[image-caption title="Mara%20Winn%20(left)%2C%20a%20Department%20of%20Energy%20official%2C%20and%20Chris%20Perry%2C%20president%20and%20CEO%20of%20the%20Kentucky%20Electric%20Cooperatives%2C%20discuss%20the%20impact%20of%20supply%20chain%20challenges%20on%20electric%20co-ops%20during%20a%20breakout%20session%20at%20PowerXchange%20in%20Nashville%2C%20Tennessee.%20(Photo%20By%3A%20Robin%20Conover)" description="%20" image="%2Fnews%2FPublishingImages%2Fpx-supplychain.jpg" /]
NASHVILLE, Tenn.—A huge boost in government spending on the nation’s infrastructure is increasing the already overwhelming demand for transformers and other crucial equipment needed by electric cooperatives, experts told co-op leaders at PowerXchange.
The supply chain issues spurred by the COVID-19 pandemic caused production and deliveries to stop or slow down significantly for about 18 months, but challenges have continued in part because demand for transformers, electrical conductor, steel wire and other material is at an all-time high, said Tim Mills, president and CEO of ERMCO, a manufacturing enterprise owned and operated by Arkansas co-ops.
“There’s a massive gap between supply and demand,” Mills said. “What changed? Did supply drop or has there been a marked change in demand? The latter, I think, is what’s happening now.”
Demand has been driven up in part by an increase in new housing developments and by billions of dollars in new federal infrastructure spending, which is spurring competition for the same materials, said Chris Perry, president and CEO of the Kentucky Electric Cooperatives and United Utility Supply Cooperative Corp., which is owned by member co-ops in 17 states.
Perry cited demand created by the $1.2 trillion bipartisan infrastructure law of 2021, which is making a historic investment in upgrading the nation’s highways, roads and bridges, deploying broadband service and funding electric vehicle charging networks that require more transformers and electrical system improvements. Last year, Congress also passed the $740 billion Inflation Reduction Act, which funds electric school buses and other clean energy programs.
“We, as the manufacturing community, have to produce more output,” Mills said, adding that ERMCO plans to make 625,000 transformers this year and a million in 2024. “We have one goal and one goal only: to increase output to meet demand.”
In addition to increased federal spending on infrastructure, the electrification of everything from transportation to heating and air conditioning and water heaters is also increasing the need for transformers and other electrical system equipment, Mills said. A rise in natural disasters is having an impact as well, he said.
The industrial sector can significantly boost output, Mills said, “but the question is, in what time period?”
“Can we get there? Yes. Will it be fast and overnight? I don’t think so.”
Both Mills and Perry serve on the Electricity Subsector Coordinating Council’s Tiger Team, which was created last summer to bring power industry leaders together with federal officials to find solutions to supply and demand challenges threatening the nation’s energy needs. The team is led by Buddy Hasten, president and CEO of Arkansas Electric Cooperative Corp. and Arkansas Electric Cooperatives Inc.
Mara Winn, who serves on the Tiger Team as the Department of Energy’s deputy director of preparedness, policy and risk analysis in the Office of Cybersecurity, Energy Security and Emergency Response, said she will continue to work with electric co-op leaders to try to ease the problem.
“It is not a magic wand, turn-the-corner-tomorrow solution,” she said.
But Winn said she has faith in the entrepreneurial spirit of electric co-ops and American manufacturers.
“With that kind of determination, I think we can meet the challenge.”