The U.S. power grid is facing a potential crisis as funding negotiations between Democrats and Republicans cast a shadow over critical infrastructure projects. In a joint effort, major associations including the American Public Power Association and the National Rural Electric Cooperative Association signed a letter urging swift action. With talks underway and the U.S. Energy Department funding deadline looming on Jan. 19, concerns arise about the impact on vital components like power transformers.

A Wood MacKenzie analysis from November 2023 reveals that only 20% of U.S. transformer demand can be met domestically, leading to a surge in prices and extended lead times. Despite President Biden's 2022 executive order to boost domestic production, funding remains unlegislated. The letter highlights the consequences, including stalled construction projects and grid modernization delays due to skyrocketing prices and shortages.

Prolec GE, a subsidiary of a U.S.-Mexico joint venture, announced an $85 million investment in a new factory in Monterrey, Mexico, to address North American demand for single-phase pad-mount transformers. Additionally, a $29 million expansion in Shreveport, La., will focus on transformers for wind and solar energy projects, with completion expected by June. Speculation arises about global manufacturers like Siemens AG potentially increasing U.S. transformer capacity.

The transformer manufacturing industry has struggled due to offshoring, as highlighted by the Niskanen Center in a 2023 report. The spending bill provision, advocated by trade groups, aims to address the current crisis by enhancing financial assistance, procurement, technical support, and workforce development. Despite challenges, industry players like Prolec GE and Siemens AG are stepping up investments to alleviate shortages and support the nation's critical infrastructure.

Source: enr.com