The electrical grid in the U.S. is very reliable by most standards. Notwithstanding severe storms, tornadoes, hurricanes, and such, the infrastructure is stable and dependable. Oddly enough, electricity consumption from 2010 to 2020 fell by 1%. Owing to modern innovations such as LED's, efficient motors, stricter appliance standards, the electrical needs of the country went flat for a number of years. This became the norm, until it wasn't.
The electrical utility industry experienced no growth for over two decades. The financial and practical circumstances surrounding this absence of growth resulted in little to no funding for apprenticeship programs, no training of personnel with specialized skills, and recruiting only to replace those lost to retirement and attrition, if that. The industries that support electrical utilities did the same. Manufacturers of transformers and electrical equipment, steel mills, were all planning based on requirements they had seen for decades.
Beginning in 2020, electricity consumption has reversed two decades of decline and increased by 7%. Demand for large power transformers, the equipment through which nearly all of America's electricity passes through has surged 116% since 2019. The updating and expansion of power generation, data centers, grid expansion for increased population sparked big increases in demand all within a few years. The utilities and support industries apparently didn't see this coming and were not prepared.
Roughly 80% of the large power transformers in the United States are now imported. The grain-oriented electrical steel required inside the transformers has but a single domestic producer. Lead times for a standard power transformer have stretched to nearly two and a half years, and even longer for the larger units that connect power plants to the grid. Prices for these critical components have increased more than 77% since 2019. The average transformer in use today is 38 years old, more than 70% of the fleet is more than 25 years old. The utility is finding themselves in the unfortunate position of trying to replace an aging base and build a completely new one with a supply chain that has been neglected for a generation.
The hardware shortage gets a lot of attention. The human shortage is worse because it can't be expedited. At the present time, there is nowhere in America a person can enroll to learn how to design or build a large power transformer. The few university power engineering programs that still exist don't teach it. Such programs were shrinking before the boom began as students began to turn their interest to software and AI.
The knowledge to wind a coil, design a core or run a high-voltage acceptance test is a learn-by-doing skill, taught on a shop floor by master winders, test engineers or metallurgists who understand why a core behaves the way it does. This kind of expertise lives in people, rarely written down. Considering that roughly half the utility workforce is now over 45 and a large share of them expected to retire in this decade. A new transformer factory can be built in a couple of years. You cannot create an experienced winder in a couple of years, not can you enroll one either.
This is the situation no one in the industry planned for. Industrial capability cost nothing to lose and is wickedly expensive to rebuild. It took only 18 months of supply chain stress to expose the gap. It will likely take as much as two decades to close it. Every credible forecast indicates demand climbing through 2050. The impending result: disruption of service.
The electrical grid and its supporting industries must be treated as growth industries once again. Meaning manufacturers must create new facilities and production lines with the demand forecasts to support them. Apprenticeships, training and recruiting must reflect that of high growth industries once again. Domestic material suppliers must retool and increase production capacity to meet orders. Capital investment must be directed to electrical capacity not just to the data centers that capacity will serve.
Most of all, it means recalibrating from the status quo that 'worked' for the past 20 years. The industry landscape has shifted and electrical providers must shift with it, in real time. I'm sure many other countries are experiencing the same dilemma.
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