Metal-material shortfalls could add roadblocks to efforts to create a more efficient grid, as U.S. production of aluminum and amorphous steel is falling behind. The situation is affecting makers of a range of electrical products, from solar panels and transmission cables to more efficient utility transformers. New U.S. Department of Energy (DOE) standards helped ease a potential crunch for transformer manufacturers. However, high demand continues to increase lead times.

Aluminum woes

Aluminum might be the most recycled material in the world. According to the Aluminum Association, 75% of all the aluminum ever made in the United States is still in use. However, we are recycling less and less. Also, some electrical products require high-purity, unrecycled “primary” aluminum manufactured from fresh bauxite ore, but U.S. suppliers have dropped out of the business in significant numbers.

This situation has been developing over the last two decades. Through 2000, the United States was the world’s largest primary aluminum producer, but by 2021, the nation had dropped to ninth largest, a ranking that represented less than 2% of global production, according to the U.S. Congressional Research Service. Three U.S. primary aluminum plants have shut down in just the last two years; collectively, those plants represented half the previous U.S. capacity for producing the material.

Ironically, given primary aluminum’s importance to energy projects, it’s the cost of electricity that’s making U.S. producers less competitive on the global market. The smelting process for primary aluminum uses enormous amounts of electricity. 

The resulting challenge can be seen in the January decision by Magnitude 7 Metals to shut down its New Madrid, Mo., smelter. The facility had the capacity to produce up to 30% of the nation’s overall supply and was the Show Me state’s largest electricity customer, relying on relatively expensive coal-fired generation.

As an indicator of the importance of the Magnitude 7 plant and primary aluminum to clean energy development, Italian wire and cable manufacturer Prysmian had an agreement with the developer of the 800-mile Grain Belt Express to use “commercially reasonable efforts” to get the aluminum needed for the project from the Magnitude 7 facility. 

The line is being built to deliver Kansas wind energy to the Illinois/Indiana border, where it will help supply Midwest consumers. It’s unclear where Prysmian will turn now for primary aluminum.

Due to the decreasing domestic supply, electrical product manufacturers must turn to foreign producers to get aluminum at the purity levels required. Trump-era tariffs on European supplies have been lifted, but transportation costs make Canadian supplies cheaper to import, and Canada has become the largest supplier to the United States. Plus, U.S. goods made  with Canadian aluminum are often resold back across the border.

Amorphous steel concerns

The adoption of more efficient transformer standards is being slowed by a shortfall of another metal commodity: amorphous steel. The material is extremely efficient—it wastes less energy as excess heat than the grain-oriented electric steel (GOES) used in transformers since Edison’s day. According to the DOE, transformers with amorphous-steel cores reduce no-load losses by 50%–70% versus GOES models. 

In absolute terms, this might not add up to a big improvement for an individual transformer, but the potential savings become substantial when multiplied by the 60 million transformers now in service, not to mention the millions more that will be needed to support transmission and distribution expansion.

To capture those potential savings, DOE proposed standards that would have moved almost the entire transformer industry to amorphous designs, but the move prompted protests from GOES fabricators, transformer manufacturers and utilities concerned the shift would set back backlogged transformer orders even further. At this point, there’s only one U.S.-based manufacturer of amorphous steel, so domestic supplies are limited, with China as the backup supplier. 

There were big concerns the new rules would jeopardize operations of the one U.S. GOES manufacturer, Cleveland-Cliffs Inc., which employs 1,500 workers at two production plants in Ohio and Pennsylvania. Managers said they could be forced to shut down. 

To address both issues, DOE revised its proposal to restrict the new amorphous steel requirements to the largest transmission-scale units—about 25% of the market—while leaving current standards in place for smaller distribution transformers. Manufacturers also now have five years to comply. 

Even with these changes in place, the DOE estimates that, once enacted, the new guidelines will save utilities and their customers $824 million in annual electricity costs and increase demand for GOES and amorphous steel.