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Faced with unprecedented delivery times and soaring costs, the transformer supply chain crisis threatens the backbone of the power industry, and there is an urgent need to improve manufacturing capabilities and innovative solutions.
1. Current Status of the Transformer Industry Crisis
l Extended Delivery Time: Since the COVID pandemic, transformer delivery times have increased dramatically and not relieved until now. In April, global research and consultancy firm Wood Mackenzie warned that transformer lead times have continued an upward trajectory and now stand at 115 to 130 weeks on average. For large transformers like substation power transformers and generator step-up (GSU) transformers take 120 to 210 weeks—or 2.3 to 4 years.
l Rising costs: Transformer prices have risen 60% to 80% since January 2020, mainly driven by rising raw material commodity prices. In particular, electrical steel (GOES) prices have almost doubled, and copper prices have soared by more than 40%.
2. Demand Drivers
l New Power Generation Models and Demand Growth: The power industry is experiencing unprecedented growth, including a surge in renewable energy projects and new loads from data centers and electrification in the industrial, commercial, transportation and residential sectors.
l Infrastructure renewal and expansion: The power grid is facing the triple pressure of decarbonization, aging infrastructure and growing demand, and urgently needs renewal and expansion.
3. Industry Response Strategies
l Long-term agreements and commitments: Long-term supply agreements are crucial for transformer manufacturers, helping to better plan material production and inventory and ensure a stable supply of components.
l Innovation and technology improvement: Improve production efficiency and quality through technological innovation to cope with demand growth and cost pressure, and ensure the stability and sustainable development of power supply.
l Forecasting and planning: Understand demand, plan in advance, and effectively ensure the stability of power supply and business continuity.
