New factory targets 'critical' power grid supply shortage

Pennsylvania will be the home of a new 160,000 sq. ft. factory for producing advanced switchgear, aiding a supply chain often featuring multi-year lead times.

Amid the looming transformer backlog in the U.S., Mitsubishi Electric Power Products (MEPPI) and its parent company Mitsubishi Electric Corporation (MELCO) announced an $86 million investment in a new advanced switchgear factory in Western Pennsylvania.

The investment is driven by the increasing demand for transmission and distribution grid products as the U.S. moves toward renewable energy and decarbonization goals, MEPPI said.

MEPPI will construct a new approximately 160,000-square-foot advanced switchgear factory in Western Pennsylvania, marking MEPPI’s first new manufacturing facility in over a decade. Initially, the factory will focus on the production of both vacuum and gas circuit breakers. As the factory scales its operations, it will transition to predominantly manufacturing vacuum circuit breakers. Upon reaching full capacity, it is anticipated that the facility will employ more than 200 full-time workers.

MEPPI will also expand and upgrade its existing facilities in Warrendale, PA, with investments in power electronics and test labs.

The Commonwealth of Pennsylvania is also investing in MEPPI’s expansion. The company received a funding proposal from the Department of Community and Economic Development (DCED) for a $4 million Redevelopment Assistance Capital Program (RACP) grant and a $2.75 million Pennsylvania First grant. The company was also encouraged to apply for a tax deduction through the Qualified Manufacturing Innovation and Reinvestment Deduction (QMIRD) program.

Submit a case study! We want to hear about what you’re working on. Submit a case study with the chance to be featured in POWERGRID International.

The U.S. is in the middle of an unprecedented imbalance between supply and demand for power transformers, which has left the energy sector anxious and uncertain about the stability of the future grid. Earlier this year, the National Renewable Energy Laboratory (NREL) completed the first phase of a study that quantified the number, capacity, age, and use of the nation’s current transformer stock — something it says has never been done before.

Based on the transformer data collected, NREL estimates distribution transformer supply may need to increase 160%–260% by 2050 compared to 2021 levels to meet residential, commercial, industrial, and transportation energy demands. NREL says The demand increase is largely driven by aging transformers and electrification. NREL is also examining potential demand increases from extreme weather events and utility undergrounding and resilience programs that use various types of transformers.

Another recent report from the National Infrastructure Advisory Council (NIAC) examined the current state of the power transformer shortage in the U.S. and made several recommendations for how to potentially overcome the obstacle.

The report, Addressing the Critical Shortage of Power Transformers to Ensure Reliability of the U.S. Grid, notes that the transformer manufacturing industry experienced “severe” supply chain issues during the COVID-19 pandemic, and the impacts of those disruptions are becoming amplified. An electric utility or generator may have to wait between 2 to 4 years for a new transformer to be delivered, compared to a few months as recently as 2020. In an extreme case, one large power transformer manufacturing facility in the U.S. revealed a 5-year wait time for new transformer orders.

The rising demand for transformers is driven by increasing electrification around the world, growing renewable energy generation, and growth in large-load customers like data centers, the report said, This has also led to sharp price increases that could have a ripple effect on electricity costs for business and residential customers.

In addition to increasing demand, the domestic transformer manufacturing industry has had trouble attracting and retaining qualified workers, NIAC said in the report. Additionally, automation, assembly optimization initiatives, and other mass production technologies have not made transformer production much more efficient, as there is a lack of standardization in transformer design.