Salt River Project Contracts for Two Battery Storage Projects Totaling 340 MW
October 31, 2022
by Peter Maloney
APPA News
October 31, 2022
Salt River Project (SRP) in Arizona has signed contracts with Plus Power for two battery storage systems totaling 340 megawatts (MW) that are expected to be online early in the summer of 2024.
The Sierra Estrella battery project will be a 250-MW, four-hour battery storage system in Avondale. The Superstition project is designed as a 90-MW, four-hour battery storage system in Gilbert.
SRP said it would have dispatch control of the storage systems, which will give the public power utility the ability to decide at what point each day it will deploy the energy output from each system onto its grid. SRP said deployment would typically occur during times of peak energy demand, usually in the early evening when demand for electric power is high and renewable resources are not available.
“These early deployments will help both SRP and the industry gain experience with this technology, which will play a major role in reducing carbon emissions,” Kelly Barr, SRP’s chief strategy, corporate services and sustainability executive, said in a statement.
SRP selected the two grid-charged battery projects from its most recent all-source request for proposals process. Both projects will be owned and operated by a subsidiary of Houston-based Plus Power.
SRP said the two planned projects push its total commitment to battery storage to 800 MW by 2024 and represent over 10 percent of the utility’s anticipated peak electric demand in 2024.
SRP is also developing the Sonoran Energy Center, an approximately 250-MW system with the solar array charging a 1,000-megawatt hour energy storage system, that is sited in Little Rainbow Valley, south of Buckeye. SRP has also contracted for the 88-MW Storey solar and battery storage project near Coolidge and plans to add a battery to the Saint Solar project, which is also near Coolidge. All three projects are scheduled to enter service in 2023.
In 2021, SRP brought a 25-MW battery storage facility at its Bolster substation in Peoria online.
Silicon Valley Power Signs PPA for Wind Power from Sempra Project in Mexico
October 28, 2022
by Peter Maloney
APPA News
October 28, 2022
California’s Silicon Valley Power (SVP) recently entered into a 20-year power purchase agreement (PPA) for the long-term supply of renewable energy from a proposed, cross-border 300-megawatt (MW) wind project Sempra Infrastructure is developing in Mexico.
Under the contract, Sempra would provide electric power to the City of Santa Clara, Calif., from the Cimarrón wind project it plans to build in Baja California where Sempra has an existing cross-border high voltage transmission line that connects to the East County substation in San Diego County.
Silicon Valley Power provides power to nearly 55,000 customers in Santa Clara and is the only full service, vertically integrated public power utility in Silicon Valley that owns generation, transmission and distribution assets.
When completed, the Cimarrón wind farm will have about 60 wind turbines and is expected to reduce greenhouse gas emissions by nearly 210,000 metric tons of carbon dioxide equivalent per year.
Completion of the wind project is subject to securing all necessary commercial agreements and permits, including reaching a final investment decision, Sempra said.
Renewable Incentives in Inflation Reduction Act Will Meet Headwinds of Higher PPA Prices: Report
October 28, 2022
by Peter Maloney
APPA News
October 28, 2022
The Inflation Reduction Act (IRA) will spur renewable development, but projects still face the headwinds of rising power purchase agreement (PPA) prices, according to a new report on the PPA market.
In the third quarter, North American P25 solar and wind PPA prices soared 9.6 percent to $45.93 per megawatt hour (MWh), pushing them to a level where they are now 34 percent higher than they were at the same time last year, according to a report from LevelTen Energy, an operator of one of the largest PPA marketplaces.
LevelTen’s P25 Price Index represents an average of the 25th percentile PPA price in seven North American wholesale electric power markets. The data is based on prices developers are offering for PPA contracts, not transacted PPA prices.
PPA prices began rising in 2020, when the COVID-19 pandemic exacerbated supply chain challenges. Since then, other factors – including economics, regulations, and permitting challenges – have created an imbalance between PPA supply and demand and led to an increase in development costs, keeping prices high, LevelTen said in the report.
The IRA, which was signed into law in August, extends a variety of energy tax credits and makes them available for projects owned and operated by tax-exempt entities, including public power.
“The IRA will undoubtedly spur significant investment in renewables — as much as 94 gigawatts (GW) of additional wind and solar by 2035,” Martin Anderson, head of research, USA, at Aurora Energy Research, said in a statement. “While many in the industry expect the influx of low marginal cost generation to significantly depress power and PPA prices, Aurora’s analysis indicates a more muted market response because of supply bottlenecks, rising electricity and natural gas demand, pricing dynamics related to thermal generation, and basis risk.”
“As the hard work of implementing the IRA begins, everyone wants to know when it will lower PPA prices,” Gia Clark, senior director, developer services at LevelTen Energy, said in a statement. “But it’s too soon to say if and when that will happen, for three reasons.”
First, the IRA does not remove immediate, major roadblocks including interconnection queue congestion and supply chain challenges that are stalling buildout, Clark said. Second, development input costs, such as labor, capital, commodities, continue to rise. And, third, demand continues to grow from corporations and utilities, increasing competition for already limited renewable capacity, Clark said.
Prices for both solar and wind projects rose “significantly,” according to the LevelTen report. More specifically, solar P25 PPA prices rose 7.5 percent to $42.21/MWh, while wind P25 PPA prices rose 11.4 percent to $49.66/MWh.
Solar supply chain challenges are one factor driving up solar PPA prices, LevelTen said, noting that polysilicon prices are at a ten-year high because of high demand and low supply, driven in part by a U.S. ban on polysilicon from Xinjiang Province, China, where production has been tied to forced labor. In June, the Biden administration began enforcing the Uyghur Forced Labor Prevention Act, leading to more than 3 GW of solar panels being held at the border.
Higher wind PPA prices are being fueled by “inflation, permitting issues, and transmission constraints” in regions like the Midcontinent ISO and the Southwest Power Pool, Jason Tundermann, chief operating officer at LevelTen Energy, said in a statement.
In July, MISO approved 18 new high-voltage transmission lines that will enable the addition of 53 GW of renewable energy capacity to the grid. Those lines will improve the region’s grid resilience, but they are expected to take between six to eight years before they are in service, “meaning that additional renewable capacity may remain limited until then,” Tundermann said.
ISO New England Stakeholders Outline Steps In Case of Extreme Winter Weather
October 27, 2022
by Peter Maloney
APPA News
October 27, 2022
ISO New England stakeholders outlined the steps they would take to work together to navigate potential energy shortages this winter.
The stakeholders discussed scenarios and strategies during a tabletop exercise in Westborough, Massachusetts. Participating in the workshop were operations and communications personnel from the ISO and the its regional utilities: Central Maine Power, Eversource, National Grid, Rhode Island Energy, United Illuminating, Unitil, and VELCO. Officials from all six New England states, as well as federal and regional agencies were also present to observe the exercise.
The stakeholders explored a scenario similar to the winter of 2017-2018, when two weeks of extreme cold strained the supply of fuels used to generate New England’s electricity.
In the past two years, four out of seven ISOs and RTOs in the U.S. have resorted to controlled outages because extreme weather led to limited energy supplies. In New England, however, a winter energy shortfall that involves several days of inadequate fuel supplies, would present “different operational challenges than capacity deficiencies that have been more common historically and typically involve just peak hours,” ISO New England said in ISO Newswire.
ISO New England released a report in August at the request of New England Power Pool stakeholders that evaluated how the region’s grid would perform under the double burden of increased levels of renewable generation sources and higher demand. “The region may struggle to maintain necessary operating reserves in scenarios of high electrification and more aggressive retirements of existing resources,” the report found.
“While this type of emergency is unlikely, it would be profoundly impactful and close coordination between all involved entities is paramount,” Peter Brandien, ISO New England’s vice president of system operations and market administration, said in a statement. “Through exercises like this tabletop, ISO New England and the region’s utilities can work together to better understand how to best respond if these conditions materialize.”
During the tabletop exercise representatives of ISO New England, transmission owners, and local distribution companies described steps they would take to:
- Forecast a possible energy shortfall using the ISO’s 21-Day Energy Assessment Forecast and Report;
- Mitigate the impact of the shortfall by urging generators to stock up on stored fuels, making public appeals for energy conservation, and other measures;
- Protect against widespread and long-lasting damage to the regional electric grid by conducting controlled outages if other efforts are unsuccessful; and
- Keep the public, government, and energy industry informed at each stage of the emergency.
Despite Possible Fuel Constraints, FERC Sees Sufficient Supplies For This Winter
October 27, 2022
by Peter Maloney
APPA News
October 27, 2022
Despite some possible regional fuel constraints, electricity markets will have sufficient capacity to maintain reliable operations this winter, under normal winter conditions, according to a report from staff at the Federal Energy Regulatory Commission (FERC).
“All regions anticipate adequate reserve margins, although extreme winter events may stress operations,” the authors of the report, Winter Energy Market and Reliability Assessment 2022-2023, wrote.
Extreme weather events aside, this winter could be mild for much of the country, implying lower-than-average electric and natural gas demand, the report said citing data from the National Oceanic and Atmospheric Administration (NOAA).
Although prolonged cold weather could cause disruptions and price impacts, the long-term NOAA data suggests a 50 percent to 80 percent likelihood of higher-than-average temperatures in Southern California, the Desert Southwest, Texas, and the Eastern Seaboard, with lower-than-average temperatures expected for the Northwest and the West North Central regions.
Natural gas prices, which set the marginal cost of wholesale electric power for much of the country, are expected to remain higher than they have been in recent years, the report said.
Despite the expectation that natural gas production will be 3.2 percent above last winter and will outpace the expected 2.4 percent increase in domestic natural gas demand growth, forecasts anticipate that continued growth in net exports, including from liquified natural gas (LNG) export facilities, that will place additional upward pressure on natural gas prices this winter. The Henry Hub natural gas futures contract price is averaging $6.82 per million British Thermal Units (MMBtu) for winter 2022-2023, up 30 percent from last winter’s settled price, the report said.
Natural gas supplies will continue to experience constraints in New England and California may also face constraints this winter due to ongoing pipeline outages, which could lead to higher natural gas and electricity prices, the report said. The authors, however, added that ISO-NE expects to maintain reliability this winter under mild and moderate winter conditions and has concluded it does not need a dedicated winter reliability program, unlike in past years.
The report also noted that supply constraints may affect coal deliveries and coal stockpiles this winter across regions that have relied on increased coal-fired generation during recent stress periods, including the Southwest Power Pool, the Midcontinent ISO (MISO), the Electric Reliability Council of Texas, the SERC Reliability Corp. in the Southeast, and the PJM Interconnection.
Meanwhile, the generation addition and retirement patterns that have prevailed for the past several years will continue through the winter.
The U.S. will add 43 gigawatts (GW) of net winter capacity between March 2022 and February 2023, mostly from wind and solar power, while 15 GW of net winter capacity, mostly coal-fired plants, are expected to retire during the same period, the report said.
Nearly 6,700 line-miles of new transmission lines and transmission upgrades are expected to have come online through this winter, mostly in the MISO, PJM, and Southeast regions, the report said.
Forecast generation and transmission additions could change or be delayed, however, as regions are reporting some projects are being impacted by component unavailability, shipping delays, and labor shortages, the report said.
Department of Energy Seeks Input on Bolstering Cybersecurity for Public Power
October 24, 2022
by Paul Ciampoli
APPA News Director
October 24, 2022
The U.S. Department of Energy (DOE) recently issued a request for information (RFI) seeking public input on a new $250 million program to bolster the cybersecurity posture of rural, municipal, and small investor-owned electric utilities.
The Rural and Municipal Utility Advanced Cybersecurity Grant and Technical Assistance (RMUC) Program will help eligible utilities cyber harden energy systems, processes, and assets; improve incident response capabilities; and increase cybersecurity skills in the utility workforce, DOE said.
The RMUC program will provide financial and technical assistance to help rural, municipal, and small investor-owned electric utilities improve operational capabilities, increase access to cybersecurity services, deploy advanced cyber security technologies, and increase participation of eligible entities in cybersecurity threat information sharing programs.
Priority will be given to eligible utilities that have limited cybersecurity resources, are critical to the reliability of the bulk power system, or those that support our national defense infrastructure.
The Office of Cybersecurity, Energy Security, and Emergency Response (CESER) will manage the RMUC Program, providing $250 million dollars in funding over five years.
To help inform program implementation, DOE is seeking input from the cybersecurity community, including eligible utilities and representatives of third parties and organizations that support or interact with these utilities.
The RFI seeks input on ways to improve cybersecurity incident preparedness, response, and threat information sharing; cybersecurity workforce challenges; risks associated with technologies deployed on the electric grid; national-scale initiatives to accelerate cybersecurity improvements in these utilities; opportunities to strengthen partnerships; the selection criteria and application process for funding awards; and more.
DOE hosted a series of listening sessions for utilities and stakeholders to ask questions and provide feedback that will help inform the development and implementation of the RMUC program. The final listening session will take place on October 25, 2022. For more information and to register, go here.
Responses to the RFI must be submitted via email to DE-FOA-0002877@netl.doe.gov by 5:00 p.m. ET on December 19, 2022. Download the RFI to see the full list of questions, topics of interest, and submission guidelines.
The American Public Power Association plans to submit comments in response to the RFI and welcomes member feedback. Members can contact Bridgette Bourge, Senior Director for Cybersecurity at APPA, at Bbourge@publicpower.org with thoughts on this RFI.
For additional information, visit the RMUC Program webpage on CESER’s website.
Electrify America Unveils First Application of Megawatt-Level Battery Storage System
October 22, 2022
by Paul Ciampoli
APPA News Director
October 22, 2022
Electrify America recently unveiled its first application of a megawatt-level battery energy storage system (BESS) for electric vehicle (EV) charging stations.
The move builds upon the company’s existing BESS installations at over 150 stations across the U.S., including more than 100 installations in California.
The megawatt-level energy storage system combined with a solar canopy goes a step further than Electrify America’s existing BESS in managing energy costs and reducing stress on the grid by acting as a buffer to supplement power to charging stations when local utilities limit the amount of power a station can draw from the grid, it said.
“This application leverages energy storage and solar as a ‘non-wires alternative’ in lieu of relying on additional utility ‘wired’ infrastructure (i.e. power lines) that may not be feasible,” Electrify America said.
Such innovative approaches become critical to expand EV charging into more remote areas to reach more consumers where utilities may not be able to deliver the capacity needed to install or expand charging infrastructure, it added.
Electrify America selected the Baker station in California for the first deployment of the megawatt-level energy storage system because of its remote location and its utility capacity constraints. The project involves the integration of roughly 1.5 MW/3 MWh energy storage system with 66 kW of generation potential from the solar canopy.
The energy storage deployment builds upon Electrify America’s previous announcement of having surpassed over 30 megawatts of installed energy storage now featured at over 150 locations.
In California, over 50 charging stations coupled with energy storage constitute the largest operating Virtual Power Plant (VPP) of its kind shifting the use of on-peak energy to lower carbon intensity off-peak hours in the California Independent System Operator’s wholesale energy market.
Electrify America, a subsidiary of Volkswagen of America, is the largest open DC fast charging network in the U.S.
APPA Comments on DOE Implementation Strategy for Grid Resilience Program
October 21, 2022
by Paul Ciampoli
APPA News Director
October 21, 2022
The American Public Power Association (APPA) recently submitted comments in response to a Department of Energy (DOE) Request for Information (RFI) on its implementation strategy for the Grid Resilience and Innovation Partnerships (GRIP) program.
GRIP is part of the Infrastructure Investment and Jobs Act (IIJA). It is aimed at enhancing grid flexibility and improving the resilience of the power system. Under GRIP, $10.5 billion in grants are available through three programs: Grid Resilience Grants ($2.5 billion), Smart Grid Grants ($3 billion), and Grid Innovation Program ($5 billion).
Among other things, DOE asked for feedback on what actions it can take to best achieve the benefits of coordinating applications to all three Grid Resilience and Innovation Partnerships topic areas at the same time.
In response, APPA said it supports DOE’s initiative to stage the application process so that applicants are able to submit a white paper before being asked to complete a full application.
“DOE could further reduce the barrier that exists for smaller entities by establishing teaming lists, as it has done for other opportunities, so that utilities may find technology partners who wish to demonstrate innovative approaches at scale, and by staggering the initial application windows by topic area,” APPA said.
A single application window for all three programs in GRIP could cause smaller entities wishing to apply to more than one topic to choose just one area, while larger utilities with more resources to direct to the application process would be able to mount multiple applications, APPA said.
“Further, DOE could provide more than 30 days between receipt of an Encourage notification to mount a completed application.”
APPA also addressed the question of how can funding from the GRIP program can best overcome challenges impeding the development of transmission, grid solutions, and interconnecting new generation and storage to improve grid resilience and reliability.
APPA believes that “these challenges may be overcome by encouraging joint action between smaller public power utilities to collectively deploy grid-edge solutions for grid resilience.”
It noted that many smaller public power utilities do not have the resources or volume of meters necessary to deploy advanced metering infrastructure (AMI) and distributed energy resource management systems (DERMS) at an affordable scale, nor the capacity to analyze the data and manage distributed energy resources (DERs) to maximize benefits and reduce impacts to the grid.
“By funding joint action agencies to deploy and manage these systems on communities’ behalf, it will enable a more resilient, modern grid within rural public power communities. Access to acreage for renewable energy deployment behind the community’s meter is not readily available in many communities.”
Instead, communities can utilize behind-the-retail meter assets, such as rooftop solar photovoltaic generation and energy storage, to help stabilize the grid and dispatch loads to meet local and regional intermittent carbon-free generation resource availability, thus mitigating the need for increased transmission infrastructure, the trade group said.
Additionally, GRIP should take into consideration the ongoing costs of maintaining the additional capabilities dedicated to resilience. Most of these capabilities are not cost advantageous nor cost recoverable from customers, and are not viewed as a valued investment by shareholders, APPA added.
DOE also asked for feedback on whether existing or expected supply chain concerns are anticipated to delay or impact development of potential applications or project implementation, if awarded.
“APPA and other industry groups have done extensive surveying of utility supply chain concerns. Lead times for transformers prior to the COVID-19 pandemic were typically three to four months, but now most utilities are experiencing lead times of over a year, and many are seeing lead times of as much as 18-24 months.”
APPA said there are also significant backlogs in other essential components, including meters. “Additionally, supply constraints are impacting goods associated with advances in grid infrastructure. The microchip shortage, as well as increased constraints related to lithium-ion batteries, mean that projects involving these components may experience significant delays.”
Labor issues are also a concern, “as almost all parties – utilities, suppliers, manufacturers – are having trouble in hiring and retaining employees. This is only exacerbating the supply chain issues almost all utilities face and may create further backlogs. An increased flow of money into this sector will also increase demand for components, furthering potential delays.“
DOE will need to factor project delays into its timetable and be flexible regarding project timetables, APPA said. “Flexibility can be defined as tolerance for a marked-up product price within a grant budget and a no-cost extension of the project work plan for up to one-year, when requested by the awardee, to accommodate the longer window of time for performance due to the delayed delivery of a product.”
APPA also addressed the timing related to the first application cycle for the GRIP program, saying it is concerned with the relatively brief turnaround time.
Having the application cycle open in November may be too soon for DOE to thoughtfully incorporate public comments from the RFI process (due October 14) into the final funding opportunity announcement (FOA), it said.
“Utilities may struggle to identify projects that are good candidates for grant funding, particularly under section 40101(c). Most utilities have an existing backlog of dozens, if not hundreds of projects, that fit the descriptions in the program, but this backlog of necessary projects is in some tension with the requirement of additionality.”
Applicants are not accustomed to prioritizing projects based on grant program guidelines and may benefit from reviewing a revised draft FOA for several weeks, after DOE has incorporated comments from stakeholders and before the application window opens, APPA said. “Releasing the FOA in December, with concept papers due at the end of January and full applications due at the end of April would minimize conflicts due to the holidays and allow applicants more time to convene partnerships and obtain letters of support.”
APPA also said that smaller public power utilities often lack dedicated staff to work through the application process. “DOE could consider covering the cost of grant writers and compliance managers as this would be helpful to public power utilities who lack the requisite staff resources. A shorter application could also be helpful to smaller public power utilities. Any sort of assistance from DOE could also be coordinated through JAAs.”
APPA and its members are also concerned about the $100 million cap on the federal share of grant allocations. “While DOE has expressed that this is not intended to be the target amount awarded for each project, many potential applicants may interpret by this cap to mean that only the largest and most ambitious efforts will be awarded. Since the federal share is no more than half of the project cost, smaller utilities will perceive the effective project costs to be $200 million or greater, and very few, if any, small utilities could reach this amount.”
Lowering the federal share cap would provide additional room to make a greater number of awards, including awards to smaller utilities and smaller projects. This would allow DOE to have a larger impact by supporting a greater number of utilities, and with a wider geographic distribution (and for other factors) as opposed to a consolidation of funding in only a few companies in a few regions. A lower cap may also assuage the concerns of potential applicants who do not think their own efforts will receive serious consideration, the trade group said.
EV Fires in Wake of Florida Flooding Draw Scrutiny
October 21, 2022
by Paul Ciampoli
APPA News Director
October 21, 2022
U.S. Sen. Rick Scott, R-Fla., and other officials from the state are seeking answers from electric vehicle (EV) makers and the U.S. Department of Transportation (DOT) in the wake of EVs catching fire due to flooding that occurred with Hurricane Ian, which hit Florida in late September.
In an Oct. 13 letter to Pete Buttigieg, Secretary of Transportation, Scott said that along with the damage caused by the storm itself, “the saltwater flooding in several coastal areas has had further destructive consequences in the aftermath of Hurricane Ian by causing the lithium ion batteries in flooded electric vehicles (EVs) to spontaneously combust and catch fire.”
He said that this “emerging threat has forced local fire departments to divert resources away from hurricane recovery to control and contain these dangerous fires.”
Scott said that the current guidelines from EV manufacturers on the impacts of saltwater submersion on the operability of the vehicles does not adequately address the issue. “As increasing numbers of EVs come to market nationwide, this threat demands action by the U.S. Department of Transportation to develop guidance to properly caution consumers about this risk posed by EVs submerged in saltwater,” he wrote.
Scott asked Buttigieg to respond to the following questions:
- What guidance has the U.S. Department of Transportation required EV manufacturers to provide to consumers to communicate the dangers related to a vehicle impacted by saltwater flooding with their customers?
- What guidance has the U.S. Department of Transportation provided directly to consumers and EV operators about precautions to prevent their EV from combusting and catching fire after a saltwater flood?
- What safety precautions or protocols has the U.S. Department of Transportation developed and made publicly available for owners of EVs when inclement weather is approaching?
- What guidance has the U.S. Department of Transportation provided to EV manufacturers to address and prevent this issue before EVs leave the factory?
- Has the U.S. Department of Transportation worked with the appropriate federal agencies to develop strategies and resources for local fire departments combatting EV fires?
In a separate Oct. 13 letter to EV manufacturers, Scott asked them to answer the following questions:
- Are you considering recalling these vehicles until there are sufficient safety measures in place to prevent these fires?
- What guidance has your company provided to consumers to communicate the dangers related to a vehicle impacted by saltwater flooding?
- What guidance has your company distributed to consumers and EV operators about precautions to prevent their EV from combusting and catching fire after a saltwater flood?
- What safety precautions or protocols has your company developed and made publicly available for owners of EVs when inclement weather is approaching?
- What has your company provided to consumers to address and prevent this issue before EVs leave the factory?
- Has your company worked with the appropriate federal agencies to develop strategies and resources for local fire departments combatting EV fires?
Florida Fire Marshal Also Seeks Answers
Meanwhile, Florida Chief Financial Officer (CFO) and State Fire Marshal Jimmy Patronis on Oct 17 sent a letter to more than 30 EV manufacturers, including Tesla, Rivian, Ford, GM, and others.
In the letter, Patronis asked EV manufacturers to do more in helping firefighters mitigate risks associated with battery fires caused by salty storm surge waters from Hurricane Ian.
He also asked nine questions of the manufactures to assess and identify methods to limit the risk of EV fires.
In his letter to Elon Musk, Tesla’s CEO, Patronis said that the National Highway Transportation Safety Administration (NHTSA) recently confirmed that test results specific to saltwater submersion show that salt bridges can form within the battery pack and provide a path for short circuit and self-heating, which in turn can lead to fire ignition.
The federal agency also confirmed that, “Lithium-ion vehicle battery fires have been observed both rapidly igniting and igniting several weeks after battery damage occurred.”
Patronis on Oct. 7 sent a letter to the NHTSA requesting information on the fire risks associated with saltwater on EVs.
EV makers Rivian and Tesla did not respond to questions from Public Power Current for the story.
Groups Urge DOE to Prioritize Funding Toward Production of Distribution Transformers
October 21, 2022
by Paul Ciampoli
APPA News Director
October 21, 2022
The American Public Power Association (APPA) and the National Rural Electric Cooperative Association (NRECA) recently sent a letter to Department of Energy (DOE) Secretary Jennifer Granholm urging the prioritization of funding toward the production of distribution transformers.
“Throughout 2022 we have been calling attention to the unprecedented challenges our members, representing the nation’s not-for-profit, community-owned and rural electric utilities, are facing in procuring basic equipment needed to provide reliable electric service to Americans, as well as in restoring power following storms and natural disasters, particularly with regard to distribution transformers,” wrote Joy Ditto, President and CEO of APPA, and Jim Matheson, CEO of NRECA in their Oct. 19 letter.
They noted that under Granholm’s leadership, the Electricity Subsector Coordinating Council stood up a Tiger Team to work with the federal government to address the supply chain crisis and identify solutions that will resolve current and long-term constraints.
“We’ve surveyed our members to provide the latest information to the Tiger Team and they report waiting on average a year or more for distribution transformers. Projects are now being deferred or canceled, and utilities are concerned about their ability to respond to more than one major storm in a season due to their depleted stockpiles,” noted Ditto and Matheson.
The Department of Energy (DOE) was allocated at least $250 million from the Inflation Reduction Act (IRA) to execute on Defense Production Act (DPA) authorities.
“To our knowledge, the IRA gives DOE discretion to use the funds on any technology invoked under DPA. We respectfully urge you to reconsider your plan to use the entirety of the funds for heat pumps and instead put at least some of the funds to immediately increase distribution transformer production,” the trade group leaders said.
Issues around labor have been identified as the most immediate challenge for manufacturers. “We urge DOE to establish a $220 million wage subsidy program that would assist manufacturers in attracting and retaining more workers, thus enabling them to move to 24/7 operations. We believe such a program could result in increased output of approximately 30 percent of distribution transformers in 2023 and support the workforce keeping the lights on in our country.”
While the trade groups support long-term investment in domestic manufacturing capacity for heat pumps, “we believe the current shortage of distribution transformers available to electric utilities poses an unacceptable risk to the electric reliability of our nation and urge you to alleviate this unprecedented situation by prioritizing available IRA funding for transformers,” Ditto and Matheson said.
“If we don’t act today, we risk being unable to recover from a storm tomorrow. In the longer term, it could mean being unable to meet the electrification goals envisioned by the Biden administration. In the meantime, the backlog for distribution transformers continues to grow.”