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The federal government must invest in near- and long-term measures to increase domestic manufacturing of critical electric utility components and bolster grid reliability necessary for an economy that is increasingly reliant on electricity, a cooperative leader told attendees at NRECA's CEO Close-Up conference.
Buddy Hasten, CEO of
Arkansas Electric Cooperative Corp. and chair of the government/industry “Tiger Team" on supply chain issues, briefed CEOs on trends in industry logistics and recommendations to the Electricity Subsector Coordinating Council to meet growing demand for grid components.
Although many refer to the constricted market for electrical equipment as a supply chain challenge, Hasten called it “a demand-side problem" due mainly to historic growth in recent years. He noted that Tennessee-based
ERMCO Distribution Transformers has increased production by 85% since 2016 but still can't keep pace with industry needs.
Demand has also been driven by widespread grid resiliency measures, renewable energy growth and new electric vehicle infrastructure construction, Hasten said.
As a result, transformer orders that previously could be fulfilled in two to four months can now take up to 33 months. Conductor orders can take up to one year of lead time, and fiberglass crossarms require 32 weeks or longer, he said.
“Electric utilities are facing unprecedented challenges procuring basic equipment needed to keep the lights on and have been getting creative to meet their needs," said Hasten.
These unconventional measures include broader emergency mutual aid requests in the aftermath of major storms, refurbishing distribution transformers and tapping overseas markets for equipment.
Recommendations that the industry committee has forwarded to the Department of Energy include:
Immediately address the labor shortage in transformer manufacturing.
Support long-term manufacturing growth for distribution and large power transformers with government loan guarantees and other financial solutions.
Increase domestic capacity for grain-oriented electric steel essential for manufacturing transformers and other electrical components.
Plan and prioritize electrification efforts, including programs approved as part of the budget reconciliation and infrastructure laws, to account for material availability.
Hasten said the Tiger Team will continue to identify potential federal funding streams to support expansion of manufacturing and identify labor sources. They plan to host a summit with utility, manufacturing and government leaders this spring.