Another part of the electric grid is set to become more energy-efficient, potentially saving end-users $15 billion over three decades.

The U.S. Department of Energy (DOE) is proposing new efficiency standards for distribution transformers, including the requirement that cores be made of amorphous steel instead of grain-oriented electrical steel for nearly all transformers produced under the new standard. The proposed rule would amend the standards for all three categories of transformers: liquid-immersed, low-voltage dry-type and medium-voltage dry-type. If adopted, the new rule would come into effect in 2027.

The DOE estimates that the proposed standards, if finalized, would reduce the country’s carbon dioxide emissions by 340 million metric tons over the next 30 years—an amount roughly equal to the annual emissions of 90 coal-fired power plants. The department also expects the proposed rule will generate more than 10 quads of energy savings and roughly $15 billion in savings to the nation from 30 years of shipments.

“Efficient distribution transformers enhance the resilience of our nation’s energy grid and make it possible to deliver affordable electrical power to consumers in every corner of America,” said Secretary of Energy Jennifer M. Granholm said in the December 2022 announcement. “By modernizing their energy-conservation standards, we’re ensuring that this critical component of our electricity system operates as efficiently and inexpensively as possible.”

The DOE will host a public meeting on Feb. 16, 2023, to solicit feedback on the proposed rulemaking from utilities, clean energy advocates and other stakeholders.

The department is also currently reviewing public input submitted last fall on how to maximize the impact of the Defense Production Act, which was invoked last June by President Biden to accelerate domestic production of distribution transformers, grid components and other clean energy technologies.

In November, the American Public Power Association and other stakeholders within the energy sector sent a letter to several House and Senate committee leaders to appropriate $1 billion “for implementation of the Defense Production Act to specifically address the supply chain crisis for electric distribution transformers.”

Current transformer production is not meeting demand, and that demand is expected to continue to increase in the coming years, according to the letter. Between 2020 and 2022, average lead times to procure distribution transformers across all segments of the electric industry and voltage classes rose 443%. The same orders that previously took 2–4 months to fill are now taking on average more than a year.

“This is a serious threat to reliability,” the stakeholders wrote. “Usage of DPA authorities to address labor and material shortages, focused specifically on the production of distribution transformers, is the most immediate way we can address this growing crisis.”

The DOE also said in the announcement that as the supply of traditional, grain-oriented steel tightens, the department is encouraging the diversification of domestic steel production where capacity can be expanded, such as in the production of amorphous steel.

Moreover, to facilitate the replacement of existing distribution transformers and extended product systems with more efficient ones, the department is finalizing guidance for the respective rebate programs established by the Energy Act of 2020 and funded by the Bipartisan Infrastructure Law.