The U.S. government should establish a "virtual reserve" of electric transformers to counter supply shortages and support electrification efforts, according to a new report from the National Infrastructure Advisory Council (NIAC). The virtual reserve would allow the federal government to act as a "buyer of last resort" when domestic transformer manufacturers face production slowdowns, ensuring a stable supply of these critical grid components.

Transformer procurement lead times have more than doubled, now averaging 120 weeks due to increasing electricity demand, workforce shortages, and limited production capacity, according to the report, which cites Wood Mackenzie data. Peter Ferrell, Director of Government Relations for the National Electrical Manufacturers Association (NEMA), highlighted the growing demand from data centers and the rise of artificial intelligence as contributing factors that could further strain transformer supply chains.

The NIAC report also calls for expanding U.S. transformer production through industry-education partnerships, long-term supplier contracts, and government incentives such as tax credits and grants. Additionally, the federal government is urged to offer $1.2 billion in funding to bolster domestic production.

The virtual reserve concept aims to smooth out the boom-and-bust cycles in transformer manufacturing, ensuring stable production capacity. The Biden administration had previously invoked the Defense Production Act to address transformer shortages, underscoring the urgency of resolving the issue to meet growing electrification needs.

Source: utilitydive.com