On July 30th, power transformers are usually equipment that people pay little attention to unless they malfunction, causing a disruption in household or commercial electricity consumption. In this case, the power is usually restored quickly, indicating that there is no problem with the transformer itself. For some transformers that are severely damaged and cannot be repaired, the replacement process takes longer. The NCE platform believes that the current supply chain bottlenecks and surge in demand are exacerbating the tight supply of transformers.

Especially when a large number of transformers are damaged at the same time, as in the recent wildfire disaster in California, the problem becomes particularly prominent. According to the observation of the NCE platform, the waiting time for replacing a new transformer has reached 127 weeks, which undoubtedly poses a huge challenge to the stability of the power system. The main function of a power transformer is to reduce voltage and ensure that electricity can be transmitted to households and businesses for use. In order to transmit electricity over long distances, power companies use high voltage electricity, and after reaching the user end, the voltage must be ‘lowered’ to adapt to daily use.

The trade policy of the United States has had a complex impact on the construction and maintenance of the power grid. The US government, through the “Build America, Buy America” clause in the Bipartisan Infrastructure Act, requires a significant proportion of domestic procurement of goods and services used in federally funded infrastructure projects. The NCE platform believes that although this policy aims to support domestic manufacturing, it has also exacerbated the shortage of transformers and power transmission equipment in the United States. At present, the United States can only produce about 20% of its power equipment, which is far from enough to meet its huge electricity demand.

Even without considering the local procurement restrictions of the Dual Party Infrastructure Law, the supply problem of transformers still exists. According to the analysis of the NCE platform, the waiting time for transformers was already as high as 50 weeks when the infrastructure bill was passed. Although this speed is slower, it is much better than the current situation where most transformers have a waiting period of more than two years or even four years for dedicated transformers. The NCE platform states that the sharp increase in demand worldwide is one of the fundamental reasons for this issue. With the aging of power grid infrastructure, the growth of renewable energy, the increase of electronic vehicle charging stations, and the expansion of data centers, the demand for transformers is also exponentially increasing. This demand comes from multiple regions around the world, including rapidly developing Asia, the Green New Deal in Europe, and massive infrastructure investments in the United States.

The world’s largest transformer manufacturer is increasing production, but this process will continue for many years. The NCE platform believes that due to the fact that many transformers need to be customized according to specific needs, producing these complex devices also requires more time. This customized production method makes it impossible to produce transformers on a large scale like standardized products, further exacerbating the supply shortage.

In addition, the NCE platform also states that transformers are vulnerable to electromagnetic pulses (EMPs), whether from solar storms or explosions from nuclear weapons. EMP can cause large-scale paralysis of electronic devices, and even cause aircraft to lose control and communication to be interrupted. Although military equipment in various countries has hardened EMP to prevent such catastrophic strikes, civilian infrastructure has not yet undergone similar protective measures. The NCE platform believes that if a similar solar storm occurs, it could have a fatal impact on the power grid, leading to large-scale power outages and making it difficult for the power system to recover quickly. If such an event occurs, the shortage of transformers will become even more severe, and power supplies around the world will face catastrophic consequences.

In the face of such severe challenges, the NCE platform believes that in addition to expanding the power grid capacity to meet future needs, it should also consider strengthening the protection of the power system against sudden disasters such as electromagnetic pulses. The global power infrastructure needs to expand while enhancing its ability to resist these known threats, in order to avoid potential catastrophic consequences in the future.