Of the nation’s estimated 60 to 80 million distribution transformers, about half are more than 33 years old and “approaching end of life,” according to an estimate in a National Renewable Energy Laboratory (NREL) study.
Distribution transformers step down the voltage used on a utility’s distribution circuit to a lower voltage used by utility customers.
Aging distribution transformers, illustrated in the nearby image, and increases in thermal loading of transformers are expected to “accelerate failure rates,” the study says. Thermal loading will increase with increased demand for electricity, for example due to electrification of transportation and heating, and with increased occurrences of extreme weather.
Assessing the current loading of distribution transformers “remains challenging,” the study says, with a rural electric cooperative association reporting average loading of 80% and other utilities reporting peak loading of 45% to 55%.
The report estimates annual addition and replacement rates of distribution transformers at between 2.5% and 3% of in-service units.
A previous NREL study pointed to shortages and price increases in the global transformer market. Both NREL studies are outputs of an ongoing NREL collaboration with utility and industry partners on future transformer demand.
Distributed solar, by reducing peak and midday net load, can yield a “potential decrease in transformer core temperature,” which could extend the lifetime of transformers. This is an important focus of future work, the study says.
The study suggests that demand management can also reduce thermal loading of transformers.
Electrification that can increase thermal loading of distribution transformers is expected to have the largest effect in regions where heating is transitioning from fossil-fired space and water heating to electric heat pumps.
States in the Northeast, in particular, “are expected to have the highest relative increase in demand from electrification,” with a likely need to upsize distribution transformers.
Distribution transformers will also be needed for data centers.
NREL expects the overall distribution transformer capacity needed in 2050 to be between 160% and 260% of 2021 levels.
The study projects a need by 2050 for nearly 2 TW of “step-up transformers” used for solar, wind, and battery arrays, which have similar characteristics to distribution transformers. The estimated need is based on the central scenario within NREL’s 2023 Standard Scenario, in which more than 1.7 TW of generation capacity would be added and require step-up transformers.
Most distribution transformers sold in the U.S. are made in the U.S. One manufacturing challenge, the study says, is that “production is constrained by customization requirements (based on diversity of requests around asset sizes, voltage levels, weight requirements, insulation, mounting, and so on).”
Trade groups representing the utility and housing industries last year called for $1.2 billion in federal funding to boost U.S. manufacturing of distribution transformers.
The NREL study is titled “Distribution Transformer Demand: Understanding Demand Segmentation, Drivers, and Management Through 2050.”
NREL plans to “continue to establish transformer demand scenarios,” focusing on utility planning scenarios and demand management.
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