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Published Jun 28, 2024

The electric transformer shortage

Explore the critical transformer shortage as Shayle Kann and Tim Mills dive into the complex dynamics affecting utilities and startups, discussing skyrocketing prices, extended lead times, and how manufacturing constraints and regulatory changes compound supply chain difficulties.
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Episode Highlights

  • Market Crisis

    The transformer market is facing a severe crisis, with lead times extending up to two years, a stark increase from the few months it took back in 2020. highlights the impact on utilities and startups, where planning becomes nearly impossible due to these delays 1. , CEO of Ermco, explains that the demand for transformers has surged, especially for distribution transformers, which are crucial for delivering electricity from power plants to end users 2.

    Transformer lead times have remained extraordinarily high, and in fact, have generally gotten worse.

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    This ongoing issue is a significant challenge for the industry, affecting various sectors reliant on electrical equipment.

       

    Transformer Types

    Different types of transformers are experiencing varying levels of stress in the market. outlines the categories, from large power transformers at power plants to distribution transformers for homes and factories 1. The most significant challenges are with distribution transformers, where lead times have extended from 12-14 weeks in 2018 to up to two years now 3.

    The single phase pull mount transformers, the gray ones that are up on a utility pole, I think the supply chain there is getting closer to being caught up.

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    This dramatic increase in lead times underscores the strain on the supply chain and the need for manufacturers to adapt quickly.

       

    Historical Insights

    Historically, the transformer market has been closely tied to the housing market, with significant fluctuations in demand. recalls the 2006-2007 housing boom, which led to a surge in transformer demand, followed by a crash that left manufacturers cautious 4. This historical context helps explain the current reluctance to rapidly expand production capacity despite rising demand 5.

    There was a really strong correlation between volume output of transformers and the housing market.

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    The lessons from past market dynamics continue to influence current manufacturing strategies and responses to demand changes.

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