US utility groups seek White House action on electrical steel

Concerned that a key material for power grid equipment and electric vehicle chargers is in short supply, electric utilities, home builders and an automotive trade group are urging the White House to hold a summit to address the limited availability of electrical steel.

In a May 22 letter to President Biden and several members of his administration, a collection of trade groups notes that electrical steel is a core component of electric motors, transformers, EV chargers, and other grid equipment due to properties that reduce power loss.

Limited supplies of domestically manufactured electrical steel have created a challenge for utilities and others seeking widespread adoption of EVs and are a contributing factor to an insufficient inventory of distribution grid transformers, the groups said.

Besides the three major electric utility groups—Edison Electric Institute, American Public Power Association, and National Rural Electric Cooperative Association—the letter was signed by the National Association of Home Builders, National Electrical Manufacturers Association, Leading Builders of America, GridWise Alliance, International Brotherhood of Electrical Workers, and the Alliance for Automotive Innovation.

"Shortages of domestic electrical steel are contributing to significant and persistent supply chain challenges across our industries," the groups said.

They urged Biden and leaders of the Energy Department, Commerce Department, Labor Department, Treasury, and others to "make it clear that electrical steel is critical to the national and economic security of the United States and to prioritize actions that will create a sustainable supply."

As an initial step, they urged the Biden administration to hold an "electrical steel summit" to bring groups together to discuss challenges and possible solutions.

"The summit would bring together users and manufacturers of electrical steel such as electric utilities, electrical manufacturers, automobile manufacturers, steel manufacturers, labor unions, home builders, and others to help solve the current supply chain crisis that threatens both the national security and economic outlook for the United States and to deliver on this administration's goals for electrification and decarbonization," according to the letter.

The utility groups have complained about limited inventories of transformers and used the letter to drive home concerns about a proposed rule from DOE on transformer efficiency standards. In comments filed with DOE in March, APPA said the proposed efficiency standards would likely exacerbate a transformer supply shortfall "that has already reached crisis levels."

Critical equipment

In the May 22 letter, the groups said plans to expand domestic steel capacity and manufacturing of critical equipment such as transformers "are now in flux as DOE contemplates new efficiency standards that would upend the market and manufacturing process."

They urged the Biden administration "to demonstrate leadership by prioritizing the critical importance of electrical steel and growing domestic manufacturing jobs by working with Congress to put requisite financial resources toward shoring up domestic supply."

The federal government can guarantee the purchase of electrical steel supplies up to a defined amount, as needed for critical electrical industries to meet electrification goals and to incentivize increased manufacturing capacity of the two primary types of electrical steel, they said.

Those two types are grain-oriented electrical steel and non-grain-oriented electrical steel and they both are used in a broad range of electrical equipment, the groups said. They noted that the US is dependent on a single manufacturer of GOES, which hinders their ability to source supplies domestically and meet domestic content thresholds.

Although not named in the letter, Cleveland Cliffs Inc. is the dominant domestic manufacturer of electrical steel.

"While two domestic manufacturers have committed recently to increase GOES production, even with this expanded output, domestic supply levels will still fall far short to meet electrification goals" and satisfy the demand created by the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, according to the letter.