Innovative Solutions for Grid Equipment Shortages

Supply chain challenges for critical grid equipment affect electricity affordability and the grid’s ability to meet surging demand. The U.S. Department of Energy’s (DOE) Office of Electricity (OE) has been funding innovations, including alternative materials and subcomponents, and refurbishment and reuse of end-of-life grid equipment, to alleviate supply chain shortages. OE is continuing its leadership and advancing innovations in these areas by implementing a Grid Supply Chain Program, authorized by Congress with up to $375 million in new funding.

Understanding Grid Supply Chain Challenges

The U.S. electricity sector is facing a severe supply chain bottleneck driven by an unprecedented increase in demand for power and distribution transformers, resulting in multi-year lead times. Demand has surged since 2019 for nearly every major category of electrical infrastructure due to an increase in electricity consumption and aging assets. 

This dramatic imbalance in supply and demand is exacerbated by both a lack of domestic material production—notably, electrical steel for transformer cores and copper for windings—and insufficient domestic grid component manufacturing. This has forced the United States to rely heavily on imports, which supply 80% of U.S. power transformers and 50% of distribution transformers. These supply chain challenges increase utility purchasing costs, ultimately leading to higher utility bills for American ratepayers.

Reducing Reliance on Imports with Alternative Materials and Subcomponents

OE is addressing this supply chain challenge by identifying alternative materials and subcomponents that can be sourced within the United States and scaling those sources to develop critical grid equipment manufacturing domestically. This approach would reduce U.S. reliance on imported materials and components used to manufacture critical grid equipment and bolster the domestic supply chain. 

Funded by OE, researchers at Pacific Northwest National Laboratory (PNNL) developed copper-graphene and aluminum-graphene composites that are 5-7% more conductive than the pure metals that are commonly used today. Continued advancements in lower-cost substitutes could reduce the amount of imported material needed today while leading to performance, safety, and longevity improvements in grid equipment.

OE also co-hosted the Supply Chain Understanding for Resilient Grid Equipment (SURGE) workshop alongside PNNL to convene stakeholders across the grid equipment supply chain ecosystem and discuss potential solutions to today’s supply chain challenges. The workshop reinforced the need for accelerated commercialization of alternative high-performance materials to boost grid capacity and reduce import dependence.

Refurbishing and Reusing Critical Grid Components

OE is also working to increase the refurbishment, recertification, and reuse of grid components that have reached end-of-life. Retired or damaged grid equipment contains valuable, functional components or high-purity materials that are currently underutilized. Refurbishment directly reduces utility procurement costs and lead times by providing a rapid, lower-cost alternative to new equipment—an estimated 10-40% in savings compared to new transformers that could be passed on to American ratepayers. If just 30% of distribution transformers that reached end-of-life were refurbished, ratepayers could save up to $125 million annually.

However, there are currently limited domestic capabilities to refurbish and reuse grid equipment, and concerns about quality assurance for refurbished products prevent some buyers from purchasing them. For example, inconsistent remanufacturing standards, inadequate testing equipment, and undocumented processes can lead to unreliable products. 

OE is working with national laboratories and industry partners to address these concerns and improve the recyclability and refurbishment process for electric grid equipment, ultimately increasing the confidence and adoption of refurbished transformers. This would slash equipment lead-times from months to weeks and reduce U.S. reliance on imports for new transformers.

Strengthening American Grid Supply Chain Leadership

OE’s Grid Supply Chain Program aims to strengthen U.S. manufacturing of critical grid components to reduce bottlenecks, improve energy affordability, and position the U.S. for long-term energy security. Greater refurbishment and reuse of existing grid equipment and increasing the use of domestically sourced alternative materials and subcomponents strengthens U.S. readiness against supply chain disruptions. Further, encouraging greater adoption of these solutions can help stabilize supply-demand mismatches and reduce the need for imports.