HD Hyundai Power Transformers USA (HD-HPT) announced an investment of over $14 million to expand its manufacturing facility in Montgomery, Alabama creating 50 new job.
The expansion is a response to “strong” market demand, per the Montgomery Area Chamber of Commerce, and is expected to increase facility productivity by 10%. HD-HPT is constructing a new warehouse and expanding yard storage to support the growth to house materials and spare parts. The expansion will also include the acquisition of a new modular transporter to facilitate the movement of parts and materials.
Initially, 15 employees will be hired for the new storage and warehouse, with the potential to increase to a maximum of 50.
“This expansion will deepen the company’s roots in the state and extend our partnership to a new level,” said HD-HPT President and Chief Operating Officer C.G. Son.
HD-HPT began operations in Montgomery in 2011. HD-HPT’s Alabama facility, the first U.S. production plant for South Korea’s electric power industry, currently employs 426 people and produces power transformers annually for the U.S. market.
Last week, Cleveland-Cliffs, a U.S.-based steel producer, announced that it will establish a new electrical distribution transformer production plant in Weirton, West Virginia at the site of an idled tinplate mill. Cleveland-Cliffs says the investment will address the “critical shortage” of distribution transformers across the United States. The company will repurpose its Half Moon Warehouse in Weirton to commence production of three-phase distribution transformers used in electric power distribution systems.
The total capital investment is $150 million, of which $50 million will be granted by the state of West Virginia to Cleveland-Cliffs through a forgivable loan. Cleveland-Cliffs expects the new plant to come online in the first half of 2026. The investment will also result in reemployment opportunities for 600 USW-represented workers from the indefinitely idled Weirton tinplate mill, Cleveland-Cliffs said.
Market conditions
The National Renewable Energy Laboratory recently estimated that distribution transformer supply may need to increase 160%–260% by 2050 compared to 2021 levels to meet residential, commercial, industrial, and transportation energy demands. NREL says The demand increase is largely driven by aging transformers and electrification. NREL is also examining potential demand increases from extreme weather events and utility undergrounding and resilience programs that use various types of transformers.
NREL has completed the first phase of the study that quantified the number, capacity, age, and use of the nation’s current transformer stock — something it says has never been done before. Most of the nation’s transformers are owned by over 3,000 distribution utilities across the country, which NREL said added some complexity to quantifying them.
This analysis is based on estimating the peak demand that would need to be met by distribution transformers, which considers the increased electricity demand across the economy from scenarios outlined in NREL’s Electrification Futures Study.
Overcoming obstacles
The electric industry is grappling with supply chain issues, including a transformer backlog that remains a significant hindrance as demand outpaces production. But one Texas utility recently said it has mostly overcome these long delays through a multi-prong approach, and has a sufficient supply to satisfy the need for residential transformers to install in new home developments.
CPS Energy said it faced a shortage of single-phase transformers in 2023, which are needed to serve residential customers. This shortage caused delays in providing electricity to new subdivisions and multi-family projects. The utility said it also experienced a 40% increase in demand for residential transformers last year, a three-year high.
To achieve this, CPS Energy says it implemented a multi-prong approach that included:
- Expanding and diversifying sources.
- Increasing engagement with vendors and manufacturers.
- Collaborating with other utilities to buy and sell to each other.
- Refurbishing existing transformers.
- Purchasing components to convert other transformer sizes for flexible use
Following the implementation of this approach, CPS Energy says it has experienced reduced lead times for new residential transformer orders, with lead times dropping from as long as one year to as low as four months. The utility says the recovery at the manufacturer level has also helped local distributors have stock available on some popular transformer sizes.
