DOE Urged to Reconsider Idea of Increasing Transformer Energy Conservation Standards

A broad coalition representing stakeholders in the distribution transformer supply chain is urging the Department of Energy to reconsider its intention to increase energy conservation standards for distribution transformers, as signaled in a recent Notice of Proposed Rulemaking issued by DOE.

The American Public Power Association and other members of the coalition made their request in a Feb. 15 letter to Secretary of Energy Jennifer Granholm.

“Since 2021, our organizations have been communicating with DOE regarding the severe and ongoing supply chain challenges that have prolonged and complicated distribution transformer production and availability,” the groups said in their letter.

“The inability to quickly manufacture and deliver these critical components threatens the ability of the electric sector to service current and planned housing markets, swiftly recover and restore service following natural disasters, and deliver the benefits of economy-wide electrification,” they told Granholm.

The groups pointed out that Granholm last June directed the Electricity Subsector Coordinating Council to establish a “Tiger Team” to examine the supply chain crisis. “It concluded that current transformer production is not meeting demand — demand that is expected to increase for the foreseeable future,” APPA and the other groups noted.

Moreover, both the electric and manufacturing sectors have raised awareness of the risks caused by lengthy lead-times in the production, procurement, and deployment of transformers. Under existing production output capabilities, manufacturers estimate the current order-cycle for most new distribution transformers to be longer than 16 months, the letter said.

In January, DOE issued a NOPR that would, through its various requirements, further exacerbate the supply chain situation, the groups said. The proposed rule would dictate that manufacturers increase the efficiency of distribution transformers by a mere tenth of a percentage point. DOE already mandates distribution transformers be manufactured to incredibly high efficiency standards, the groups noted.

“Our organizations agree that energy efficiency standards play an important role in reaching decarbonization benchmarks while transitioning our nation to a clean and increasingly electrified economy. However, as proposed, the rule would delay the realization of these benefits by worsening supply chain complications already well known to DOE.”

In addition, APPA and the other groups said that the proposed rule would require manufacturers to transition to a different type of steel, which is largely untested, less flexible, and more expensive.

“Further, the existing supply chain of this alternative steel is very limited and mostly foreign-sourced. This rule would impose unnecessary cost burdens and further delay the delivery of such critical products. Simply put, this DOE proposal does nothing to address, and is likely to exacerbate, the current distribution transformer shortage crisis,” the letter said.

“Given the unprecedented demand for distribution transformers, our organizations urge DOE to maintain the current efficiency levels required of these products. Getting these already highly efficient products into the market more quickly should be the highest priority and will result in the realization of electrification benefits much sooner — benefits that will far outweigh any gains achieved through a fractional percentage increase in efficiency.”

Other groups signing on to the letter were the Edison Electrical Institute, GridWise Alliance, Leading Builders of America, National Association of Home Builders, National Electrical Manufacturers Association and the National Rural Electric Cooperative Association.

Groups Say Department of Energy Proposal Raises Reliability, Affordability Questions

In recent related news, APPA and NRECA told the Department of Justice that reliability and affordability for U.S. electric utilities and their customers could be threatened under the DOE NOPR.

The DOE’s NOPR would transition almost the entire distribution transformer market in the U.S. to use amorphous steel cores, but there is only one domestic producer of amorphous steel cores today and that producer’s current output “is a mere fraction of what would be required to adequately meet the electric utilities’ demand,” the groups noted.