Congressionally mandated energy efficiency standards for distribution transformers, including liquid-immersed, low-voltage dry-type, and medium-voltage dry-type equipment, have been finalized by the U.S. Department of Energy (DOE). The revised standards are intended to increase the resiliency and efficiency of the U.S. power grid and to save utility, commercial and industrial entities $824 million per year in electricity costs.

The updated standards can be met with grain-oriented electrical steel (GOES), most of which will be manufactured in the U.S. A small segment of the market will be met with amorphous alloy, also expected to be domestically manufactured. About 75% of the market will be able to achieve the standards with GOES under the final rule, which also extends the compliance timeline from three years to five years.

Distribution transformers are crucial components in grid modernization and are increasingly needed for stepping down power for electric vehicle chargers. Efficiency improvements to the more than 60 million distribution transformers mounted on utility poles and pads nationwide will reduce wasted energy on the power grid and provide significant energy savings.

The new standards are expected to protect existing domestic supply of core materials used in distribution transformers, increasing resiliency in the distribution transformer supply chain, while preserving steel union manufacturing jobs in Pennsylvania and Ohio. The GOES production at these same locations will also benefit from DOE’s recent $75 million grant for furnace upgrades to slash carbon emissions, which are expected to make U.S. domestic GOES amongst the lowest emission GOES in the world.