In a detailed report at Green Tape, Charles Yang exposes a critical misstep by the Biden administration that has worsened the ongoing transformer shortage. As the U.S. grid faces increasing strain from rising electricity demand, the previous administration had a rare opportunity to bolster domestic transformer manufacturing using $250 million in Defense Production Act (DPA) funding. Instead, under pressure from climate nonprofits like Rewiring America, the Biden White House chose to direct that money toward heat pump production—despite clear warnings that transformers were becoming a major supply bottleneck. This decision has not only deepened the crisis but also ensured that load growth would outpace the grid’s ability to support it.
The Transformer Crisis: A Problem Decades in the Making
The U.S. power grid is aging. Most transformers in use today are over 30 years old, and demand for replacements has surged due to new industrial projects, increased electrification, and the rise of electric vehicles (EVs). Yet, instead of investing in much-needed grid infrastructure, the administration chose to spend $250 million in Defense Production Act (DPA) funding on heat pump production.
Transformers play a crucial role in ensuring that electricity generated at power plants can travel long distances efficiently before being stepped down to safer levels for homes and businesses. Without them, the power grid is constrained, unable to add new generation capacity or support increased demand.
Lead times for transformers have nearly tripled since 2022, while prices have soared, making it harder for utilities to maintain and expand the grid. The causes of this shortage are many: supply chain disruptions, reliance on foreign electrical steel, and bureaucratic inefficiencies. However, the Biden administration’s decision to prioritize heat pumps over transformers has directly worsened the problem.
Biden’s Decision: A Policy Failure
In 2022, Biden delegated DPA authority to the Department of Energy (DOE) to support domestic production of key energy components, including transformers. This funding was a rare opportunity to address supply chain issues and bolster domestic production. But instead of using it to ease the transformer shortage, climate nonprofits successfully lobbied the administration to divert the money toward heat pump manufacturing.
Despite clear warnings about the growing backlog of transformer orders, the administration sided with groups that pushed an agenda disconnected from the realities of grid stability. This decision ignored fundamental supply-side challenges: transformers are a bottleneck in the electrical system, whereas heat pumps merely increase electricity demand. By funding heat pump production instead, the administration ensured that demand would rise while the grid’s ability to support that demand remained constrained.
Why Heat Pumps? A Politically Motivated Decision
Heat pumps are not a critical national security asset. Unlike transformers, which rely on a fragile global supply chain and require specialized materials such as grain-oriented electrical steel (GOES), heat pumps are relatively simple appliances that can be produced domestically without major geopolitical risk.
The push to subsidize heat pumps over transformers wasn’t rooted in strategic industrial policy but in an ideological commitment to an electrification agenda. The administration effectively prioritized politically favorable technology over essential grid infrastructure.
Even worse, this move came at a time when transformer manufacturers were already struggling due to foreign competition. There is only one U.S. producer of GOES, meaning domestic transformer manufacturing is heavily dependent on imports. A serious industrial policy would have focused on strengthening transformer supply chains rather than redirecting funds toward an unrelated appliance sector.
The Consequences: A Weaker, Less Reliable Grid
The decision to prioritize heat pumps over transformers has real-world consequences:
- Longer Wait Times for Grid Expansion – Utilities and power providers now face multi-year delays for transformer procurement, slowing down grid modernization efforts.
- Higher Costs for Consumers – Transformer prices have nearly doubled, and utilities will inevitably pass these costs on to ratepayers.
- Reduced Grid Reliability – A weak grid can’t handle growing electrification demands, making blackouts and brownouts more likely.
- Increased Dependence on Foreign Suppliers – Rather than investing in strengthening the domestic transformer supply chain, the U.S. remains reliant on foreign manufacturers, particularly in China.
What Needs to Happen Next?
Fixing the transformer crisis requires urgent action. Congress and the Trump administration must reverse course and prioritize transformer production over politically motivated spending.
- Pass the CIRCUIT Act – This bipartisan bill would provide a 10% tax credit for transformer manufacturing, helping domestic producers compete.
- Redirect Remaining DPA Funds – The administration still has $14 million in unallocated DPA funding. This should go toward transformers, not more heat pumps.
- Standardize Transformer Design – The lack of uniform transformer standards makes manufacturing inefficient. DOE should work with utilities to establish common specifications.
- Invest in Advanced Transformer Technology – Research into solid-state substations and new transformer materials could help alleviate future shortages.
Conclusion: A Case Study in Misguided Priorities
The transformer crisis is a direct result of the previous administration’s decision to prioritize ideological policies over practical energy infrastructure needs. While certain technologies were favored politically, they did not address the essential requirements of grid stability. Without immediate action to rectify the transformer shortage, the U.S. risks hindering economic growth and compromising energy security.
The new Trump administration has the opportunity to correct this course. By focusing on strengthening domestic transformer manufacturing and supply chains, the administration can enhance grid resilience and support the nation’s energy demands. This approach aligns with President Trump’s broader agenda to revitalize American manufacturing and reduce dependence on foreign imports. Implementing policies that prioritize critical infrastructure over politically driven initiatives will be essential in addressing the current crisis and ensuring long-term energy stability.
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Calling it a blunder is being pretty magnanimous.
Worse, according to the U.S. Energy Information Administration (EIA), the residential sector, which includes homes, accounts for approximately 21% of total electricity used in the United States. The other 80% is used for making automobiles, Aluminum, other high grade metals, manufacturing, rail transportation in areas of the US, pumping water, sewers, etc., etc., etc. All of which will suffer from frequent blackouts, brownouts, failed transformers, etc. and add to that the energy needed for Crypto and AI.
No surprises here.
Ideology and rationality cannot operate in the same mind spaces at the same time.
Richard Feynman – “For a successful technology, reality must take precedence over public relations, for Nature cannot be fooled.”
Unlike most voters in so-called “democracies”. Or “climate scientists”, for that matter.
I’ve been saying for a while now that the true goal has always been the collapse of Western society, global warming was just a means to do that.
Fictional global warming.
It’s -6 here and snowing. I’m lobbying the Wyoming Citizens for Global Warming to sue the UN and the IPCC for never delivering that 1.5 degrees of warming we were promised.
For communists dressing as greens the goal is the demise of capitalism. Their problem is that their wishes are not backed by money. Who has money with ability to apply it? It is the banking industry. Western banking industry expected to make a lot of money on the green investment cycle and “sustainable” climate-industrial complex. They funded all of these failed projects and the greens. The state also did this, but ultimately, the banking oligarchy owns the state as well, so they call all of the shots.
The dicta that one should not claim a conspiracy in that which is adequately explained by stupidity applies here. The Biden crew was more interested in the race, sex, sexual orientation, and the political adherence of their hires than actually knowing what they were purportedly hired to do.
The conspiracy was to keep the public (voters) in the dark about Biden’s mental state even before the 2020 election – calling lids on press releases in the early afternoon. This allowed the radical greens to take control of where the money went and what regulations to enact.
The US has been seriously neglecting the heavy electrical industry for a number of years, with plenty of places to spread the blame.
I have problems with this.
Number one the post was needlessly repetitive. That is not helpful.
Number two. I don’t know what the Defense. Production Act (DPA) funding is all about. Why do we need defense funding for transformers?
Number three why do we struggle making our own transformers?
Number four who on earth thinks the government subsidizing a problem is going to solve it. I don’t know what the problem is but my guess is that government is the problem.
Number five heat pumps shouldn’t be receiving government money for antything.
The subject of the piece is governmental incompetence and stupidity which always bears repeating. You can look up DPA, has been used on other stupid stuff. Another sort of slush fund. Transformers contain nasty stuff, most likely expensive to produce under our environmental rules. (Dumb to ignore given their essential nature). Everyone here most likely has the same thoughts on 4 and 5 but are aware that up until January 20 no one in DC really lifted a finger to stop the stupid.
I agree on the government incompetence but I have to disagree with the “transformers are full of nasty stuff” statement. A transformer is made of various steels, aluminum or copper conductors with some insulation. Some are air cooled (noisy with 50 or 60 cycle hum) and others are filled with silicone oil (Quiet 😊). Nothing nasty about that. Older green coloured transformers use PCB oils, which I’ll give you are a little nasty, but have been outlawed and replaced with the grey silicone filled ones.
Depends on your definition of nasty. Steel – uses coke, nasty stuff to greens. Aluminum and copper – must be mined and refined, nasty stuff to greens. Silicone oil – made from oil, nasty stuff to greens.
That doesn’t begin to deal with the manufacturing costs of U.S. production versus purchasing subsidized Chinese products.
And lastly, as many of the Western economies are all doing this at the same time to meet CO2 reduction goals, supply can’t meet demand.
My answer to that is, don’t reduce CO2 and rid of the greens since they seem to be the apparent problem.😉😊
“…to stop the stupid.”
About two years ago someone in the government was suggesting that transformers use poured steel cores rather than laminated.
I recall my dad spending over a week of evenings studying spec sheets for various types of steel for laminations. (He designed, supervised the building of, and did the final testing of sub-station size transformers. Australian Electrical Industries, in the 1950’s.)
I hate to think of the hysteresis loop with a poured core, power just being wasted as heat.
In my first job I redesigned an analog power supply. This was back when if you wanted a digital supply, you still had to design it by hand from discrete components.
The original design used a solid core transformer. I spent about half a day going through catalogs. I ended up replacing it with a laminated core transformer. The new transformer was less than half the weight of the original, yet it still ran cooler than the original.
Because it was smaller I was able to redesign the cabinet, to make it smaller, I also didn’t need to have as many ventilation slits punched into it.
Total power down about 10%, shipping weight down about 3 pounds.
Wonder how many spares are available.
We are sitting ducks for sabotage or EMP unless we have s full set of spares, security had better be in place
Not nearly enough even without an EMP incident. There wouldn’t be much left 6 months after a global EMP incident.
I expect 5 to 10% of the population would still be alive 6 months after a comprehensive EMP strike.
Transformers are not the risk in the EMP scenario.
All electronics connect to the power grid will be fried in an EMP event.
Per mile, EMPs are tiny compared to lightning strikes. The rise time of the signal is slower as well.
Already existing protection against lightning will also protect the grid from an EMP event.
I have no analyses to rely on. Would like to learn more. I have only anecdotal information. Our transformer took a direct hit, totally destroying it. We lost a garage door opener, a towel warmer – and several days later we learned we lost the well electronics when the cistern ran dry. Four years later the computers, entertainment center, and appliances are still fine. We’re the only property on the transformer – obviously we live out in the country.
I’ve feared an EMP simply because it could affect a much larger area. Depending on the power, an EMP in Los Angeles (for example) should affect a lot of transformers because of their close proximity.
“Surprise, surprise, surprise”. -Gomer Pyle USMC
$14 million is probably enough to produce a Sri Lankan version of Sesame Street.
It’s hard to craft decent strategy when you’re taking 29 paid weeks of vacation a year.
Unfortunately for society virtue signalling has become more important than practicality resulting in an ever increasing number of unfit for purpose choices each with a knock-on effect.
There is nothing virtuous about being plain wrong.at the start of a chain of events even if you meant well. .
The Federal government has no business “investing” in either transformers or heat pumps. The private markets will respond to whatever the demand is vastly better – quicker and more efficiently and more effectively – than any government bureaucracy can.
Instead of handwringing over where $250 million got spent … don’t spend it at all, and don’t tax for it.
The article repeats, somewhat modified, after a ChatGPT prompt. Is this intentional or a copy-paste error? Fair enough either way, I take no issue with using LLMs to assist with articles, but if intentionally included a small explanation note from the CR of what was attempted or meant to be conveyed would be helpful. Thanks as always for the work on WUWT.
They also advanced energy efficiency requirements that don’t actually reduce transformer losses but do worsen supply chain problems.
The manufacturing industry doesn’t need financial help. It needs regulatory certainty to justify investments to expand capacity. Create legislation to replace executive orders to de-risk.
“Heat pumps are a technology with clear benefits for reducing direct fossil fuel use in homes”
like higher electric bills and worse heat ?
In places where you barely need any heat in the first place, heat pumps can work well.
As for anyplace that gets cold, they are much less useful.
Yea today with the outside temp at -11 and a heat pump I would have be electrically heating my 180,000 Btu hydronic furnace. That is a 53 Kw electrical equivalent and at least a 221 amp draw. Sorry I will stick with gas thank you. 😰
If “very much less useful” is a gentle way of saying “worse-than-useless.”
Heat pumps have their place, of course, but that is not universal.
So trying to make it universal is akin to forcing a round peg in a square hole.
And “their place” would be south Florida or Southern, coastal California maybe.
Story Tip
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Another one bites the dust.
I thought all heat pumps were made in China.
Thoughtful article but wouldn’t a market approach be more effective? If there is greater demand for transformers then the market will supply those demands. And manufacturers won’t supply components that don’t fit the needs of the purchaser. Is there, perhaps, an impediment to producing what is needed? Is there a government agency that specifies the requirements for transformers? Perhaps based on standards a couple of decades out of date? That’s kind of what it smells like.
No pun intended?! Tee-hee!
EE in the power industry here. The transformer people are making bank, selling everything that they can produce at high prices. If there is an industry in the country does not need incentives its them. They choose to optimize profits instead of ramping up. There is money to be made in the electrical manufacturing industry, people who know what they are doing and don’t remember the boom and bust nature of electrical manufacturing or think it can’t happen to them will invest.
If the cost is going up, why doesn’t a manufacturer either expand production or start making transformers. These are not technologically complex items. We can make them easily. Perhaps the issue is that we can’t compete with foreign manufacturers. The last thing we need is more rent-seeking by an industry that should be able to stand on its own two feet and make a product and a reasonable profit. Subsidize nothing.
My brother is a consulting Power Engineer. He has talked about the transformer shortage for years.
Substation transformer metal is always in short supply with waits of over 2 years. That was four years ago and nothing has changed.
The Biden Administration sent substation transformers taken from power generation companies in several States to Ukraine. The Russians were blowing them up faster than they could be replaced.
North Caroline after Hurricane Helene suffered a profound shortage of substation transformers.
The so called extra inventory transformers in North Caroline were sent to Ukraine before Helene hit.