Harnessing the power of data to navigate challenging times
By Peter Londa
March 25, 2025
Tariffs are here, and utilities everywhere are paying close attention
The details are constantly in flux, depending on the country and product involved. But despite all the uncertainties about the final form of the tariffs (and counter-tariffs), what is certain is that among other things, there will be significant impact for utilities to source, purchase and install new transformers—which is already a major issue.
So far, American tariffs have focused on China, North America, and the European Union (EU). China is already witnessing an increase in blanket tariffs from 10% to 20%. Canada and Mexico have already witnessed the threat, activation and suspension of a 25% tariff on every industry, with the possibility of the tariffs going back into effect on April 2. The only exception is a 10% tariff on Canada’s energy industry. The EU is also dealing with the threat of 25% tariffs with continuing pressure on imports of steel, aluminum and semiconductors coming into the United States.
Predictably, we are witnessing prompted counter-tariffs from China, Canada, and Mexico. China is primarily targeting agricultural and food products, while Canada is targeting food and consumer goods along with a threat to include energy flowing from Ontario into the United States. Mexico is set to announce how they will respond soon, and the expectation is that the EU will similarly respond. Even more recently, there have been talks of counter-counter-tariffs, only further exacerbating the situation.
Straining an already strained transformer supply chain
Before the onset of the threat of tariffs, utilities in the U.S. were already grappling with a scarcity of transformers while managing an aging infrastructure that is operating beyond its initial retire date and in need of replacement. This scarcity and subsequent high demand for transformers has generated growing stress on the U.S. electrical grid as manufacturers race to replace their aging infrastructure. Transformer wait times were at 50 weeks in 2021, and have doubled to nearly two years, with manufacturers ramping up production to meet the increased demand.
One of the transformer components most vulnerable to tariffs is grain-oriented electrical steel (GOES), a metallic product imported through both Canada and Mexico. GOES is a core component in a transformer’s core. The U.S. has only one domestic supplier that is challenged to fill a portion of the current demand. Any cost increases to this vital import will impact the manufacture of transformer cores.
Not surprisingly, it is unlikely that transformer manufacturers will absorb the cost of tariffs. Given how invaluable and mission-critical these products are, manufacturers are likely to offload the increases in costs to buyers—and if the buyer is an electric cooperative or a public power utility, there are limitations to offset the increased pricing. Public power and electric cooperative utilities cannot offload the increased cost to customers without rate studies and in some instances a vote of their governing bodies. So, in the short term, they have to absorb the costs directly, pulling resources from maintenance and modernization initiatives to cover the difference.
Looking for domestic alternatives
This whole situation is made more challenging by a “made in America” clause that many electric cooperatives and public power utilities have in place for transformers. Less expensive Mexican- and Canadian-made transformers would work just fine for their needs, but these clauses prevent them from leveraging non-American equipment. The stigma towards non-American equipment forces utilities to arguably purchase more expensive equipment that will become even more costly as the tariffs come into place—and further impacts raw materials and components that go into the transformers built in America.
There is a domestic alternative in play—a different design for distribution transformers that is approved by the Department of Energy (DOE). This design forgoes the GOES vulnerable to tariffs. The outer steel for the shell—often imported—will increase in price, and that can be offset with increased American steel production. But this new design operates with less efficiency at the extreme demands faced by transformers, both high and low. GOES helps transformers handle loads below and above certain thresholds, and those built without GOES will be much less efficient when electrical demand surges or wanes. The full consequences of a great number of utilities switching to this design of transformer are unknown, but we do know it will result in less efficient equipment putting more strain on the overall grid.
Harnessing the power of data
So, the question is … what can utilities do when transformer availability shrinks and costs grow?
The answer is pretty straightforward—leverage data to protect, prioritize and extend the energy infrastructure already deployed. Invest in solutions that capture and analyze data to pinpoint inefficiencies and vulnerable assets. Leverage proven technology that leads to energy efficiency at stress points across the distribution grid to offset the need to upgrade and fix these transformers, or at the very least, buy time. This can only be done if a utility has visibility, command and control into every element on its network, including the transformers and devices and appliances located behind the meter.
This is where a solution such as Tantalus’ TRUGrid™ Transformer Analytics becomes invaluable, especially in light of these recent tariffs. It’s a data analytics tool that analyzes real-time transformer data across the grid, so utilities can identify transformer loading and other issues. Through the analytics tool, utilities receive actionable insights to determine when it is time to replace, repair or shift transformer locations and prevent catastrophic outages. The insights allow the utility to navigate crippling supply chain constraints due to extended lead times for new transformers. And, since TRUGrid Transformer Analytics works with the TRUSync™ Grid Data Management system, it can use any vendor’s AMI, SCADA, ADMS, and/or DERMS system as sources of data.
At a time like this, knowing when to replace a transformer—and when not to—is more important than ever.
To learn more about our TRUGrid Transformer Analytics solution, click here.
