Utility trade groups call for $1.2 billion to boost transformer manufacturing


Seven trade groups have called for $1.2 billion in federal funding to help manufacturers of distribution transformers boost their production capacity, in a letter to U.S. Senate leadership.

“Robust domestic production” of distribution transformers “is essential to ensuring a reliable U.S. grid while reducing dependence on foreign products,” the letter says.

Distribution transformers step down the voltage of electricity on a distribution circuit so the power may be used by customers.

The trade groups say that ongoing supply chain challenges and “unprecedented demand” for grid components have resulted in a distribution transformer shortage.

About 80% of transformers of all types are manufactured abroad, the Niskanen Center reported last year.

A limited global supply of transformers for large-scale energy storage projects has become a bottleneck for those projects, a Wood Mackenzie analyst told pv magazine in October.

The seven trade groups calling for federal funding support for transformer manufacturing include four utility groups, two homebuilder groups, and an association of equipment manufacturers.

In their letter, the groups said that the Senate Appropriations Committee last July unanimously passed language specifying $1.2 billion in repurposed supplemental funding for the Department of Energy to “bolster the transformer and critical grid component supply chain.”

The groups called for this language to remain in the Senate’s final Energy and Water Development Appropriations bill, and urged the inclusion of the Senate Appropriations Committee language in any forthcoming House-Senate conference negotiations.

The groups’ letter said that more manufacturing capacity “means home construction can be completed, communities can modernize their infrastructure to incorporate IIJA investments, and regions can bounce back quickly from natural disasters.” The IIJA, or Infrastructure Investment and Jobs Act, is also known as the Bipartisan Infrastructure Law.

President Biden invoked the Defense Production Act in 2022 to mobilize federal resources to support production of distribution transformers and other electric grid components, the Bloomberg Law news service has reported.

Yet last July, the news service said, Energy Department and Labor Department officials interviewed pointed to a systemic workforce shortage and supply chain issues that would be difficult to fix quickly, and a lack of funding from Congress that limited what the departments could do.

The seven trade groups signing the letter were:

  • American Public Power Association
  • Edison Electric Institute
  • GridWise Alliance
  • Leading Builders of America
  • National Association of Home Builders
  • National Electrical Manufacturers Association
  • National Rural Electric Cooperative Association.

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