Biden Changes Course On A Major Power Grid Rule After Backlash

In the years before the United States’ aging network of electrical grids began heaving under the pressure of record-breaking storms and heat waves, demand for transformers — the connective tissue of the power system — kept pace with the construction of new housing. 

Those days are over. Now extreme weather regularly destroys hundreds of transformers at a time and drives up demand for more electricity on scorching or smoky days when cooling or purifying the air indoors saves lives. Preventing that crisis from getting worse means using electricity instead of fossil fuels for cars and heating while also generating a lot more of that power from sources such as solar panels and wind turbines. Those renewables, in turn, require a much larger and more expansive grid system — and a lot more transformers. 

Manufacturers were in a bind. Building new assembly lines to churn out more of the transformers in current use would cost millions. The Biden administration, meanwhile, had proposed a new rule raising the energy-efficiency standards for transformers sold after 2027, requiring factories to start using a different kind of steel and invest in equipment that could not produce what’s currently in demand. 

Facing backlash, the Department of Energy dialed back the regulation, unveiling a finalized proposal Thursday that almost completely reversed one of U.S. manufacturers’ biggest sticking points and gave companies five years to comply. 

“The regulatory process can work, and this final rule shows just that by reflecting feedback from a broad spectrum of stakeholders,” Energy Secretary Jennifer Granholm said in a statement. “Ultimately, it will be a piece of the solution, rather than a barrier, to help resolve the ongoing distribution transformer shortage and keep America’s businesses and workers competitive.” 

Transformers function like locks in a canal, adjusting the voltage of electricity like water levels as it travels through different parts of the grid system from power plants to wall outlets. Energy is lost each time volts pass through thousands of transformers. Since the majority of U.S. generating stations burn fossil fuels to make electricity, that increase adds more planet-heating pollution.

The Biden administration’s initial proposal would have mandated that manufacturers make transformers with a type of steel that wastes less energy. This amorphous alloy of electrical steel is commonly used in transformers in parts of Asia that built their grid systems more recently. It’s also needed for electric vehicles, and the Energy Department had hoped that switching to amorphous steel transformers would streamline things for steelmakers. 

But factories already struggling to keep up with demand complained that spending millions on the machines to ramp up production of the existing transformers could spell financial ruin if those investments became worthless in just a few years. 

The original rule would have required amorphous steel for 95% of new transformers. The final proposal reverses that requirement, allowing the traditionally used grade known as “grain-oriented electrical steel” in at least 75% of new transformers. 

But the new standards still ratchet up efficiency of new transformers by enough to shave what the Energy Department estimated would be $14 billion off utility bills over the next 30 years, slashing nearly 85 million metric tons of carbon dioxide pollution ― equal to the annual emissions of 11 million American homes ― during that same period. 

The agency estimated the original proposal would have avoided 340 million metric tons of carbon pollution. 

“It seems like a compromise solution that maintains the Biden administration’s commitment to reducing emissions while allowing more time for the industry to adjust to updated standards,” said Johan Cavert, a policy analyst at the Niskanen Center who authored a report last year on the transformer supply crunch. “Regardless, the urgent transformer shortage remains a pressing and growing concern.”  

Still, environmentalists criticized the Biden administration’s decision to loosen the proposed regulation. 

“These standards significantly reduce energy waste, but they leave much bigger savings on the table,” Andrew deLaski, executive director of the watchdog Appliance Standards Awareness Project, said in a statement. “Passing up the savings that…