Biden DOE Slaps Energy Efficiency Regulations On Key Power Grid Components

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by Tyler Durden
Friday, Apr 05, 2024 - 10:55 AM

The Biden administration has finalized energy efficiency regulations for distribution transformers, a key component of managing the flow of electricity between power stations and consumers.

In a Thursday morning announcement, the Department of Energy said that the regulations would help accelerate the green agenda as part of the administration's "commitment to tackling the climate crisis" (and causing more inflation).

The agency suggested that the move would save utilities and businesses over $824 million per year in electricity costs (once they come out of pocket for the 'necessary' upgrades).

"These standards are going to make America's power grid more resilient," said DOE Secretary Jennifer Granholm, adding "They'll support good-paying, high-quality manufacturing jobs, and they'll help us deploy more affordable and reliable and clean electricity more quickly across the country."

"It's going to provide critical, long-term certainty for domestic manufacturing and production investments – it's going to strengthen energy and economic supply chain security," she continued, adding "And it'll position American producers and workers to capture an evolving and growing market."

Granholm also emphasized that the energy efficiency standards will slash nearly 85 million metric tons of carbon dioxide, the equivalent of the combined annual emissions of 11 million U.S. homes.

Under DOE's regulations, energy efficiency gains will be achieved with 75% of the transformers on the market being manufactured with grain-oriented electrical steel (GOES) and another 25% being manufactured with amorphous alloy, a lesser-used electric steel core material. Manufacturers will be given five years to ensure total compliance with the regulations. -Fox News

The new standards are a scaled-down version of regulations first proposed by the DOE in January 2023, under which 95% of distribution transformers would have been required to be made with amorphous alloy, and manufacturers would have three years to comply. 

The original proposal has been widely criticized by power providers and utility companies which said it's unrealistic, leading to bipartisan legislation introduced by Sens. Ted Cruz (R-TX) and Sherrod Brown (D-OH) which would require the DOE to preserve market opportunities for transformer manufacturers.

Brown said that GOES accounts for more than 95% of the domestic distribution transformer market, while amorphous steel relies on foreign materials, while there's just one small producer in the US. Therefore, per Brown, rapidly ramping up reliance on amorphous steel could create a vulnerability in the US power grid.

"The final rule provides stability for most of the market, while affording a more gradual shift toward tighter efficiency standards for transformers used to meet larger commercial and certain electrification loads," said  Louis Finkel, the senior vice president of government relations for the National Rural Electric Cooperative Association (NRECA).

In a press release, Cleveland-Cliffs applauded the rule, saying in a statement that "Cleveland-Cliffs and the United Auto Workers (UAW) worked collaboratively to educate the DOE on the shortcomings of the originally proposed distribution transformer rule and the danger of relying on Amorphous Metal, which is produced in very limited volumes and exclusively from imported materials."