Utility Supply Chain Issues on the Rise

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The entire world seems like it’s getting hampered by supply chain issues, and utilities are certainly no exception.  Utility supply chain issues have been on the rise throughout 2022, leading to serious problems like 3-year lead times for large transformers!  Unfortunately, transformers are not the only concerning supply issue.

What are the Critical Utility Supply Chain Problems, and Why are They Increasing?

There are 2 main issues, and it all comes down to time and money.

As you might imagine, one of the most problematic aspects of this situation is rising costs.  According to experts, prices are up about 20% overall, although they thankfully started to stabilize in June.  That said, the volatility in pricing has created a large amount of uncertainty across the industry, which makes planning more difficult – simply put, providing fixed prices for projects is not easy right now.

Another problem is the increasing difficulty getting materials and components in a timely manner.  While much of the press has focused on transportation and delivery bottlenecks in the consumer arena, manufacturing delays due to difficulties obtaining raw materials are the bigger issue for utilities.  It’s a problem that is exasperated by the lack of standardization – for example, there are around 10,000 SKUs for transformers in the U.S. alone, which makes it difficult to keep everything in stock consistently.

There’s little doubt, the utility supply chain is fragile, and one more proverbial shock to the system could temporarily bring everything to a screeching halt.  And, unfortunately, this is not the only challenge facing the industry right now.  Labor shortages, an aging workforce, high fuel costs, inflation, increased regulatory scrutiny, and the push for decarbonization are all conspiring to keep utility leaders up at night.

And these utility supply chain issues negatively impact emergency response and recovery as well.  It’s easy to send mutual assistance to other utilities when it’s people, but if replacement equipment is needed for outage restoration, problems can ensue.  Let’s just hope that the situation improves sooner rather than later.