NASHVILLE, Tenn.—Electric cooperatives should work closely with equipment suppliers to ensure they have the transformers, gas turbines and other components needed to serve rising electricity demand, panelists said at a TechAdvantage breakout session. 

Supply chains have largely recovered from disruptions in 2021 and 2022 tied to the COVID-19 pandemic, they said. But an expected jump in power demand from data centers, manufacturing and electrification is likely to put new pressure on utilities and cooperatives.  

New Department of Energy efficiency standards for distribution transformers that are set to take effect in 2029 are also expected to add strain, potentially creating additional bottlenecks across the supply chain. 

“We’re in a little bit of a calm before the storm,” said Kurtis McMillen, chief sales officer for ERMCO, a major transformer and electrical components manufacturer. 

ERMCO has available capacity for single-phase transformers, which currently have lead times of eight to 12 weeks. But there’s “significant” and growing demand on the three-phase side, and a major ramp-up in manufacturing capacity takes two to three years, he warned. 

“It’s really important that if you work for a utility or … distributor that you’re working with your partners, your manufacturers and suppliers to plan for the future, not just this year but three to five years down the road,” McMillen said. “We’ve got to have that advance notice to be able to make those investments, hire those people, get the equipment in and be ready for that demand to hit.” 

Spencer Moore, senior vice president of utility sales and sales operations for Virginia Transformer Corp., echoed that timeline. 

“To the extent that you can work with us on what your forecast looks like for three or five years, we're happy to take that information and use that to do factory loading planning, look at our supply chains and really try to plan for that,” he said. 

The same fundamentals affecting transformer supply chains are also tightening the market for gas turbines, said Tom Freeman, CEO of consulting firm Gas Turbine Coach LLC. 

“Right now, GE, Siemens and Mitsubishi are backlogged into 2032,” he said. “Everybody's sold out.” 

Even the market for refurbished units is tight, Freeman said.  

“There's all kinds of activity right now for refurbished units, and that's maybe a four-year surplus, and then it'll be gone,” he said. 

Turbine manufacturers are competing with other industries for raw materials and face a labor shortage that will likely intensify in the coming years, Freeman said, creating the “perfect storm.” 

“Navigating that is really important, getting in front of planning is really important, and you can feel on the supply chain thing why there’s a crunch right now,” he said. 

Along with early planning on new orders, co-ops can look at extending the life of existing infrastructure, including through timely maintenance, and consider different suppliers than their traditional ones, panelists said. 

“On the maintenance side, don’t defer stuff if you know you have to do it,” Moore said. “I come from a utility background … [and] there was always pressure to defer what you could. But at the end of the day, when you did the right thing and kept that plant and that asset in tip-top condition, it always worked out financially better for everybody.” 

When procuring new equipment, “really take a hard look at what you're putting into your specifications,” he added. “Work with your [original equipment manufacturers] to really tighten those specs up, give that OEM some flexibility on what they can do for sub-suppliers.”