Power Companies Enter Peak Hurricane Season Lacking Enough Transformers
Utilities across the country are facing a shortage of transformers heading into peak storm season, when the critical gear for delivering electricity is most at risk of destruction.
Wait times for transformers, used to move electricity from higher to lower voltages, have quadrupled and are averaging well over a year, utilities say, raising the likelihood of prolonged power outages during hurricane season.
Companies are trying to share limited inventories as they face increasingly strong storms, replace aging infrastructure and manage soaring demand for power. Their suppliers, beset by supply-chain challenges and a global scramble for raw materials related to electricity, haven’t been able to keep pace.
“The fundamental problem with transformers is they’re used in everything that is related to electricity,” said
Ray Kowalik,
chief executive of engineering, architecture and construction company Burns & McDonnell Inc. The move to electric vehicles as well as rising interest in power-hungry cryptocurrencies and the development of solar and wind farms are a few factors pushing up demand for transformers of all sizes. Data center growth, increased residential construction and the replacement of old equipment also are contributing to the higher demand.
Mr. Kowalik said some of his colleagues have started calling the lack of distribution transformers, recognizable as the can-shaped equipment mounted on neighborhood utility poles or the green boxes on concrete pads, “the current toilet-paper shortage.”
Ermco, a transformer manufacturer, is trying to increase production at its Dyersburg, Tenn., factory.
Public Service Enterprise Group Inc.,
PEG 0.02%
which serves 2.3 million electric customers in New Jersey, used to be able to procure distribution transformers within 12 weeks. Now, it says it is taking more than a year. The company has lately started refurbishing some units, something it hasn’t typically done.
Chief Executive
Ralph Izzo
said the company is taking longer to deliver transformers to the construction industry, to the extent that it can, to ensure that the utility has enough inventory for storm season. He said the company has enough of a buffer this season for a storm akin to Hurricane Isaias, which caused extensive destruction and widespread power outages in New Jersey in 2020 even after the hurricane weakened into a tropical storm.
Two storms of that magnitude “would be very challenging, given competition between new construction and storm readiness,” Mr. Izzo said. Under those circumstances, he added, “you just cannot accommodate new construction, and that would be a very bad day for the economy.”
A group of Florida lawmakers in a June letter asked the Federal Emergency Management Agency to help mitigate the problem, saying that the state’s municipal utilities and electric cooperatives can no longer stockpile transformers and face “substantially longer” power restoration after storms. Alabama lawmakers followed with a similar letter in July.
Rudy Garza,
interim chief executive at city-owned CPS Energy in San Antonio, has likewise written to Texas policy makers advocating for the creation of a strategic reserve of transformers and wires.
“There’s going to be some stuff that we don’t have that our brothers and sisters on the coast are going to need in the event of a major hurricane,” Mr. Garza said.
Transformer maker Ermco is contending with stressed supply chains.
Utilities have a long tradition of sharing equipment and workers after disasters, but voltages for transformers vary, complicating matters. “You can’t just take a transformer that we use and ship it to Austin,” Mr. Garza said.
Electric Research & Manufacturing Cooperative Inc., known as Ermco, supplies an estimated one-quarter of the U.S. transformer market and made about 460,000 transformers last year in its Dyersburg, Tenn., factory, a record for the company. Chief Executive
Tim Mills
said the company is trying to increase output again but still must limit orders to sometimes half of what a company requests.
“I’m sold out or will be locked in through 2025 by the end of this summer,” said Mr. Mills, who is part of an industry group studying supply chains and demand to try to figure out solutions.
The company’s plant runs 24 hours a day, five days a week. If Mr. Mills could add 600 workers to the current 1,700, he could operate seven days a week and boost output by a range of 25% to 30%. But finding more workers isn’t easy and raw-materials supply chains are also stressed.
In 2016, three large utilities launched a company called Grid Assurance to stockpile transmission transformers, used at substations or to serve large industrial customers, and other equipment critical to maintaining system reliability after significant storms and emergencies. The company stockpiled equipment ahead of supply-chain challenges and now serves six utility companies that pay for the opportunity to tap the reserves when needed.
Ermco sometimes limits orders to half of what a customer requests.
CEO
David Rupert
said Grid Assurance has lately noted a surge in interest among other utilities facing months- or yearslong lead times for critical equipment. He said the company can deliver much of that equipment within four to eight weeks.
“There’s just a lot of concern tied in with the price of new assets and the long lead times,” Mr. Rupert said.
At
Duke Energy Corp.
DUK -0.07%
, a company with electric utilities serving six Southern and Midwestern states, the lead times to acquire transmission transformers have increased as a result of challenges with overseas suppliers and shipping availability. It now takes the company about three years to obtain higher-voltage ones, up from roughly two years, and 18 months to procure lower-voltage ones, up from about a year or less.
Ben Harrison,
vice president of transmission engineering and asset management, said the company is working to increase the amount of inventory it keeps on hand and placing orders earlier in its project-planning cycles.
“That product has not been immune in any way from all the global supply-chain issues,” Mr. Harrison said. “We’re not yet seeing the lead times go down.”
Coils that help conduct electricity move along the assembly line at Ermco, which runs its plant 24 hours a day five days a week.
Write to Jennifer Hiller at [email protected] and Katherine Blunt at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Utilities across the country are facing a shortage of transformers heading into peak storm season, when the critical gear for delivering electricity is most at risk of destruction.
Wait times for transformers, used to move electricity from higher to lower voltages, have quadrupled and are averaging well over a year, utilities say, raising the likelihood of prolonged power outages during hurricane season.
Companies are trying to share limited inventories as they face increasingly strong storms, replace aging infrastructure and manage soaring demand for power. Their suppliers, beset by supply-chain challenges and a global scramble for raw materials related to electricity, haven’t been able to keep pace.
“The fundamental problem with transformers is they’re used in everything that is related to electricity,” said
Ray Kowalik,
chief executive of engineering, architecture and construction company Burns & McDonnell Inc. The move to electric vehicles as well as rising interest in power-hungry cryptocurrencies and the development of solar and wind farms are a few factors pushing up demand for transformers of all sizes. Data center growth, increased residential construction and the replacement of old equipment also are contributing to the higher demand.
Mr. Kowalik said some of his colleagues have started calling the lack of distribution transformers, recognizable as the can-shaped equipment mounted on neighborhood utility poles or the green boxes on concrete pads, “the current toilet-paper shortage.”
Ermco, a transformer manufacturer, is trying to increase production at its Dyersburg, Tenn., factory.
Public Service Enterprise Group Inc.,
PEG 0.02%
which serves 2.3 million electric customers in New Jersey, used to be able to procure distribution transformers within 12 weeks. Now, it says it is taking more than a year. The company has lately started refurbishing some units, something it hasn’t typically done.
Chief Executive
Ralph Izzo
said the company is taking longer to deliver transformers to the construction industry, to the extent that it can, to ensure that the utility has enough inventory for storm season. He said the company has enough of a buffer this season for a storm akin to Hurricane Isaias, which caused extensive destruction and widespread power outages in New Jersey in 2020 even after the hurricane weakened into a tropical storm.
Two storms of that magnitude “would be very challenging, given competition between new construction and storm readiness,” Mr. Izzo said. Under those circumstances, he added, “you just cannot accommodate new construction, and that would be a very bad day for the economy.”
A group of Florida lawmakers in a June letter asked the Federal Emergency Management Agency to help mitigate the problem, saying that the state’s municipal utilities and electric cooperatives can no longer stockpile transformers and face “substantially longer” power restoration after storms. Alabama lawmakers followed with a similar letter in July.
Rudy Garza,
interim chief executive at city-owned CPS Energy in San Antonio, has likewise written to Texas policy makers advocating for the creation of a strategic reserve of transformers and wires.
“There’s going to be some stuff that we don’t have that our brothers and sisters on the coast are going to need in the event of a major hurricane,” Mr. Garza said.
Transformer maker Ermco is contending with stressed supply chains.
Utilities have a long tradition of sharing equipment and workers after disasters, but voltages for transformers vary, complicating matters. “You can’t just take a transformer that we use and ship it to Austin,” Mr. Garza said.
Electric Research & Manufacturing Cooperative Inc., known as Ermco, supplies an estimated one-quarter of the U.S. transformer market and made about 460,000 transformers last year in its Dyersburg, Tenn., factory, a record for the company. Chief Executive
Tim Mills
said the company is trying to increase output again but still must limit orders to sometimes half of what a company requests.
“I’m sold out or will be locked in through 2025 by the end of this summer,” said Mr. Mills, who is part of an industry group studying supply chains and demand to try to figure out solutions.
The company’s plant runs 24 hours a day, five days a week. If Mr. Mills could add 600 workers to the current 1,700, he could operate seven days a week and boost output by a range of 25% to 30%. But finding more workers isn’t easy and raw-materials supply chains are also stressed.
In 2016, three large utilities launched a company called Grid Assurance to stockpile transmission transformers, used at substations or to serve large industrial customers, and other equipment critical to maintaining system reliability after significant storms and emergencies. The company stockpiled equipment ahead of supply-chain challenges and now serves six utility companies that pay for the opportunity to tap the reserves when needed.
Ermco sometimes limits orders to half of what a customer requests.
CEO
David Rupert
said Grid Assurance has lately noted a surge in interest among other utilities facing months- or yearslong lead times for critical equipment. He said the company can deliver much of that equipment within four to eight weeks.
“There’s just a lot of concern tied in with the price of new assets and the long lead times,” Mr. Rupert said.
At
Duke Energy Corp.
DUK -0.07%
, a company with electric utilities serving six Southern and Midwestern states, the lead times to acquire transmission transformers have increased as a result of challenges with overseas suppliers and shipping availability. It now takes the company about three years to obtain higher-voltage ones, up from roughly two years, and 18 months to procure lower-voltage ones, up from about a year or less.
Ben Harrison,
vice president of transmission engineering and asset management, said the company is working to increase the amount of inventory it keeps on hand and placing orders earlier in its project-planning cycles.
“That product has not been immune in any way from all the global supply-chain issues,” Mr. Harrison said. “We’re not yet seeing the lead times go down.”
Coils that help conduct electricity move along the assembly line at Ermco, which runs its plant 24 hours a day five days a week.
Write to Jennifer Hiller at [email protected] and Katherine Blunt at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Denial of responsibility! Techno Blender is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – [email protected]. The content will be deleted within 24 hours.