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Transformer Shortages & Escalating Transformer Costs - Let's Solve This Problem!

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W. Alan Snook, II's picture
President GRID20/20, Inc.

Given 25 years of entrepreneurial business experience at many levels, my daily focus remains on building relationships, supporting customers and team members, and holding tightly to core business...

  • Member since 2021
  • 17 items added with 8,910 views
  • Sep 22, 2022

Our utility operators are experiencing an unprecedented, developing distribution transformer shortage coupled with substantially escalating new transformer costs. 

Unfortunately, there is no present trend-correction in sight. 

Critical assets availability is now in jeopardy.

The following two articles help to shine appropriate light on this REAL problem:


For those who do not desire to read the aforementioned articles, consider these snippets:

  • US average transformer = 38yrs old; 70% of US transformers > 25yrs old  (40yr avg. lifespan)
  • US manufacturing of critical Grain-Oriented Electrical Steel is on life support; imports dependent
  • Lead times now up to 142 weeks (i.e., 2.7 years!) for Single phase pad mount transformers
  • 500% increase in price – from previous $3k-$4k each to now upwards of $20k each
  • New construction being halted due to lack of sufficient transformers to support new homes

Summarized Reality:   The age-old belief that distribution transformers are merely a low-price, expendable asset is no longer our reality.  Distribution transformers are REQUIRED to reliably and safely deliver electricity to customers.  However, the inventory stockpiles once sitting in utility yards are now quickly diminishing, and availability of backfill replacements assets has substantially dwindled.  This is a quiet problem now, but is on pace to become a more-publicized genuine problem.  Most transformer manufacturers are now ‘booked out for years’, which means supply will remain soft and price will undoubtedly increase; economics 101 – supply/demand.

Our US transformer fleet averages 38 years old per the US Dept. of Commerce; typical asset lifespan expectancy is approximately 40 years, under normal, planned/expected use.  But, we have already introduced substantial unplanned/unexpected burden onto much of our transformer fleets in the way of residential Electric Vehicle charging stations, Reverse Energy due to rooftop solar, cryptocurrency mining, and escalated power theft.  Our already-aged transformers are now more burdened than ever; yet present-day focus remains misguided on ‘adding more EV charging stations’ and ‘adding more rooftop solar’.  These green transitions are fine, IF we have the assets to handle it.  But, we do not.

This overall reality suggests that our Reliability of electricity is becoming in jeopardy.  And, this overall reality suggests that national economics and national security are also on the verge of being genuinely threatened by this unfolding transformer shortage crisis; especially when combined with our ongoing grid-edge burdening created via our ongoing clean energy, reduced Greenhouse Gas emissions/NetZero pursuits.   

Let’s Level-set: The US transformer fleet is in excess of 40 million units under electric utility management, and in excess of 10 million units under private management.  That’s 50+ million distribution transformers in operation; with a now-recognized genuine shortage to backfill these assets.  

Today, operators of the utility and private transformer fleets have virtually ZERO empirical visibility into the operating conditions of these critical asset fleets.  Transformers simply function until they fail, or until a customer complaint is reported…then we fix or replace them.  Can we truly expect our grid operators to continue a reactive approach to managing this asset class, which is now becoming increasingly scarce?

Historically, the industry practice has been to: a) use best guesstimates to pre-size a transformer for the next 40 years of service, b) then install and drive away with the hope the transformer survives 40 years, and c) have no ongoing empirical understanding of the dynamic conditions or demands subsequently occurring on transformers during the anticipated 40 year operations period.  Ponder that; virtually zero proactive visibility by operators into whatever planned or unplanned burdens the transformer assets are perpetually experiencing, at a time when intra-grid dynamics and grid-edge impacts are unprecedented.  

This in part is why premature transformer failures are occurring, why power outages are continually causing customer impacts, and why we will see increasing outages.  All while operators have a declining capability to replace failed transformers with new assets; and with substantial cost escalations when they can intermittently procure new transformers.  Today’s reality requires a new, proactive approach.

How About a Solution; Versus Fear and Panic, or Willful Acceptance of Declining Reliability

For the last 10 years, Advanced Transformer Infrastructure (ATI) technology has been operating within the global marketplace, including various US utilities.   This time-proven technology provides operators with empirical visibility into: a) distribution transformer conditions, and b) localized intra-grid conditions.  ATI uniquely captures actual data right at the transformer source, thereby revealing reliable, accurate, granular, timely, empirical insights for operators.   This benefit flips the historic paradigm from traditional ‘reactive behaviors’ to ‘proactive behaviors’ for operators. Enabling them to empirically know what is occurring with their transformer fleets, and to visualize today’s dynamic intra-grid conditions. 

ATI Enables Operators to:

  1. Identify transformers that are presently underutilized; allowing for them to be repurposed
  2. Identify transformers that are presently overburdened; facilitating helpful corrective measures
  3. Perpetually monitor dynamic intra-grid conditions to see/foresee manifesting transformer issues
  4. Benefit from Auto Alerts that make ease of operation simple, efficient and reliably effective
  5. Avoid premature transformer failures, avoid preventable outages, and avoid costly replacements


Conclusion:  We CAN Solve The Problem, Now!

If we are now dealing with unfolding transformer shortages and escalated costs, does it make sense to proactively improve our operator’s empirical understanding of distribution transformer and intra-grid conditions?  Does it make sense to empirically know which transformers are underutilized and can be repurposed to other locations?  Does it make sense to know which transformers are now or will become overburdened so that operators can make changes, or proactively replace transformers to avoid otherwise-imminent transformer failures?

Does it make sense to leverage an already time-proven ATI technology to help us work through the developing transformer shortage realities, and associated unfolding grid Reliability risk impacts?

It takes a lineperson about 7-10 total minutes to install an overhead single phase ATI sensor.  Pad mount single phase installations require about 5-7 total minutes.  Poly phase ATI sensors typically require about 15-20 total minutes for installation.  No de-energizing of transformers is required for installations; this means there are no disruptive or costly customer interruptions during the swift deployment of ATI.

Once ATI sensors are installed, operators benefit from ongoing empirical visibility, and auto alerts capability.  This is how we enable operators to maximize existing transformer fleet longevity.  And this is how we provide our operators the necessary tools to withstand the developing transformer shortage. 

A solution to this REAL problem is already available…Advanced Transformer Infrastructure (ATI).

Why would we not leverage ATI during this time of emerging, unprecedented, undeniable need?

W. Alan Snook, II's picture
Thank W. Alan for the Post!
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Matt Chester's picture
Matt Chester on Sep 22, 2022

For such a large problem that's right on the surface, it seems like this topic isn't getting enough attention. We're one or two major storms away from some utilities simply not having access to new replacement transformers because of the supply shortages. Do you expect maybe there will be some sort of government intervention before such a situation plays out? 

W. Alan Snook, II's picture
W. Alan Snook, II on Sep 28, 2022

Matt - Thanks for always being proactive to encourage discussions.

To address your question, the government has already taken actions to help address this developing concern.  One example: 

As my post attempts to express, a real problem and a real solution already exist.....the choice to be proactive is not the government's responsibility, IMHO.    You appropriately indicated that we are perhaps just one or two major storms away from a serious situation surfacing....Hurricane Ian in Florida is one of those 'perfect storms' that will certainly help to consume someone's finite stockpile of distribution transformers.  So, we can either wait until enough storms have occurred, and/or enough increased unplanned grid-edge impacts have caused premature failures, and/or enough typical transformer failures  have occurred before we deal with this apparent problem.  Or, we can employ time-proven technology to proactively help to avert this developing problem.   Reactive, or Proactive.....which one makes the best sense for the daily life-interests of customers, for economic perpetuation, for maintained societal order, for supporting necessary security interests, etc?

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