At least five large-scale blackouts occurred in the United States over the past 45 years. Three of these occurred in the past 15 years. According to the US Department of Energy (DOE), power outages and interruptions cost Americans at least $150 billion each year. Demand for energy growth exceeds growth of power transmission by an average of 25% per year since 1970.
Currently in the USA theres is a shortage of electrical distribution power grid transformers. According to Transformers Magazine, transformer shortages are creating delays in grid infrastructure deployment of equipment for everything from connecting smart meters and homes in smart cities to enabling e-mobility for electric vehicles and public EV transportation.
Transformers are important because the equipment can take the high-voltage from power lines and convert this energy into lower power voltages that can then be used by local users (homes) and businesses. In fact, transformer shortages have been preventing some homebuyers from moving in, with some home developers saying the shortage will continue for another couple of years.
Transformer electricity network
Due to the current nationwide shortage of transformers, it can take more than one year in some local areas and regions to replace transformers that might blow during a storm or hurricane.
Its not uncommon for storm-ravaged areas to often wait multiple months why officials scramble the available transformer market to find replacement equipment.
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Even transformer distributors don’t have enough national or regional transformer inventory, despite knowledge of transformer shortages.
Key elements of the electrical grid
- Electricity is generated and leaves the power plant
- Voltage is increased at step-up substations
- Transmission lines enable the power to travel to areas where the power is needed
- Substations then decrease or step-down voltage power
- Distribution power lines then carry the electricity
- Electricity reaches your home or business
Equipment markets for transformers, power management systems and batteries
The market for power generation, transmission and controls manufacturing consists of entities that produce power, transmit (distribute) such power, and produce controls equipment and panels. Some examples of these hardware and equipment types include specialty transformers, electric motors, generators and motor generator sets, switchgear and switchboard apparatus, plus relays and industrial control panels.
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Whereas the batteries market consists of entities producing primary, and battery management systems (BMS).
Primary battery examples include disposable flashlight batteries and dry cells (e.g., AAA, AA, C, D, 9V), lithium batteries, and watch batteries.
Examples of storage batteries and systems include lead acid storage batteries, lithium storage batteries, and rechargeable nickel-cadmium (NICAD) batteries such as used in electric vehicles.
Transformer manufacturing trends
One common driver for the shortage of transformers that transformer manufacturers and utility firms agree on is the fact transformer cores are manufactured using a specific type of steel called grain oriented steel (GOES) and most GOES manufacturers are located outside the USA, according to the US Department of Energy.
The US is trying to correct the transformer shortage situation by using a GOES alternate steel for cores called amorphous steel.
Many believe amorphous steel can reduce the materials cost of goods sold (MCOGs0 for manufacturing transformers while also reducing energy waste.
Additionally, power lines communications (PLC) has been leading the way of electricity networks in Europe. PLC represents a broad range of proprietary high and low bit rate communications technologies using electrical cabling, wiring and wire harnesses as the physical transportation medium.
European utility organizations have been working to integrate smart metering with a smart grid. Italy and Scandinavia are leading this charge, resulting in ‘smart’ transformers and other key electricity network elements beyond the meter.
Other trends driving evolution of the energy grid includes cloud computing, which dramatically decreases the cost of storing the vast amounts of information generated by inexpensive sensors attached to equipment and installed in-line power transmission cables… plus, machine learning that is helping unskilled users and producers to simplify otherwise advanced analytical tools to deploy and monitor connected devices, the Internet of Things, and smart grids.
Add to these, widespread use of smartphone apps enabling citizens, customers and city workers alike to monitor problems and provide information and feedback to improve operational efficiency and better use power grids and other city assets.
Smart grid revenue opportunities and business use cases
For the first time in recent history, the electric grid presents opportunities for power and mobility hardware and equipment manufacturers to leverage real-time, standards-based intelligence enabling a new class of companies in the sustainable energy and industrial technology sector to evolve a green economy.
Energy and battery systems supply chain contract manufacturing
Effective supply chains are not only efficient, they are also cost competitive with a reasonable degree of flexibility. Readers of the ventureoutsource.com website know companies compete supply chain vs supply chain and energy companies are no different.
Balancing supply chain and supplier risk with economies of scale and product quality is ongoing. Nowhere is this more true than in market verticals with higher technology components and fewer suppliers with specific market and industry capabilities. Automotive industry is a good example.
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In terms of supply chain dynamics, ABB is a global company. For its China operations, ABB sources over 75% of what it produces in China, in China. Some ABB products sourced and produced in China for the Chinese market include industrial robots, power transformers, circuit panels and breakers, and other electrical equipment
And while ABB has witnessed the Company’s position in the Chinese power industry declining the past few years, ABB still has considerable complexity with its China supply chain strategy. Recently, ABB CEO Bjorn Rosengren, stated that despite the weakness it is seeing in China, electric mobility is proving a fast-growing area for the company globally — especially in China. “One of the positive things is EV vehicles, which also are getting a position globally as you’ve seen also in Europe today, Chinese cars from that perspective,” said ABB’s Rosengren.
Whether is relocating China-based supply chains or setting up alternative strategies for supply chain manufacturing, Venture Outsource has decades of experience working with power companies and their contract manufacturing supply chains vetting and selecting CM/EMS suppliers, comparing quotes and bids, CM/EMS program cost modeling, and more.
Use the form on this page to ask how we can help your company create plan and execute contract electronics outsourcing strategies with confidence to accurately determine product ‘should cost’, optimize total landed cost profit and product margin growth protection. We welcome you to view consulting services and client project results.
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