With Surging Electrical Demand, a Crucial Component of the Power Infrastructure Experiences a Notable Deficit
With Surging Electrical Demand, a Crucial Component of the Power Infrastructure Experiences a Notable Deficit
People have an insatiable appetite for control over their environment. Every facet of life is powered by electricity, and the need for more power is ever-growing. To address this exponential demand, humans are reviving nuclear power plants, pushing forward with fusion energy, pouring resources into solar power, and expanding traditional gas and oil plants. Regardless of the method used, each requires a fundamental tool: transformers. As reported by IEEE Spectrum, we're running low on these.
In essence, a transformer does just as its name suggests. Electrical energy is fed into it, and it alters the voltage, either increasing or decreasing it, before sending it off to another destination. This vital technology, which has been in use for over a century, is ubiquitous. You'll find small transformers in your phone charger, and industrial-scale transformers occupy storage spaces in warehouses.
Yet, the world is struggling to keep up with the demand for transformers. The industry has been voicing alarm bells for the past year. A report from energy analytics firm Wood Mackenzie revealed that lead times for transformers significantly escalated from 50 weeks in 2021 to a whopping 120 weeks by 2024. If you require a larger transformer, the wait time can stretch anywhere from 80 to 210 weeks.
In other words, if you're constructing a power station or a substation, you might find yourself joining a waitlist spanning four years to secure a critical piece of infrastructure. The National Infrastructure Advisory Council (NIAC), a government organization linked to DHS, highlighted this issue in a report published in June. Subsequent warnings about the transformer shortage followed the report's release in multiple trade publications.
So, why the scarcity? It's a matter of basic supply and demand. The demand has surpassed the supply. The costs of raw materials like copper and Grain Oriented Electrical Steel (GOES) have more than doubled since 2020. Copper prices have skyrocketed by 50%, and the cost of GOES has doubled as well. With the potential for further price increases under President Trump's proposed tariffs, the costs could rise even higher.
Much of what we need to manufacture transformers is imported. "In the US, only around 20% of transformer demand can be met by domestic supply," the Wood Mackenzie report stated. Despite President Biden's executive orders in June 2022 to boost local production, funding hasn't been allocated in subsequent bills.
At present, there's only a single plant in the U.S. that manufactures GOES. Senators Sherrod Brown (D-OH) and Bob Casey (D-PA) have suggested adding GOES to existing steel tariffs to bolster domestic production. However, this move could exacerbate the transformer shortage.
Senators Casey and Brown aim to safeguard American jobs, but according to the NIAC report, there's a scarcity of workers in the domestic transformer manufacturing industry. "The domestic transformer manufacturing industry faces labor shortages due in part to the demands of training, working conditions, and the limited regional labor pool of some manufacturing facilities in rural areas," the report stated.
The US is currently investing in power-intensive projects, such as expensive crypto mines, data centers, and AI models. Moreover, cities across the country are expanding. The demand for power is not poised to diminish.
Some believe the solution lies in advanced nuclear power plants. Others advocate for sustainable and renewable energy sources, like wind and solar. Oil and gas companies propose carbon scrubbers and selling people "greenwashed" versions of traditional methods. However, all these approaches depend on transformers, and our production isn't keeping pace.
The advancement in technology and the tech sector's reliance on electricity for operations further emphasizes the importance of transformers in shaping the future. As we explore alternative energy sources like nuclear and solar power, the demand for transformers is expected to increase substantially.
Given the prolonged lead times for acquiring transformers, it's crucial for nations to invest in research and development to improve production efficiency and reduce reliance on imported materials, ensuring a sustainable supply for the future.