Transformer Supply Shortage Continues to Loom Large
Image courtesy of Tim Vrtiska under Attribution-NoDerivs 2.0 Generic Deed, resized to 700 x 391 pixels.
The transformer supply shortage that has been ongoing since the pandemic has shown no signs of improving. This has widespread negative implications for the utility industry which is reeling from hurricane and wildfire damage, aging assets, and the impending threat of increased demand.
Status of the Transformer Supply Shortage
According to the National Association of Electrical Manufacturers (NEMA), delivery of a new transformer can currently take up to 3 years to fulfill. Prior to the pandemic, the turnaround time was about 6 weeks. This is quite a remarkable increase in just 5 years! And unfortunately, experts believe this situation could continue for another decade, yikes.
The burning question – why has the turnaround time gotten so inflated? Well, as I alluded to in the opening paragraph, there are several reasons on both the supply and the demand side.
In terms of the demand for transformers, there is a lot of load-growth pressure on existing infrastructure. Between the increasing development of data centers as well as overall electrification efforts in the U.S., demand for electricity is projected to grow 16% in 5 years, increasing the need for both more and larger transformers.
Additionally, more and more transformers need to be replaced each year due to their age as well as damage from climate extremes – for example, Duke Energy needed to replace 16,000 transformers after Hurricane Helene and Hurricane Milton. On the other side of the equation, these demand-side pressures have exasperated pandemic-induced supply challenges. Thus, transformer manufacturers have been unable to keep up.
And there is very little hope of a quick improvement on this. There are currently up to 80 million distribution transformers in the U.S., and this number could increase by a whopping 260% by 2050 because over half of residential transformers are at the end of their useful lives.
While there are many potential solutions being kicked around within industry circles, there is no magic bullet. Unfortunately, the transformer supply shortage is here to stay for the foreseeable future.
