North Carolina Gov. Roy Cooper announced a Job Development Investment Grant (JDIG) for Siemens Energy Inc. to support expanding its existing manufacturing facility in Charlotte, North Carolina to produce large power transformers.
In the current proposal, 53,800 sq. ft. of existing floor space at the facility will be repurposed in conjunction with the construction of an 86,100-square-foot expansion to manufacture the transformers. Siemens Energy’s presence in Charlotte dates back to 1969, and approximately 1,250 Siemens Energy employees currently work in that location.
“Manufacturing large power transformers in the United States will strengthen and expand our electrical grid to incorporate more renewable energy and meet growing energy demand,” said Tim Holt, Member of the Executive Board of Siemens Energy. “We are excited to do that in Charlotte, North Carolina where our existing factory and incredible team is answering the call of our customers and policymakers to help protect our nation’s energy and national security.”
Utilities are still struggling to implement supply chain sustainability metrics, and the transformer backlog remains a significant issue in the U.S., according to a recent report from the Sustainable Supply Chain Alliance (SCCA).
Recent supply chain disruptions include geopolitical and economic events, transformations in industry, climate change impacts, and availability of basic inputs like steel and labor, the report said. The global metal supply chain is still facing shortages from the COVID-19 pandemic and the war in Ukraine, the port said. Additionally, the growth of clean energy technology has created a surge in critical minerals markets, meaning higher prices, more delays, and concerns about availability.
With high lead times and soaring prices (up to four times the usual value) for transformers in the U.S., some utilities are choosing to repair and refurbish instead. The long lead times of over a year have already led to delays or cancellations in electrification and construction projects at a time when these projects are crucial for the energy transition.
Aside from repairing and refurbishing transformers, the idea has been floated to use the Defense Production Act to spur more domestic production, the report said.
Demand has surged for grid components in recent years. In December 2022, The American Public Power Association said it was “beyond disappointed” that funding to ramp up production of distribution transformers through the Defense Production Act was not included in a bill to fund the U.S. government, known as the omnibus appropriations bill.
In a survey of APPA’s members, released in October 2022, the average lead time for transformer delivery was 12-18 months, up from a three-month norm that had been the average for years. Some domestic transformer manufacturers were offering bids as long as 3-5 years for transformer delivery.
The industry trade group did its first informal member survey on the topic in November 2021, and responses signaled “serious concern” and not just for transformers. The survey also identified supply chain constraints among components such as smart meters, bucket trucks, conduits, and bolts, as well as constraints in getting insulators for large transmission lines.
