The President’s National Infrastructure Advisory Council (NIAC) recently released a report that offers a set of recommendations aimed at addressing the country’s ongoing power transformer shortage.
NIAC is composed of senior executives from industry and state and local governments that own and operate critical infrastructure essential.
It was established by executive order in October 2001 to advise the President of the United States on practical strategies for industry and government to reduce complex risks to designated critical infrastructure sectors.
Adrienne Lotto, Senior Vice President of Grid Security, Technical & Operations at APPA, served on the Transformer Production Subcommittee of NIAC.
The report, Addressing the Critical Shortage of Power Transformers to Ensure Reliability of the U.S. Grid, makes the following recommendations:
- Craft federal policies and designate funding targeted at increasing domestic capacity, such as tax credits, grants, accelerated depreciation, funding for new apprentice or training programs, and other incentives, using the Crafting Helpful Incentives to Produce Semiconductors and Science Act as a model;
- Achieve greater accuracy in transformer-demand forecasting that provides a more comprehensive outlook across the next 10 to 15 years by convening all parties who drive demand;
- Encourage long-term contracts/customer commitments between transformer suppliers and the industry sectors driving demand and establish favorable regulatory frameworks to enable them;
- Establish a strategic virtual reserve of transformers, with the U.S. government as the buyer of last resort;
- Promote collaboration between design engineers from utilities, engineering firms, trade associations, and domestic and foreign manufacturers to standardize transformer design, reduce complexity associated with customization, and facilitate interoperability through standardized interfaces between transformers and other grid components;
- Ensure a sufficient supply of electrical steel by coordinating incentives for new domestic supply, governmental efficiency standards, and trade policy; and
- Grow the pipeline of qualified workers by partnering with universities, community colleges, and trade schools on training programs, while working with federal, state, and local governments to craft tax incentives for workers who enter the field.
APPA and a broad coalition of stakeholders continue to advocate for Congress to appropriate funds to support manufacturers to expand domestic production of distribution transformers.
The House Energy and Water Appropriations bill includes provisions directing the Department of Energy to use existing authorities to find and address the root causes of the shortage.
The Senate Energy and Water Appropriations Bill includes a provision repurposing $600 million in previously appropriated funds to enhance domestic manufacturing. In addition, two amendments to the House bill to appropriate funds to support domestic DT manufacturing were adopted on the floor before the bill was pulled from consideration.
However, it is unlikely that either of these bills will get enacted into law, and instead Congress will rely on a continuing resolution to fund the government for a yet-to-be determined period.
APPA and the coalition have sought other avenues, such as through the annual National Defense Authorization Act, to secure these provisions but nothing has been signed into law yet.
APPA said it plans to survey members later this year to get updated information on what members are facing in terms of supply and price of distribution transformers to help APPA in its advocacy efforts.
