Now is not the time to replace grain-oriented steel distribution transformers with those made of amorphous steel—a less durable material that has fewer manufacturers and multiple shortcomings that make it difficult to incorporate on the grid—NRECA told the Department of Energy, underscoring that the mandate would increase costs and risk reliability.
“DOE’s top priority should be finding ways to support domestic distribution transformer manufacturers, to increase production immediately and to sustain that output over the long term as electrification of the U.S. economy grows,” said Stephanie Crawford, NRECA regulatory affairs director.
“We urge DOE to keep the existing distribution transformer standard in place, as permitted by existing law, and pursue other paths to expand the amorphous steel market without jeopardizing electric reliability.”
DOE intends to raise the efficiency standard such that distribution transformer manufacturers would be forced to discontinue use of grain-oriented electrical steel in 2027 and use amorphous steel instead.
NRECA filed formal comments March 27 on the significant impact DOE’s proposed Energy Conservation Standards for Distribution Transformers would have on electric cooperatives.
“A proposal of this magnitude requires more time and analysis to avoid unintended consequences,” NRECA said. “The only amorphous steel producer’s output today is a mere fraction of what would be required…to adequately meet the electric utilities’ demand, raising serious implications for electric reliability and affordability.”
DOE’s proposal would exacerbate the challenges of the global supply crunch, Crawford said. There is only one domestic supplier of amorphous steel, which, according to the Commerce Department, is “more labor intensive to form into cores.”
“Just when utilities need manufacturers to be 100% focused on increasing output, DOE’s proposed rulemaking injects harmful uncertainty into the distribution transformer market, upending potential progress in expanding production during a global supply crunch,” she said.
NRECA consulted Power System Engineering and their electrical and mechanical experts for a comprehensive view of DOE’s transformer proposal. The firm found the superiority of amorphous steel to grain-oriented electrical steel to be overstated by DOE.
“Electric cooperatives with experience utilizing amorphous steel core transformers in the field report that they more often led to broken wood poles, replacement transformers had long lead times, and to switch out amorphous transformers with new equipment required two trucks,” Crawford said.
“Most concerning is amorphous steel core transformers’ ability to withstand short circuit faults is low. This will lead to more outage time and damaged transformers for co-ops, which will ultimately be very costly to their consumer-members at the end of the line.”
In addition, DOE’s analysis fails to reflect current electricity loading and increased loading on transformers due to greater future electrification, NRECA said. The department assumes utilities are loading their transformers at 30%, which “vastly underrepresents” the near 80% loading that co-ops report.
“Our members strive to maximize the loading that is both safe and maximizes usage of the asset to the extent possible,” NRECA told the department, adding that “DOE is also undercounting the expected loading on distribution transformers due to future growth in electrification at 50%.”
A division within the Small Business Administration, which held a recent roundtable with electric co-ops, is raising similar concerns that the DOE proposal “does not adequately consider the economic impacts to all regulated small entities, namely small electric utilities.”
“Given the significant challenges that industries are facing with respect to supply shortages, requiring them to switch to a new product that is not widely available and labor intensive to produce will only further exacerbate an already struggling market,” the SBA Office of Advocacy said in a March 27 letter to Energy Secretary Jennifer Granholm. “The result may be significant unintended consequences to the domestic electrical grid.”
The SBA office concluded that DOE’s proposed rule “is not economically justified at this time and will have a significant economic impact on a substantial number of small entities.”
NRECA and a coalition of utility stakeholders first outlined their concerns about the DOE proposal in a letter sent to Granholm in February.