at least some relevance to public power and the electric industry as a whole, APPA decided to focus its comments on this subset of categories most directly affecting public power currently: Electric Grid – Transformers and HVDC; Carbon Capture, Storage and Transportation Materials; and Cybersecurity and Digital Components.

Cybersecurity and Digital Components

APPA and LPPC noted that public power utilities “take very seriously their responsibility to maintain a secure and reliable electric grid.”

The electric utility sector has a mandatory and enforceable federal regulatory regime in place for reliability, including cybersecurity. Under this standards regime, utilities are responsible for assessing the cybersecurity of vendors and manufacturers of digital components.

According to the two trade groups, public power utilities have found that not all vendors and manufacturers of digital components feel compelled to respond to utilities as they seek to conduct these vendor assessments.

“Public power utilities believe the responsibility for demonstrating the cybersecurity of their supply chain for all equipment, components, and subcomponents used for critical electric infrastructure should rest with the vendors and manufacturers.”

For this reason, APPA and LPPC recommended that, with regards to the electric utility sector supply chain, DOE should:

  • Use a risk-based framework for supply chain security;
  • Directly engage with the vendors and manufacturers of digital components;
  • Issue specific and prospective directives where necessary; and
  • Factor in cost and availability. 

Electric Grid – Transformers/HVDC

APPA provided comments on the supply chain constraints affecting distribution transformers to DOE’s Office of Energy Efficiency and Renewable Energy in December 2021 in response to the proposed rule, “Energy Conservation Program: Energy Conservation Standards for Distribution Transformers.”

In those comments, APPA primarily raised concerns with the domestic supply of distribution transformers.

“While APPA and LPPC recognize that the questions in this inquiry are about new large power transformers (LPT) and high voltage direct current technology (HVDC) initiatives, the same supply chain constraints identified in APPA’s earlier comments will impact the successful implementation of any LPT and HVDC initiatives,” the trade groups told DOE.

“As APPA communicated to DOE in its prior comments for both bulk power system and distribution system transformers, the supply chain for steel will significantly impact future transformer production and supply. Moreover, any efficiency standard for transformers will greatly impact transformer supply.”

Of immediate concern to public power utilities is how limitations on distribution transformer supply would play out in response to extreme weather events across the U.S., LPPC and APPA said.

“If an extreme weather event were to disable a significant number of distribution transformers, supply chain constraints could severely limit the availability of replacement devices, jeopardizing utilities’ ability to restore or maintain reliable electric service. Even if distribution transformers are available, supply and demand imbalance may result in significant price increases that would ultimately be borne by electric consumers. Importantly, these same concerns could eventually impact Bulk Power System (BPS) transformers.”

APPA and LPPC are concerned that this current supply shortage may last several years and exacerbate the current slowdown of domestic and international transformer deliveries. The minimum impact of this constraint is a significant increase in transformer prices, they said.

“However, the worst-case scenario could be a rationing of transformers that could slow down local economies and impede new construction and infrastructure investments.”

APPA and LPPC recommended that DOE study domestic and international supply of both distribution and bulk electric system transformers and the components needed to manufacturer these transformers “so that any well-intentioned LPT and HVDC supply chain initiatives do not result in transmission-level transformers competing for the same resources needed to restart the domestic supply chain for distribution transformers.”

More broadly, the electricity sector is dependent on numerous supply components, fuel, and technology for the generation, transmission, distribution, and consumption of electricity, the comments noted.

This would include entities involved with the following:

  • Raw Materials: various metals (steel, aluminum, copper) and fossil fuel products.
  • Manufacturing: manufacturers of generators/parts, motors/pumps, transformers (power/distribution), electric switching equipment, conductor, control cable, fiber optics, metering equipment, etc.
  • Transportation: (ports, rail, roads, and vehicles) movement of the raw materials and finished products to their final destination.
  • Skilled Workforce: (laborers, drivers, lineworkers, etc.) to make the final product that is then skillfully installed to build the U.S. modern electricity network.

“A slow down or disruption in any part of this supply system may have an adverse impact on the delivery of safe, reliable, and cost-effective electricity,” APPA and LPPC said. 

Carbon Capture, Storage and Transportation Materials

Meanwhile, the groups noted that a broad portfolio of technologies is needed to achieve deep carbon dioxide (CO2) emissions reductions practically and cost-effectively. Energy efficiency and renewable resources are needed for such emissions reductions, but other technologies and strategies have a major role to play as well.

Carbon capture, utilization, and storage (CCUS) technologies are critical for putting energy systems on a sustainable path, they said.

“Despite the importance of CCUS for achieving the clean energy transition, deployment has been slow to take off — there are only around 20 commercial CCUS operations worldwide. But momentum is building. Plans for more than 30 commercial CCUS facilities have been announced in recent years, and despite the COVID‑19 pandemic, in 2020, governments and industry committed more than $4.5 billion to CCUS.”

APPA and LPPC said that CCUS could play an important role in proposed plans to reduce greenhouse gas (GHG) emissions from the U.S. power sector.

“The trend of increasing penetration of variable renewable power into the energy grid is clear. However, concerns for the rate at which variable renewable sources can be installed and the reliability of the grid caution for the continued need for reliable fossil power. CCUS could enable fossil power to fill this role while limiting CO2 emissions or supporting a clean energy standard.”

APPA and LPPC said that successful use of CCUS to remove significant CO2 from the national inventory requires not only reliable and effective capture technology, but an entire “value chain” of activities.

The key steps in this value chain are CO2 compression, transport, disposition in a safe and ideally useful manner, and analytical and monitoring techniques. The creation and maintenance of a successful supply-chain to support these activities is equally important to CO2 capture for CCUS, the groups told DOE.

CO2 compression will require large compression equipment and large diameter steel pipe. APPA and LPPC recommended that DOE survey the compression equipment manufactures to assess current and future capacity.

They noted that the transport of CO2 via pipelines is the principal means by which CO2 is, and will continue to be, distributed for enhanced oil recovery or deep saline geologic injection.

A significant expansion of the existing pipeline network is projected to be necessary to support CO2 emission reductions, based on an analysis by the National Energy Technology Laboratory, petroleum industry, and Great Plains Institute.

“Further the availably of domestically supplied steel needed to construct pipelines remains an issue not only for the power sector but for other industrial processes and equipment.”

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