Large Power Transformer Study - June 2012 - 0

LARGE POWER TRANSFORMERS AND
THE U.S. ELECTRIC GRID
Infrastructure Security and Energy Restoration

Office of Electricity Delivery and Energy Reliability
U.S. Department of Energy
Large Power Transformers and the U.S. Electric Grid

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FOR FURTHER INFORMATION
This report was prepared by the Office of Electricity Delivery and Energy Reliability under the
direction of Patricia Hoffman, Assistant Secretary, and William Bryan, Deputy Assistant
Secretary.
Specific questions about information in this report may be directed to Dr. Kenneth Friedman,
Senior Policy Advisor (kenneth.friedman@hq.doe.gov).
Tiffany Y. Choi of ICF International contributed to this report.

The U.S. Department of Energy would like to acknowledge the following reviewers for their
contribution to this report:
ABB
American Transmission Company
North American Electrical Reliability Corporation
Ontario Power Generation
Scott, Daniel
U.S. Department of Commerce
U.S. Department of Homeland Security
U.S. Federal Energy Regulatory Commission
Cover photo sources:

Large power transformer photo: Siemens.com
High-voltage transmission lines photo: Utilities-me.com
DOE / OE / ISER June 2012 ii
TABLE OF CONTENTS
List of Figures ............................................................................................................................ iv
List of Tables.............................................................................................................................. iv
Executive Summary ........................................................................................................................ v
I. Introduction......................................................................................................................... 1
1.1 Focus of the Study................................................................................................................. 1
1.2 Background ........................................................................................................................... 2
1.3 Scope and Definition of Large Power Transformers............................................................ 3
II. Power Transformer Classification ...................................................................................... 5
2.1 Power Transformers in the Electric Grid .............................................................................. 5
2.2 Physical Characteristics of Large Power Transformers ........................................................ 6
III. Large Power Transformer Procurement and Manufacturing .............................................. 8
3.1 Overview ............................................................................................................................... 8
3.1.1 Prequalification of Manufacturers ............................................................................. 8
3.1.2 Bidding Process ......................................................................................................... 9
3.1.3 Production .................................................................................................................. 9
3.1.4 Lead Time .................................................................................................................. 9
3.1.5 Transportation .......................................................................................................... 10
3.2 Raw Materials Used in Large Power Transformers ............................................................ 11
3.2.1 Electrical Steel and Large Power Transformers ...................................................... 12
3.2.2 Global Electrical Steel Suppliers ............................................................................. 12
3.3 Variability of Commodity Prices ........................................................................................ 13
IV. Power and Transmission Infrastructure Investment Trends ............................................. 15
4.1 Global Power Generation Capacity..................................................................................... 15
4.2 Transmission Infrastructure Investment in the United States ............................................. 17
V. Global Power Transformer Market ................................................................................... 19
5.1 U.S. Power Transformer Market Overview ........................................................................ 20
5.2 Key Global Suppliers of Power Transformers .................................................................... 22
5.2.1 Consolidation of Power Equipment Manufacturers................................................. 24
5.3 Large Power Transformer Manufacturing Capacity in North America .............................. 25
5.4 Historical Imports of Large Power Transformers to the United States ............................... 27
5.5 Challenges in Global Sourcing of Large Power Transformers ........................................... 30
VI. Concluding Remarks......................................................................................................... 30
Appendix A. Acronyms ................................................................................................................ 33
Appendix B. Global Electrical Steel Manufacturer Profiles......................................................... 34
DOE / OE / ISER June 2012 iii
Appendix C. Planned Transmission Lines in the United States ................................................... 36

Appendix D. Historical Imports of Large Power Transformers in the United States................... 37
Appendix E. Large Power Transformers Manufacturing Facilities in North America................. 38
Appendix F. Selected Global Power Transformer Manufacturers............................................... 39
Appendix G. Power Transformer Industry in China..................................................................... 40
Appendix H. Power Transformer Manufacturers Web sites......................................................... 42
Appendix I. Bibliography ............................................................................................................. 43
LIST OF FIGURES
Figure 1. Electric Power Grid Representation ................................................................................ 5
Figure 2. Core-Type Large Power Transformer Showing Major Internal Components................ 6
Figure 3. Large Power Transformer Procurement Process and Estimated Lead Time................... 8
Figure 4. Transport of Large Power Transformers ....................................................................... 10
Figure 5. World Installed Production of Electrical Steel in 2007................................................. 13
Figure 6. Historical Copper and Steel Price Variability From 2000 to 2011 ............................... 14
Figure 7. Global Installed Power Generation Capacity From 2005 to 2035 ................................ 15
Figure 8. Estimated Power Generation Infrastructure Investment Needs in the World From 2010
to 2035 .......................................................................................................................................... 16
Figure 9. Historical Transmission Investment in the United States From 1975 to 2003.............. 17
Figure 10. Estimated Historical and Projected Transmission Investment in the United States
From 1995 to 2015........................................................................................................................ 18
Figure 11. Yearly Installment of Large Power Transformers in the United States From 1948 to
2006.............................................................................................................................................. 21
Figure 12. Estimated Power Transformer Markets: United States v. China in 2010 ................... 22
Figure 13. Global Suppliers of Power Transformers in 2011 ....................................................... 23
Figure 14. Large Power Transformer Manufacturing Facilities in North America in 2012 ......... 26
Figure 15. U.S. Imports of Large Power Transformers by Country From 2005 to 2011 ............. 27
Figure 16. Global Suppliers of Large Power Transformers to the United States in 2011 ............ 28
Figure 17. Projected Demand Growth for Large Power Transformers in the United States through
2030.............................................................................................................................................. 29
LIST OF TABLES
Table 1. Transmission Voltage Classes .......................................................................................... 4
Table 2. Estimated Magnitude of Large Power Transformers in 2011.......................................... 7
Table 3. Electrical Steel Grades.................................................................................................... 12
Table 4. Summary of Power Transformer Market (60 MVA +) in the United States in 2010 ..... 21
Table 5. Key International Mergers and Acquisitions of Power Equipment Industry From 1980 to
2010.............................................................................................................................................. 24
DOE / OE / ISER June 2012 iv
EXECUTIVE SUMMARY
The Office of Electricity Delivery and Energy Reliability, U.S. Department of Energy (DOE)
assessed the procurement and supply environment of large power transformers (LPT)1 in this
report. LPTs have long been a major concern for the U.S. electric power sector, because failure
of a single unit can cause temporary service interruption and lead to collateral damages, and it
could be difficult to quickly replace it. Key industry sourcesincluding the Energy Sector
Specific Plan, the National Infrastructure Advisory Councils A Framework for Establishing
Critical Infrastructure Resilience Goals and the North American Electric Reliability
Corporations Critical Infrastructure Strategic Roadmaphave identified the limited availability
of spare LPTs as a potential issue for critical infrastructure resilience in the United States, and
both the public and private sectors have been undertaking a variety of efforts to address this
concern. Therefore, DOE examined the following topics in this report: characteristics and
procurement of LPTs, including key raw materials and transportation; historical trends and future
demands; global and domestic LPT suppliers; and potential issues in the global sourcing of
LPTs.
LPTs are custom-designed equipment that entail significant capital expenditures and long lead
times due to an intricate procurement and manufacturing process. Although the costs and pricing
vary by manufacturer and by size, an LPT can cost millions of dollars and weigh between
approximately 100 and 400 tons (or between 200,000 and 800,000 pounds). Procurement and
manufacturing of LPTs is a complex process that requires prequalification of manufacturers, a
competitive bidding process, the purchase of raw materials, and special modes of transportation
due to its size and weight. The result is the possibility of extended lead times that could stretch
beyond 20 months if the manufacturer has difficulty obtaining certain key parts or materials.
Two raw materialscopper and electrical steelaccount for over 50 percent of the total cost of
an LPT. Electrical steel is used for the core of a power transformer and is critical to the
efficiency and performance of the equipment; copper is used for the windings. In recent years,
the price volatility of these two commodities in the global market has affected the manufacturing
conditions and procurement strategy for LPTs.
The rising global demand for copper and electrical steel can be partially attributed to the
increased power and transmission infrastructure investment in growing economies as well as the
replacement market for aging infrastructure in developed countries. The United States is one of
the worlds largest markets for power transformers and holds the largest installed base of LPTs
and this installed base is aging. The average age of installed LPTs in the United States is
approximately 40 years, with 70 percent of LPTs being 25 years or older. While the life
expectancy of a power transformer varies depending on how it is used, aging power transformers
are subject to an increased risk of failure.
Since the late 1990s, the United States has experienced an increased demand for LPTs;
however, despite the growing need, the United States has had a limited domestic capacity to
produce LPTs. In 2010, six power transformer manufacturing facilities existed in the United
States, and together, they met approximately 15 percent of the Nations demand for power
1Throughout this report, the term large power transformer (LPT) is broadly used to describe a power transformer
with a maximum capacity rating greater and or equal to 100 MVA unless otherwise noted.
DOE / OE / ISER June 2012 v
transformers of a capacity rating greater than or equal to 60 MVA. Although the exact statistics
are unavailable, global power transformer supply conditions indicate that the Nations reliance
on foreign manufacturers is even greater for extra high-voltage (EHV) power transformers with a
maximum voltage rating greater than or equal to 345 kV.
However, the domestic production capacity for LPTs in the United States is improving. In
addition to EFACECs first U.S. transformer plant that began operation in Rincon, Georgia in
April 2010, at least three new or expanded facilities will produce EHV LPTs starting in 2012 and
beyond. These include: SPX Transformer Solutions facility in Waukesha, Wisconsin, which
completed expansion in April 2012; Hyundai Heavy Industries new manufacturing facility,
which was inaugurated in Montgomery, Alabama in November 2011; and Mitsubishis proposed
development of a power transformer plant in Memphis, Tennessee, which is expected to be
completed in 2013.
The upward trend of transmission infrastructure investment in the United States since the late
1990s is one of the key drivers for the recent addition of domestic manufacturing capacity for
power transformers. Between 2005 and 2011, the total value of LPTs imported to the United
States grew by 188 percent (or at an annual growth rate of 34 percent) from $284 to $817 million
U.S. dollar. Power transformers are globally traded equipment, and the demand for this
machinery is forecasted to continue to grow at a compound annual growth rate of three to seven
percent in the United States according to industry sources. In addition to replacing aging
infrastructure, the United States has needs for transmission expansion and upgrades to
accommodate new generation connections and maintain electric reliability.
While global procurement has become a common practice for many utilities to meet their
growing need for LPTs, there are several challenges associated with it. Such challenges include:
the potential for extended lead times due to unexpected global events (e.g., hurricanes) or
difficulty in transportation; the fluctuation of currency exchange rates and material prices; and
cultural differences and communication barriers. The utility industry is also facing the challenge
of maintaining experienced in-house workforce that is able to address procurement and
maintenance issues.
The U.S. electric power grid is one of the Nations critical life-line infrastructure on which many
other critical infrastructure depend, and the destruction of this infrastructure can cause a
significant impact to national security and the U.S. economy. The U.S. electric grid faces a wide
variety of possible threats, including natural, physical, cyber, and space weather. While the
potential effect of these threats on the electric power grid is uncertain, public and private
stakeholders of the energy industry are considering various risk management strategies to
mitigate potential impacts. This DOE report, through the assessment of LPT procurement and
supply issues, provides information to help the industrys continuous efforts to build critical
energy infrastructure resilience in todays complex, interdependent global economy.
DOE / OE / ISER June 2012 vi
I. INTRODUCTION
1.1 FOCUS OF THE STUDY
In todays dynamic, intersected global economies, understanding market characteristics and
securing the supply basis of critical equipment, such as large power transformers (LPTs),2
becomes increasing imperative for maintaining the resilience of the Electricity Subsector.3 The
purpose of this report is to provide information to decision-makers in both public and private
sectors about the countrys reliance on foreign-manufactured LPTs and potential supply issues.
The Office of Electricity Delivery and Energy Reliability,

U.S. Department of Energy (DOE), as part of its on-going Paths Forward
efforts to enhance the resilience of the Nations critical Refine our understanding of the
infrastructure, assessed the manufacturing and supply threats and risks associated with
conditions of LPTs in this report.4 Power transformers have the global supply chain through
long been a major concern for the U.S. electric power updated assessments.
sector.5 Failure of a single unit could result in temporary
- The National Strategy for
service interruption and considerable revenue loss, as well Global Supply Chain Security,
as incur replacement and other collateral costs. Should White House, 2012
several of these units fail catastrophically, it will be
challenging to replace them.
LPTs are special-ordered machineries that require highly-skilled workforces and state-of-the-art
facilities. Installation of LPTs entails not only significant capital expenditures but also a long
lead time due to intricate manufacturing processes, including securing raw materials. As a result,
asset owners and operators invest considerable resources to monitor and maintain LPTs, as
failure to replace aging LPTS could present potential concerns including mounting maintenance
costs and unexpected power failure.
2 Throughout this report, the term large power transformer (LPT) is broadly used to describe a power transformer
with a maximum capacity rating of 100 MVA or higher, unless otherwise noted. See Section 1.3, Scope and
Definition of Large Power Transformers, for discussions relating to the inconsistencies in the industrys definition
for LPTs, and see Section 2.2, Physical Characteristics of Large Power Transformers, for key physical attributes of
LPTs.
3 The Electricity Subsector refers to the electricity industry as described in the Energy Sector Specific Plan (SSP).
The Energy Sector, as delineated by Homeland Security Presidential Directive 7 (HSPD-7), includes the production,
refining, storage, and distribution of oil, gas, and electric power, except for hydroelectric and commercial nuclear
power facilities. The Energy Sector is not monolithic and contains many interrelated industries that support the
exploration, production, transportation, and delivery of fuels and electricity to the U.S. economy. This SSP
distinguishes between the Electricity Subsector and the Oil and Natural Gas Subsector. See the 2010 Energy SSP,
http://energy.gov/sites/prod/files/oeprod/DocumentsandMedia/Energy_SSP_2010.pdf (accessed January 5, 2012).
4
The Homeland Security Presidential Directive-7 (HSPD-7) established the United States national policy for
identifying and prioritizing critical infrastructure for protection from terrorist attacks. It also identified the Nations
18 critical infrastructure sectors and the agencies that would be responsible for carrying out the policy for each
sector. The DOE is the Sector-Specific Agency responsible for the coordination of critical infrastructure protection
activities for the Energy Sector, which consists of two Subsectors: Oil and Natural Gas and Electricity. See HSPD-7
full text at http://www.dhs.gov/xabout/laws/gc_1214597989952.shtm (accessed January 4, 2012).
5 Such concern was raised in a June 1990 Congressional Report. See U.S. Congress, Office of Technology
Assessment, Physical Vulnerability of Electric System to Natural Disasters and Sabotage, OTA-E-453 (Washington,
DC: U.S. Government Printing Office, June 1990).
DOE / OE / ISER June 2012 1
Therefore, this report examines the following:

Classification and physical characteristics of LPTs;
Power transformer procurement and manufacturing processes;
Supply sources and price variability of two raw commoditiescopper and electrical
steel;
Global and domestic power transformer market and manufacturing conditions;
Key global suppliers of LPTs to the United States; and
Potential challenges in the global sourcing of power transformers.
1.2 BACKGROUND
As applied to infrastructure, the concept of resilience embodies the ability to adapt to changing
conditions and prepare for, withstand, and rapidly recover from disruption.6 The resilience
strategy is a cornerstone of the United States national policy as adopted in the 2009 National
Infrastructure Protection Plan (NIPP), the 2010 National Security Strategy, and the 2012
National Strategy for Global Supply Chain Security.7 Broadly defined as the ability to withstand
and recover from adversity, resilience is also increasingly applied to broad technical systems and
social context.
The Electricity Subsector has long embraced resilience as

part of the continuity of operations planning, risk Challenges and Opportunities
in Increasing Resilience
management, and systems reliability. These practices
have been so well established in the operation of the The limited availability of [spare]
electric grid that utility owners and operators often do not extra-high-voltage transformers in
think of their practices as resilience.8 Although crisis situations presents potential
reliability and redundancy are built into the system, the supply chain vulnerability.
electricity industry identified that the limited domestic - A Framework for Establishing
manufacturing capacity of high-voltage power Critical Infrastructure Resilience
transformers could present a potential supply concern in Goals, National Infrastructure
Advisory Council, 2010
the event that many LPTs failed simultaneously.9
The same issue was brought to light in the Electricity Subsectors High-Impact Low-Frequency
(HILF) Risk Workshop in November 2009.10 Cosponsored by DOE and the North American
6 The National Security Strategy, the White House, May 2010,

http://www.whitehouse.gov/sites/default/files/rss_viewer/national_security_strategy.pdf (accessed December 15,
2011).
7 See the National Infrastructure Protection Plan: Partnering To Enhance Protection and Resiliency, the U.S.
Department of Homeland Security, 2009, http://www.dhs.gov/xlibrary/assets/NIPP_Plan.pdf (accessed December

15, 2011); the National Security Strategy, the White House, May 2010,
http://www.whitehouse.gov/sites/default/files/rss_viewer/national_security_strategy.pdf (accessed December 15,
2011) ; and the National Strategy for Global Supply Chain Security, the White House, January 25, 2012,
http://www.whitehouse.gov/sites/default/files/national_strategy_for_global_supply_chain_security.pdf (accessed
February 1, 2011).
8
A Framework for Establishing Critical Infrastructure Resilience Goals, the National Infrastructure Advisory
Council, October 16, 2010, http://www.dhs.gov/xlibrary/assets/niac/niac-a-framework-for-establishing-critical-
infrastructure-resilience-goals-2010-10-19.pdf (accessed December 8, 2011).
9 Ibid.
10 High-Impact, Low-Frequency Event Risk to the North American Bulk Power System, NERC, June 2010,
http://www.nerc.com/files/HILF.pdf (accessed November 30, 2011).
Electrical Reliability Corporation (NERC), the HILF Risk Workshop examined select severe
impact risks to the Nations electrical grid. The workshop participants produced a report entitled
High Impact, Low Frequency Event Risk to the North American Bulk Power System, outlining
the results of the joint NERC/DOE workshop and recommendations for industry partners.
The workshop considered four main risk scenarios concerning the Electricity Subsector:
1. A physical attack on electricity system equipment that disabled difficult-to-replace
equipment in multiple generating stations or substations and caused a prolonged outage;
2. A coordinated cyber attack that impaired the integrity of multiple control systems;
3. A severe geomagnetic disturbance (GMD) that damaged difficult-to-replace generating
station and substation equipment and caused a cascading effect on the system; and
4. A potential widespread pandemic influenza that resulted in the loss of critical personnel.
Multi-Element Approach to Address
In November 2010, NERC released the Critical
Severe Risk Impacts
Infrastructure Strategic Roadmap to provide a
framework on how to address some of the severe Prevention: Work with infrastructure
impact risks identified in the HILF report. 11 The vendors and suppliers to enhance
Roadmap supported the Energy Sector-Specific identification of vulnerabilities,
protections, and recoverability.
Plans vision and goals as well as strengthening of
the public-private partnership.12 Further, the Recovery: Verify and enhance plans to
Roadmap provided recommendations on how to provide human and material resources,
enhance electricity reliability and resilience from an with particular attention on equipment
all-hazards perspective and suggested direction for that may not be readily available.
the Electricity Subsector. - Critical Infrastructure Strategic
Roadmap, NERC, 2010
In the Roadmap, the Electricity Subsector
Coordinating Council advised electricity sector

entities to consider a full spectrum of risk management elements to address severe impact risks
planning, prevention, mitigation, and recovery.13 In accordance with the Roadmap, both public
and private sectors of the Electricity Subsector have undertaken a variety of activities that
consider these risk management elements.
This assessment supplements the sectors ongoing resilience efforts, specifically of prevention
and recovery elements, through an examination of the supply chain of LPTs.
1.3 SCOPE AND DEFINITION OF LARGE POWER TRANSFORMERS

Throughout this report, the term LPT is broadly used to describe a power transformer with a
maximum nameplate rating of 100 megavolt-amperes (MVA) or higher unless otherwise noted.
However, it should be noted that there is no single, absolute industry definition or criterion for
11 Critical Infrastructure Strategic Roadmap, Electricity Sub-sector Coordinating Council, August 2010,
http://www.nerc.com/docs/escc/ESCC_Strat_Roadmap_V3_31_Aug2010_clean.pdf Class (accessed November
Voltage 30, 2011).
Ratings (kV)
Note: The roadmap does not include discussion on the pandemic risk.
Medium Voltage
12 For the Energy Sector goals and visions, see Energy Sector Specific Plan, 2010, 34.5, 46, 69, 115/138
High Voltage
http://energy.gov/sites/prod/files/oeprod/DocumentsandMedia/Energy_SSP_2010.pdf 115/138,
(accessed 161, 230
December 7, 2011).
13 The Electricity Subsector Coordinating Council represents the electricity sector as described in the Energy Sector
Extra High Voltage 345, 500, 765
Specific Plan, which includes bulk power system entities defined by Section 215 of the Federal Power Act.
what constitutes an LPT and that additional specifications are often used to describe different
classes of LPTs.
Table 1. Transmission Voltage Classes
The size of a power transformer is
determined by the primary (input) voltage,
the secondary (output) voltage, and the load
capacity measured by MVA. Of the three, the
capacity rating, or the amount of power that
can be transferred, is often the key parameter Source: DOE, 2006; see Footnote 14. Modified based on
rather than the voltage.14 In addition to the industry review.
capacity rating, voltage ratings are often used
to describe different classes of power transformers, such as extra high voltage (EHV), 345 to 765
kilovolts (kV); high voltage, 115 to 230 kV; medium voltage, 34.5 to 115 kV; and distribution
voltage, 2.5 to 35 kV.15 A power transformer with a capacity rating greater than or equal to 100
MVA typically has a voltage rating of greater than or equal to 115 kV on the high side; therefore,
an LPT with a capacity rating of 100 MVA or greater can have a transmission voltage class of
medium, high, or extra high (greater than or equal to115 kV).
There are considerable differences in the definitions used to describe an LPT, including the
transmission voltage classifications shown in Table 1. This report derived the criterion of an LPT
from the following sources:
In a 2006 DOE study entitled, Benefits of Using Mobile Transformers and Mobile
Substations for Rapidly Restoring Electrical Service, LPTs were described as high-
power transformers . . . with a rating over 100 MVA.16
A 2011 preliminary report from an ongoing antidumping investigation by the United
States International Trade Commission (USITC) established LPTs as large liquid
dielectric power transformers having a top power handling capacity greater than or equal
to 60,000 kilovolt amperes (60 megavolt amperes), whether assembled or unassembled,
complete or incomplete.17
The 2011 NERC Spare Equipment Database Task Force Report defined LPTs as
follows:18
Benefits of Using Mobile Transformers and Mobile Substations for Rapidly Restoring Electrical Service, a
14
report to the United States Congress pursuant to Section 1816 of the Energy Policy Act of 2005, U.S. Department of
Energy, August 2006.
http://energy.gov/sites/prod/files/oeprod/DocumentsandMedia/MTS_Report_to_Congress_FINAL_73106.pdf
(accessed November 1, 2010).
15 Ibid. This study does not consider distribution transformers in the assessment, as the United States maintains
domestic manufacturing capacity and backup supplies of distribution transformers. Moreover, a localized power
outage at distribution level does not present significant reliability threats, and utilities often maintain spare
transformer equipment of this size range.
16 Ibid.
17
Large Power Transformers from Korea, U.S. International Trade Commission (USITC), Preliminary
Investigation No. 731-TA-1189, September 2011, http://www.usitc.gov/publications/701_731/Pub4256.pdf
(accessed December 11, 2012).
18 Special Report: Spare Equipment Database System, the North American Electric Reliability Corporation, October
2011, http://www.nerc.com/docs/pc/sedtf/SEDTF_Special_Report_October_2011.pdf (accessed November 22,

2011).
o Transmission Transformers: Low voltage side is rated 100 kV or higher and the
maximum nameplate rating is 100 MVA or higher.
o Generation Step-up Transformers: High voltage side is 100 kV or higher and the
maximum nameplate rating is 75 MVA or higher.
In addition, preliminary findings from the aforementioned USITC antidumping investigation are
cited throughout the report; however, the investigation was still ongoing at the time of the
analysis and therefore, these preliminary findings are not conclusive until the USITC reaches the
final decisions on the case.19
II. POWER TRANSFORMER CLASSIFICATION

2.1 POWER TRANSFORMERS IN THE ELECTRIC GRID
North Americas electricity infrastructure represents more than $1 trillion U.S. dollars (USD) in
asset value and is one of the most advanced and reliable systems in the world. The United States
bulk grid consists of over 360,000 miles of transmission lines, including approximately 180,000
miles of high-voltage lines, connecting to over 6,000 power plants.20 Power transformers are a
critical component of the transmission system, because they adjust the electric voltage to a
suitable level on each segment of the power transmission from generation to the end user. In
other words, a power transformer steps up the voltage at generation for efficient, long-haul
Figure 1. Electric Power Grid Representation

Source: DOE, 2006; see Footnote 14. Modified based on industry review.
On July 14, 2011, an antidumping duty petition was filed with the U.S. Department of Commerces International
19
Trade Administration and the USITC concerning imports of LPTs from two Korean producers, Hyundai Heavy
Industries and Hyosung Corporation. The petition alleged that between 2008 and 2010, the Korean manufacturers
aggressively expanded in the United States market by selling LPTs at prices that significantly undercut domestic
market prices and in some instances below the domestic producers cost of materials. Final decision on this case is
expected in April 2012.
20 Source: NERC Electricity Supply & Demand Database, http://www.nerc.com/page.php?cid=4|38 (accessed
December 15, 2011).
transmission of electricity and steps it down for distribution to the level used by customers.21
Power transformers are also needed at every point where there is a change in voltage in power
transmission to step the voltage either up or down. Figure 1 illustrates a simplified arrangement
of the U.S. electric grid system.
2.2 PHYSICAL CHARACTERISTICS OF LARGE POWER TRANSFORMERS

An LPT is a large, custom-built piece of equipment that is a critical component of the bulk
transmission grid. Because LPTs are very expensive and tailored to customers specifications,
they are usually neither interchangeable with each other nor produced for extensive spare
inventories.22 According to an industry source, approximately 1.3 transformers are produced for
each transformer design. Figure 2 illustrates a standard core-type LPT and its major internal
components.
Although LPTs come in a wide variety of sizes and configurations, they consist of two main
active parts: the core, which is made of high-permeability, grain-oriented, silicon electrical steel,
layered in pieces; and windings, which are made of copper conductors wound around the core,
providing electrical input and output. Two basic configurations of core and windings exist, the
core form and the shell form. In the usual shell-type power transformer, both primary and
secondary are on one leg and are surrounded by the core, whereas in a core-type power
Figure 2. Core-Type Large Power Transformer Showing Major Internal Components

Source: ABB, Liquid-Filled Power Transformers,
http://www05.abb.com/global/scot/scot252.nsf/veritydisplay/299a52373c3fd0e6c12578be003a476f/$file/pptr_mpt_brochure_2406pl170-
w1-en.pdf (accessed August 16, 2011).
21 ABB, http://www.abb.com/cawp/db0003db002698/1d5674d769397bc8c12572f40045bd75.aspx (accessed

December 7, 2011). Electricity is generally produced at 5 to 34.5 kV and distributed at 15 to 34.5 kV, but
transmitted at 115 to 765 kV for economical, low-loss, long-distance transmission on the grid.
22
Large Power Transformers from Korea, USITC, Preliminary Investigation, September 2011.
transformer, cylindrical windings cover the core legs. Shell form LPTs typically use more
electrical steel for the core and are more resilient to short-circuit in the transmission systems and
are frequently used in industrial applications.23 The core and windings are contained in a
rectangular, mechanical frame called the tank. Other parts include bushings, which connect
LPTs to transmission lines, as well as tap changers, power cable connectors, gas-operated relays,
thermometers, relief devices, dehydrating breathers, oil level indicators, and other controls.24
Voltage Rating Capability Approximate Approximate Weight
Power (Primary-Secondary)
transformer costs and pricing MVAvary by manufacturer,
Rating by market condition,
Price ($) & Dimensionsand by location
of theTransmission
manufacturing facility. In 2010, the approximate cost of an LPT with an MVA rating
Transformer
between 75 MVA and 500 MVA was estimated Threeto range from $2 to $7.5 million in the United
Phase
States; however, these estimates were 300
230115kV
Free on Board$2,000,000
(FOB) factory costs,170 exclusive
tons (340,000 of lb)
transportation, installation, and other associated expenses, which generally21ftadd 25L25ft
W27ft to H30 percent
345138kV
to the total cost 500
(see Table 2).25 Raw materials, copper and 335
$4,000,000
particularly tons (670,000 lb)
electrical steel, are a
45ft W25ft L30ft H
significant factor in
765138kVpower transformer prices.
750 Transportation
$7,500,000 is also an important element
410 tons (820,000 lb) of the
total LPT cost, because an LPT can weigh as much as 410 tons (820,000 lb) and often requires
56ft W40ft L45ft H
Single Phase
long-distance transport. 235 tons (470,000 lb)
765345kV 500 $4,500,000
40ft W30ft L40ft H
Table Generator
2. Estimated Magnitude
Step-Up of Large Power Transformers in 2011
Transformer
Three Phase
11513.8kV 75 $1,000,000 110 tons (220,000 lb)
16ft W25ft L20ft H
345-13.8kV 300 $2,500,000 185 tons (370,000 lb)

21ft W40ft L27ft H
Single Phase
34522kV 300 $3,000,000 225 tons (450,000 lb)
35ft W20ft L30ft H
76526kV 500 $5,000,000 325 tons (650,000 lb)

33ft W25ft L40ft H
Note: Prices are FOB factory and do not include taxes, transportation, special features and accessories, special testing (short-circuit, etc.),
insulating oil, field installation, and/or optional services. The total installed cost is estimated to be about 2530 percent higher.
Source: NERC Special Report: Spare Equipment Database System, 2011; see Footnote 25.
Large Power Transformers from Korea, USITC, Preliminary Investigation, September 2011, p. I-5.
23
Benefits of Using Mobile Transformers and Mobile Substations for Rapidly Restoring Electrical Service, U.S.
24
Department of Energy, 2006.

25 NERC Special Report: Spare Equipment Database System, October 2011,
http://www.nerc.com/docs/pc/sedtf/SEDTF_Special_Report_October_2011.pdf (accessed November 11, 2011).
LPTs require substantial capital and a long-lead time (in excess of six months) to manufacture,
and its production requires large crane capacities, ample floor space, and adequate testing and
drying equipment. The following section provides further discussions on the production
processes and requirements of LPTs, including transportation and key raw commodities.
III. LARGE POWER TRANSFORMER PROCUREMENT AND

MANUFACTURING
3.1 OVERVIEW
This section provides an overview of key steps in the procurement and manufacturing process of
an LPT, including bidding, production, and transportation. This overview is then followed by a
discussion of key raw materialselectrical steel and copperwhich are integral to LPTs. The
several distinct steps and procedures as well as the estimated lead time for each step required in
power transformer manufacturing and procurement are illustrated in Figure 3.
3.1.1 PREQUALIFICATION OF MANUFACTURERS

As discussed in Section II, LPTs are custom-made equipment that incurs significant capital costs.
Utilities generally procure LPTs through a competitive bidding process, which all interested
producers must prequalify to be eligible to bid. Prequalification is a lengthy process that can take
years.26 A typical qualification process includes an audit of production and quality processes,
verification of certain International Organization for Standardization (ISO) certifications, and
Figure 3. Large Power Transformer Procurement Process and Estimated Lead Time
Note: This figure illustrates an optimal flow of the manufacturing process and the estimated lead time, which can extend beyond the
estimated time frame shown.
* Variable depending on distance and logistical issues.
Source: USITC and industry estimate.
26 Conference Hearing for Investigation No.731-TA-1189, In the Matter of Large Power Transformers from Korea,
USITC, August 4, 2011,
http://www.usitc.gov/trade_remedy/731_ad_701_cvd/investigations/2011/large_power_transformers/preliminary/P
DF/Conference%2008-04-2011.pdf (accessed November 23, 2011).
inspection of the manufacturing environment. This process can often be rigorous and costly to
purchasers; however, it is an important step, as the manufacturing environment and capability
can significantly affect reliability of the product, especially of high-voltage power
transformers.27
3.1.2 BIDDING PROCESS

A standard bidding process is initiated by a purchaser, who sends commercial specifications to
qualified LPT producers. The producers then design LPTs to meet the specifications, estimate
the cost, and submit a bid to the purchaser. The bids not only include the power transformer but
also services such as transportation, installation, and warranties.28 Except for a few
municipalities, most U.S. utilities do not announce the amount of the winning bid or the identity
of the winning bidder. The winning bidder is notified, and bid terms normally require that the
results be kept confidential by all parties involved.29
3.1.3 PRODUCTION
The typical manufacturing process of an LPT consists of the following steps:30
1. Engineering and design: LPT design is complex, balancing the costs of raw materials
(copper, steel, and cooling oil), electrical losses, manufacturing labor hours, plant
capability constraints, and shipping constraints.
2. Core building: Core is the most critical component of an LPT which requires highly-
skilled work force and cold-rolled grain-oriented (CRGO) laminated electrical steel.
3. Windings production and assembly of core and windings: Windings are
predominantly copper and have an insulating material.
4. Drying operations: Excess moisture must be removed from the core and windings,
because moisture can degrade the dielectric strength of the insulation.
5. Tank production: A tank must be completed before the winding and core assembly
finish the drying phase so that the core and windings do not start to reabsorb moisture.
6. Final assembly of the LPT: The final assembly must be done in a clean environment;
even a tiny amount of dust or moisture can deteriorate the performance of an LPT.
7. Testing: Testing is performed to ensure the accuracy of voltage ratios, verify power
ratings, and determine electrical impedances.
In the manufacturing process, certain parts can be produced either at the transformer plant or at
another vendor or subsidiary location, depending on how vertically integrated the particular plant
is, whether the plant has the necessary tools and capabilities, as well as economic reasons.31
3.1.4 LEAD TIME

In 2010, the average lead time between a customers LPT order and the date of delivery ranged
from five to 12 months for domestic producers and six to 16 months for producers outside the
United States.32 However, this lead time could extend beyond 20 months and up to five years in
extreme cases if the manufacturer has difficulties obtaining any key inputs, such as bushings and
27
28 Ibid., p. V-I.
29
Conference Hearing for Investigation No.731-TA-1189, USITC, August 4, 2011, pp. 135136.
30
Large Power Transformers from Korea, USITC, Preliminary Investigation, September 2011, pp. I-9I-10.
31 Conference Hearing for Investigation No.731-TA-1189, USITC, August 4, 2011, p. 95.
32 Ibid., p. II-7.
other key raw materials, or if considerable new engineering is needed.33 An industry source
noted that HV bushings often have a long lead time extending up to five months. Another
industry source added that HV bushings are usually customized for each power transformer and
there are limited bushing manufacturers in the United States. Manufacturers must also secure
supplies of specific raw materials or otherwise could endure an extended lead time.34
Once completed, a power transformer is disassembled for transport, including the removal of oil,
radiators, bushings, convertors, arrestors, etc. The proper transportation of power transformer
and its key parts is critical to ensuring high reliability of the product and minimizing the period
for onsite installation.
3.1.5 TRANSPORTATION
Transporting an LPT is Figure 4. Transport of Large Power Transformers
challengingits large dimensions
and heavy weight pose unique
requirements to ensure safe and
efficient transportation. Current
road, rail, and port conditions are
such that transportation is taking
more time and becoming more
expensive.35 Although rail transport
is most common, LPTs cannot be
transferred over normal rail cars,
because they cannot be rolled down
a hill or bumped into other rail cars,
which can damage the power Note: Workers move wires, lights, and poles to transport a 340-ton power
transformer, causing hours of traffic delay.
transformer. This is because the
Source: Pittsburgh Live News, December 2011.
heaviest load a railroad normally
carries is about 100 tons, or 200,000
lb, whereas an LPT can weight two
to three times that.36
A specialized railroad freight car

known as the Schnabel railcar is
used to transport extremely heavy
loads and to accommodate height via
railways (see Figure 4); however,
there are a limited number of
Schnabel cars available worldwide, Note: Schnabel Car transporting an LPT.
with only about 30 of them in North
Source: ABB
33 Industry source estimate.

34 Ibid., p. II-7.
35 Siemens, Transformer Lifecycle Management, http://www.energy.siemens.com/mx/pool/hq/services/power-
transmission-distribution/transformer-lifecycle-management/TLM_EN_.pdf (accessed November 30, 2011).
America.37 Certain manufacturers operate a Schnabel car rental program and charge up to $2,500
per day for the rental in addition to other applicable fees.38 Access to railroad is also becoming
an issue in certain areas due to the closure, damage, or removal of rail lines.
When an LPT is transported on the road, it requires obtaining special permits and routes from the
department of transportation of each state on the route of the LPT being transported. According
to an industry source, obtaining these special permits can require an inspection of various
infrastructure (e.g., bridges), which can add delay. In addition, transporting LPTs on the road
can require temporary road closures due to traffic issues, as well as a number of crew and police
officers to coordinate logistics and redirect traffic. Figure 4 depicts LPTs being transported via
road and Schnabel car. The transport modular shown is 70 feet long with 12 axles and 192
wheels, and occupies two lanes of traffic.39 The Schnabel car shown in Figure 4 has 20 axles.
Logistics and transportation accounted for approximately three to 20 percent of the total cost of
an LPT for both domestic and international producers.40 While important, this is less significant
than the cost of raw materials and the potential sourcing concerns surrounding them. The next
section describes some of the issues concerning raw materials vital to LPT manufacturing.
3.2 RAW MATERIALS USED IN LARGE POWER TRANSFORMERS

The main raw materials needed to build power transformers are copper conductors, silicon
iron/steel, oil, and insulation materials. The cost of these raw materials is significant, accounting
for well over 50 percent of the total cost of a typical LPT.41 Specifically, manufacturers have
estimated that the cost of raw materials accounted for 57 to 67 percent of the total cost of LPTs
sold in the United States between 2008 and 2010.42 Of the total material cost, about 18 to 27
percent was for copper and 22 to 24 percent was for electrical steel.43
Aluminum windings were used in 1970s and 1980s when copper prices were high; however,
today, only copper is used in LPTs due to certain issues surrounding conductivity, connection
failures, and short circuit strength.44 For this reason, this section examines the issues surrounding
the supply chain and price variability of the two key raw materials used in LPTscopper and
electrical steel.
Large Power Transformer and Schnabel Rail Car, Business and Technical Report, National Security Industrial
37
Readiness, Pre-decisional Draft for Official Use Only.

38
Railcar rental program for power transformer relocation, ABB,
http://www05.abb.com/global/scot/scot252.nsf/veritydisplay/36bcc4e173d5c1558525760b00711641/$file/1zul0046
05-300_railcar_r4.pdf (accessed January 12, 2012).
39
Adam Brandolph, 340-ton transformer makes 9-mile trek, December 30, 2011,
http://www.pittsburghlive.com/x/pittsburghtrib/news/s_774162.html (accessed January 12, 2012).
40
Large Power Transformers from Korea, USITC, Preliminary Investigation, September 2011, p. V-1, and an
industry source estimate.
41
Transformer Manufacturer Uses Only Copper, Copper Development Association Inc.,
http://www.copper.org/applications/electrical/energy/pdf/transformer_manufacturer_a6100.pdf (accessed November
24, 2011).
42
Large Power Transformers from Korea, USITC, Preliminary Investigation, September 2011, p. V-1.
43 Ibid., p. VI-1.
44 According to Copper Development Association Inc., aluminum's conductivity is about 62 percent that of copper
when measured on a volume basis and an industry source review.
3.2.1 ELECTRICAL STEEL AND LARGE POWER TRANSFORMERS

The electrical steel used in power transformer manufacture is a specialty steel tailored to produce
certain magnetic properties and high permeability.45 A special type of steel called CRGO
laminated steel (hereinafter refer to as electrical steel) makes up the core of a power
transformer. Electrical steel is the most critical component that has the greatest impact on the
performance of the power transformer, because it provides low core loss and high permeability,
which are essential to efficient and economical power transformers.
Steel Grades Core Price per
Table 3. Electrical Grade
Thickness
Losses Pound*
Conventional electrical steel is available (mm)
(w/Kg) (USD)
in various grades generally called M3, N/A M2 N/A $1.42
M4, M5, and M6, which are classified 0.23 M3 0.90 $1.37
based on the thickness of the steel (see 0.27 M4 1.12 N/A
Table 3). The quality of electrical steel is 0.30 M5 1.30 N/A
0.35 M6 1.45 $.95
measured in terms of loss of electrical
current flowing in the core. In general,
core losses are measured in watts per *Notes: Price per pound information is estimated 2012 data provided by
kilogram (W/kg), and the thinner the an industry source.
material, the better the quality.46 An Source: World of Steel; see Footnote 45.
industry source noted that electrical steel
grade of M3 or better is typically used in
an LPT to minimize core loss. The price

of electrical steel fluctuates over time and has been recorded as high as $2.80 per pound,
according to an industry source (see Figure 6 for historical price variability of copper and steel).
As a reference, approximately 80,000 120,000 Kg (170,000 to 220,000 lbs.) of core steel is
needed in a power transformer with a capacity rating between 300 and 500 MVA.47
The quality or degree of loss that is desired can vary depending on the primary use of the LPT
whether the LPT located on a site carries a moderate or heavy load. In other words, the grade of
electrical steel used for the LPTs core varies depending on how highly the utility values losses.48
Recently, due to environmental protection requirements, energy savings and minimizing core
loss in power transformers are becoming important. Hi-B grade is a special grade of electrical
steel that not only offers the lowest core loss but also is designed to operate at a much higher flux
density, thus reducing the overall size of the power transformer.49 There are a limited number of
electrical steel suppliers, including Hi-B materials, in the world as is further explored in the
following section.
3.2.2 GLOBAL ELECTRICAL STEEL SUPPLIERS

The availability of electrical steel supply sources worldwide is limited. According to a 2007
DOE technical document, in 2007, there were only 11 manufacturers in the world that produced
About Electrical Steel, World of Steel,

45
http://www.worldofsteel.com/resources/electrical_steel.htm (accessed January 12, 2012).

46 Ibid.
47 Estimates provided by an industry source.
49
Future bright for transformer lamination industry, November 2007,
http://www.kryfs.com/05_EM_Interview.pdf (accessed November 15, 2011).
electrical steel, the major manufacturing countries being Japan, Germany, United States, France,
Korea, and China (see Figure 5).50 The technology for manufacturing Hi-B electrical steel is
closely held, and only six mills in the world produced it in 2007: AK Steel (United States),
POSCO (Korea), Nippon and Kawasaki (Japan), TKES (Germany), and Cogent (United
Kingdom).51 See Appendix B, Global Electrical Steel Manufacturer Profiles, for additional
information on the electrical steel producers.
Figure 5. World Installed Production of Electrical Steel in 2007
Note: Data courtesy of Sumitomo Corp.

Source: Prolec GE, 2008; see Footnote 51.
3.3 VARIABILITY OF COMMODITY PRICES

Since 2004, the global commodity market has experienced price fluctuations for both steel and
copper, driven up largely by the demand from emerging economies. Global consumption of these
metals is expected to continue to rise in the next decade as supply conditions tighten, leading to
increased worries about the future price movement of these key commodities. The average price
of copper more than quadrupled between 2004 and 2011, costing more than $4.27 a pound by
2011 (see Figure 6). While the price of steel shown in this figure does not represent the electrical
steel used to manufacture LPTs, it does shed some light on the volatility of steel commodity
prices worldwide.
In 2011, China was the single biggest buyer of steel in the world, consuming over 610 million
metric tons of steel, almost half of the worlds total steel consumption of 1,360 million metric
tons that year.52 The World Steel Association forecasted that world steel demand would reach a
50 Distribution Transformers Final Rule Technical Support Document, Appendix 3A. Core Steel Market Analysis,
U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, September 2007,
http://www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/transformer_fr_tsd/appendix_3a.pdf
51 Prolec GE, November 2008,
http://www.ieeerepc.org/documents/ProlecGEDOETransformerEfficiencyStandardsREPC.ppt (accessed November

15, 2011).
52
China Steel Products Demand To Reach 646mil Tonnes in 2012, Reuters, December 28, 2011,
http://www.reuters.com/article/2011/12/28/china-steel-consumption-idUSL3E7NS03Q20111228 (accessed January
3, 2012); World Steel Demand to Hit New Record in 2012, Metal Center News, May 4, 2011,
new record of 1,440 million tons in 2012, and that 72 percent of this would come from
developing economies, including China and India.53 Although Chinas primary need for steel is
in the construction sector, China also has a significant demand for power transmission
infrastructure. Particularly, Chinas and Indias demand for steel, including high-efficiency,
grain-oriented steel, is expected to continue to affect the availability and price of steel and copper
to the rest of the world.54
Figure 6. Historical Copper and Steel Price Variability From 2000 to 2011
Source: Bloomberg, 2011.
Faced with the price volatility of raw materials and increased global demand for LPTs in recent
years, the industrys procurement teams have revamped their sourcing strategies. According to a
sourcing analyst from a major U.S. electric utility, a procurement strategy companies are
increasingly using is multi-year blanket agreements in which they lock in volumes and price
points for power transformers.55 Blanket agreements are long-term alliances between an investor-
owned utility and a specific LPT supplier; the utility selects and locks in with one manufacturer
to provide it with LPTs for a period of two to five years. These agreements benefit the utility
because once it provides specifications and buys one power transformer from the supplier,
additional LPTs can be produced and shipped more rapidly. Although industry executives
suggest that sales based on these alliances account for a significant share of LPT sales in the
United States, the actual percentage of sales based on these agreements is unavailable.56
http://www.metalcenternews.com/Editorial/SearchBackIssues/2011Issues/MCNMay2011/542011NewsWorldSteelD
emandHitNewRecord/tabid/5078/Default.aspx (accessed January 3, 2012).
53 Ibid.
54 Distribution Transformers Final Rule Technical Support Document, Appendix 3A. Core Steel Market Analysis,
DOE, September 2007.

55
Judson Schumacher, Buying Transformers, Transmission & Distribution World, May 1, 2006,
http://tdworld.com/business/power_buying_transformers/ (accessed November 15, 2011).
56
Large Power Transformers from Korea, USITC, September 29, 2011.

Two examples of blanket agreements between a utility and manufacturer are:

ABBs five-year agreement with Tennessee Valley Authority in 2002, for power
transformers of 230 kV and below, with an estimated value of $200 million USD;57 and
Hyundai Heavy Industries (HHI)s 10-year agreement with Southern California Edison in
2010, for power transformers of 200 kV to 500 kV, with an estimated value of $600
million USD.58
IV. POWER AND TRANSMISSION INFRASTRUCTURE INVESTMENT

TRENDS
4.1 GLOBAL POWER GENERATION CAPACITY
In 2011, the world had approximately five trillion watts of power generation capacity, which was
growing at an annual rate of two percent. The United States and China had the largest generation
capacity, with each holding about 20 percent of the worlds total installed capacity.
According to the U.S. Energy Information Administrations (EIA) 2011 International Energy
Outlook, the world will add 2,365 GW of new capacity by 2035, a majority of which will be
installed in non-OECD (Organization for Economic Co-operation and Development) countries.59
Chinas generating capacity is forecasted to increase by approximately three percent annually
through 2035, while the United States capacity is expected to rise at less than one percent
Figure 7. Global Installed Power Generation Capacity From 2005 to 2035
Source: 2011 International Energy Outlook, Table F1, U.S. Energy Information Administration, September 2011.
ABB Signs US$ 200 Million Agreement for Power Transformers in United States, ABB, November 26, 2002,
57
http://www.abb.com/cawp/seitp202/c1256c290031524bc1256c7d003d7992.aspx (accessed December 15, 2011).

58
Hyundai Heavy Received US$600 Million Transformer Order, May 23, 2010,
http://english.hhi.co.kr/press/news_view.asp?idx=554&page=1 (accessed December 15, 2011).
59
The EIAs 2011 IEO data are divided according to Organization for Economic Cooperation and Development
members (OECD) and nonmembers (non-OECD). OECD member countries (as of September 1, 2010) are the
United States, Canada, Mexico, Austria, Belgium, Chile, Czech Republic, Denmark, Finland, France, Germany,
Greece, Hungary, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Slovakia,
Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom, Japan, South Korea, Australia, and New
Zealand. See http://www.oecd.org/pages/0,3417,en_36734052_36761800_1_1_1_1_1,00.html (accessed January 3,
2012).

annual rate during the same period (see Figure 7).60 By 2035, Chinas installed power generation
capacity will surpass that of the United States and will hold a quarter of the worlds total
capacity of 7,272 GW, becoming the worlds largest power generating capacity holder.
As a general rule, electricity generation capacity addition spurs investment in not only power
generation infrastructure but also in transmission infrastructure, including transmission line
equipment and power transformers, which are necessary to transmit power from generators to
end users.
Similar to EIA, the International Energy Agencys (IEA) 2010 World Energy Outlook forecasted
that the increase in new power generation capacity in the next two decades would be attributed to
non-OECD countries, with China in the lead. Additionally, IEA projected an estimated
infrastructure investment of $10 trillion USD by 2030 worldwide, with 68 percent placed in
China, Europe, North America, and India (see Figure 8).61 While the infrastructure investment
needs in developing countries (e.g., China) were mainly attributed to new generation capacity
additions, the key catalyst for power infrastructure investment in developed countries (e.g.,
United States) was the replacement market for aging infrastructure.62 In addition to aging
infrastructure, the United States has needs for transmission expansion and upgrade to
accommodate new generation connections and maintain electric reliability.
Figure 8. Estimated Power Generation Infrastructure Investment Needs in the World From 2010 to 2035
Source: World Energy Outlook 2010, OECD/IEA, 2010, as modified by SPX Electrical Products Group. See Footnote 61.
60 2011 International Energy Outlook, EIA.

61 SPX Electrical Products Group, Presented May 16, 2011, http://phx.corporate-
ir.net/External.File?item=UGFyZW50SUQ9NDI3NDYzfENoaWxkSUQ9NDQ0NTg1fFR5cGU9MQ==&t=1
62 Ibid.

4.2 TRANSMISSION INFRASTRUCTURE INVESTMENT IN THE UNITED STATES
According to recent analyses by the Edison Electric Institute (EEI),63 the United States power
industry overturned a long-standing downward trend in transmission investment in the late
1990s. The uncertainty about the nature and extent of power industry restructuring had triggered
a decline in transmission investment in the 1980s and the 1990s. During this period of stagnant
investment in transmission infrastructure, the electric load on the Nations grid more than
doubled.64 This resulted in transmission congestion in certain regions and limited renewable
implementation.65 Figure 9 illustrates a long-term decline in transmission investment (in 2003
dollars) between the 1970s and the 1990s, as well as the reversing of that trend beginning in the
late 1990s. Specifically, transmission investments grew at a 12 percent annual rate between 1999
and 2003.66 Reliability and generation interconnection needs were viewed as the main reasons
for transmission investments in the United States during this period.
Figure 9. Historical Transmission Investment in the United States From 1975 to 2003
Source: EEI, Survey of Transmission Investment, May 2005; see Footnote 66.
Note: Data sources for annual transmission investments vary. Data prior to 1998 are from EEIs Uniform Statistical Report. For 1998,
data are from EEI's Annual Construction Expenditures Survey, FERC Form 1s, and company 10-Ks. For years 19992003, data are
from EEIs Annual Property & Plant Capital Investment Survey and FERC Form 1s.
63 The EEI is an association of U.S. shareholder-owned electric power companies. Its members serve 95 percent of
the ultimate customers in the shareholder-owned segment of the industry and represent approximately 70 percent of
the U.S. electric power industry. See http://www.eei.org/Pages/default.aspx (accessed December 1, 2011).
64
Campbell, Richard J., Regulatory Incentives for Electricity Transmissions Issues and Cost Concerns,
Congressional Research Service, October 28, 2011,
http://www.ieeeusa.org/policy/eyeonwashington/2011/documents/electrans.pdf (accessed November 23, 2011).
65 GE, May 2009, http://www.usea.org/USEA_Events/Smart-Grid-Briefings/Session_1-
The_Smart_Grid_and_its_Benefits.pdf (accessed November 23, 2011).

66 EEI Survey of Transmission Investment, EEI, May 2005,
http://www.eei.org/ourissues/ElectricityTransmission/Documents/Trans_Survey_Web.pdf (accessed November 29,

2011).
Figure 10 represents the United States transmission investment forecast through 2015, based on
(1) EEIs projected capital expenditure growth rates applied to the 2009 U.S. total investment
level, and (2) estimated investment requirements associated with transmission circuit-mile
additions data from NERC.67 Note, however, that NERC data are derived from EIA Form 411,
which provides projected circuit-miles of transmission additions rather than investment
dollars. The data reflect projects that are under construction or planned but tend to miss
newly proposed projects of the last few years. NERC data indicate that 22,669 circuit-miles of
transmission lines will be added between 2011 and 2015, and that 67 percent of those will be in
EHV lines (see Appendix C, Planned Transmission Lines in the United States).68 Figure 10
shows that the reported additions peak in 2013 and drop off quickly. This reflects the likelihood
that many newly proposed conceptual transmission projects were not yet reported in these
circuit-mile data.
Figure 10. Estimated Historical and Projected Transmission Investment in the United States From 1995
to 2015
Note: 19952009 Historical additions to plant-in-service as reported in FERC Form 1, which is an annual reporting requirement for
major U.S. electric utilities. 20042009 estimated plant additions based on share of projected circuit-miles in EIA Form 411. 2010
2015 estimates of forecasted total plant additions (dark green line) based on EEI projections of investment trends; 20112015 estimate
of forecasted plant additions (light green line) based on NERC/EIA Form 411 and EEI project survey cost estimates (for facilities
100kV only). NERCs forecast uses only projected circuit-miles of transmission additions rather than investment dollars.
Source: The Brattle Group, 2011; see Footnote 67.
In Figure 10, the range between the dark and light green lines illustrates some of the
uncertainties in transmission investment levels, ranging from a low of approximately $8 billion
per year to a possible high that may exceed $18 billion per year. On average, the annual
Employment and Economic Benefits of Transmission Infrastructure Investment in the U.S. and Canada, WIRES
67
(Working Group for Investment in Reliable and Economic Electric Systems) In Conjunction with The Brattle
Group, May 2011, http://www.wiresgroup.com/images/Brattle-WIRES_Jobs_Study_May2011.pdf (accessed
December 1, 2011).
68 Ibid.
transmission investment is forecasted to range from $12 to $16 billion through 2030, totalling
about $240 to $320 billion. The cost of power transformers accounts for anywhere between 15
percent to half of the total transmission capital expenditures; the rest is attributed to the
transmission line equipment (conductors, towers, poles, etc.).69 Given the developing investment
in overall transmission infrastructure, the following section provides a market overview and
investment forecast specific to power transformers in the world and in the United States.
V. GLOBAL POWER TRANSFORMER MARKET

The global power transformer market is well matured, without many technological or product
innovations taking place.70 Analysts have reported that for most of the 1990s, power transformer
prices were depressed and that the relationship between sales value and sales volume remained
fairly constant.71 However, starting in 2002, this situation was completely reversed due to
volatile raw commodity prices, unprecedented market demand, and rationalization of
manufacturing bases.72 Particularly, a sudden rise in the cost of raw materials had a significant
impact on the price of power transformers. According to recent industry analyses, the total
revenues for the global electricity transformer market (combining power and distribution
transformers) in 2009 were $23 billion USD.73 Of the total, revenues from power transformer
sales were $11 billion in 2009, and this market rose at a compound annual growth rate (CAGR)
of about 13 percent from 2000 to 2009.74 The global transformer market is forecasted to continue
to develop in the next decade. One source estimated the global transformer market to grow at a
CAGR of eight percent through 2020;75 another estimated that the global transformer market
would reach $54 billion USD (almost 10 million units) by the year 2017.76
Key drivers for future transformer market development include an increase in electricity demand
in developing countries, replacement of old electric power equipment in matured economies, and
a boost for high-voltage power transformers and capital expenditure in the power sector
worldwide. In addition, the adoption of energy-efficiency standards in developed markets, such
as Europe and the United States, as well as in emerging markets, such as China and India, are
expected to create demand for new, more efficient electricity equipment, including power
transformers.77
The remainder of this section discusses the current condition of the LPT market in the United
States, as well as its domestic manufacturing capacity and historical imports of LPTs. Chinas
69 EEI Survey of Transmission Investment, EEI, May 2005.
70 An industry source indicated that there are research and development efforts in high temperature
superconductor transformers and solid state transformers.
71
World Transformer Markets 2002 to 2012, Gouldon Reports 2009, Presented to Leonardo Energy, May 15,
2009, http://www.leonardo-energy.org/webfm_send/2731 (accessed November 22, 2011).
72 Ibid.
73
Power Transformers Market Analysis to 2020, Global Data, 2009, http://www.articlesnatch.com/Article/Power-
Transformers-Market-Analysis-To-2020-/1861724 (accessed November 11, 2011).
74 Ibid., Gouldon Report 2009.
75
Power Transformers Market Analysis to 2020, Global Data, 2009.
76
Global Electricity Transformers Market To Reach US$53.6 Billion, 9.7 Million Units by 2017, Global Industry
Analysts, October 12, 2011, http://tdworld.com/business/global-transformer-market-1011/ (accessed November 21,
2011).
77 Global Industry Analysts, October 12, 2011.
LPT demand and production capacity are also discussed briefly because of its sizeable market
and the potential effects its power transformer industry has on the global marketplace. An
overview of Chinas power transformer industry, including demand, manufacturing capacity, and
key manufacturers, is provided in Appendix G, Power Transformer Industry in China.
5.1 U.S. POWER TRANSFORMER MARKET OVERVIEW

The United States is one of the worlds largest markets for power transformers, with an estimated
market value of over $1 billion USD in 2010, or almost 20 percent of the global market. The
United States also holds the largest installed base of LPTs in the world. Using certain analysis
and modeling tools, various sources estimate that the number EHV LPTs in the United States to
be approximately 2,000.78 While the estimated total number of LPTs (capacity rating of 100
MVA and above) installed in the United States is unavailable, it could be in the range of tens of
thousands, including LPTs that are located in medium voltage transmission lines with a primary
voltage rating of 115 kV. Figure 11 represents the historical annual installment of LPTs in the
United States, not including replacement demand.
This worlds largest installed base of LPTs is aging. Power equipment manufacturers estimated
that the average age of LPTs installed in the United States is approximately 40 years, with 70
percent of LPTs being 25 years or older.79 According to an industry source, there are some units
well over 40 years old and some as old as over 70 years old that are still operating in the grid.
The same source also noted that these transformers are typically warranted by the manufacturers
for approximately 30 to 35 years. An LPT is subjected to faults that result in high radial and
compressive forces, as the load and operating stress increase with system growth.80 In an aging
power transformer failure, typically the conductor insulation is weakened to the degree at which
it can no longer sustain mechanical stresses of a fault.81 Given the technical valuation that a
power transformers risk of failure increases with age, many of the LPTs in the United States
have outlived their useful lives and will need to be replaced or refurbished. Although age can be
a factor, the life expectancy of a power transformer varies depending on how it is used. In
addition, according to an industry source, there were also some bad batches of LPTs from certain
vendors. The same source also estimated that the failure rate of LPTs to be around .5 percent.
As illustrated in Figure 11, a large volume of LPTs were installed in the United States between
the 1950s and 1970s. Although the investment remained low in the 1990s, the need for LPTs has
been growing steadily since 1999. Despite its mounting demand for power transformers, the
United States has a limited domestic capacity to produce LPTs.
78 Benefits of Using Mobile Transformers and Mobile Substations for Rapidly Restoring Electrical Service, DOE,
August 2006. This DOE source provides an estimated voltage range of an LPT as 115765 kV and the estimated
power range as 2001,200 MVA. Report of the Commission To Assess the Threat to the United States from
Electromagnetic Pulse (EMP) Attack, EMP Commission, April 2008,
http://www.empcommission.org/docs/A2473-EMP_Commission-7MB.pdf
Market Share by Quantity (accessed January
Market 3, 2012).
Share byKappenman,
Value
John, Geomagnetic Storms and Their Impacts
Quantity (MVA)on the U.S. Power(%)
Percent Grid. Prepared
Valuefor Oak Ridge
(1,000 National Percent (%)
dollars)
Laboratory,
U.S. January 2010, http://www.fas.org/irp/eprint/geomag.pdf
19,279 (accessed January 3, 2012).
15% 213,070 19%
79
AllConference
Import Hearing
Sources for Investigation No.731-TA-1189,
108,030 USITC, August
85% 4, 2011, pp. 147148.911,863 81%
80
Analysis of Transformer Failures, William
Total H. Bartley P.E., Hartford
127,309 100%Steam Boiler Inspection & Insurance Co.
1,124,933 100%
2003, http://www.bplglobal.net/eng/knowledge-center/download.aspx?id=191 (accessed November 18, 2011).
81 Ibid.
Figure 11. Yearly Installment of Large Power Transformers in the United States From 1948 to 2006
(Power transformers with a capacity rating greater than or equal to 100 MVA)
Note: Figure includes LPTs with a capacity rating greater than or equal to 100 MVA and excludes replacement demand.
Source: EIA; SPX Electrical Products Group, May 2010.
In 2010, the United States demand for LPTs was 127,309 MVA, valued at over $1 billion USD
(see Table 4).82 Only 15 percent of the Nations demand, or 19 percent in terms of sales value,
was met through domestic production. Note, however, that the data shown in Table 4 includes
production capacity and actual production of power transformers with a capacity rating of 60
MVA and above, which is different from capacity rating of greater than or equal to 100 MVA,
which was used to describe LPTs in the rest of the report.
Table 4. Summary of Power Transformer Market (60 MVA +) in the United States in 2010
Note: This analysis includes power transformers with capacity greater than or equal to 60 MVA.
Source: Large Power Transformers from Korea, USITC, Preliminary Investigation, September 29, 2011.
Figure 12 provides a comparison of the estimated market size and production of power
transformers in the United States and China in 2010. Different parameters are used to define
power transformers a capacity rating of 60 MVA and above for the United States and a voltage
rating of 220 kV and above for China.83 While attributes may vary, the comparison shows
82
Figure 12 was derived from the USITCs preliminary investigation report on Large Power Transformers from
83
Korea, which defined an LPT as a power transformer with capacity greater than or equal to 60 MVA. Chinas LPT
data were derived from an industry analysis as reported in Reuters, which described used transformers with capacity
220 kV and above to describe the market.
distinct characteristics of the two markets the United States heavy reliance on foreign-
manufactured power transformers and Chinas abundant domestic production capacity. In 2010,
although the estimated market size for the two countries were comparable in the range of
120,000 MVA and 150,000 MVA , the actual production of power transformers in the United
States was less than one fifth that of Chinas.
Figure 12. Estimated Power Transformer Markets: United States v. China in 2010
Note: Different criteria used for the United States and China. For the United States, power transformers with capacity greater than or equal
to 60 MVA are included in the data; for China, power transformers with capacity greater than or equal to 220 kV are included in the data.
Sources: USITC, 2011; China Transformer Net, 2010; China's Power Transformer Industry Report, Reuters, 2011.
In terms of manufacturing base in 2010, six domestic manufacturers accounted for all power
transformers produced in the United States, whereas over 30 power transformer manufacturers
existed in China. The total annual production capacity84 of the six domestic factories was
approximately 50,000 MVA in 2010, far below the U.S. market demand of 127,309 MVA for
that year. On the contrary, China displayed a self-contained LPT market, in which the vast
majority of its demand was met through domestic production. For example, three of Chinas
largest power transformer manufacturers each held an annual production capacity of more than
100,000 MVA.
The following section will explore todays power transformer manufacturing industry, including
major players in the global scene and in the United States. As a comparison to the global and
domestic suppliers, Chinese manufacturers of LPTs are profiled in Appendix G, Power
Transformer Industry in China.
5.2 KEY GLOBAL SUPPLIERS OF POWER TRANSFORMERS

The global power transformer market has been one of fluidity and constant adaptation,
characterized by a myriad of consolidations, new players, and power shifts throughout the last
few decades. Due to the markets shifting nature, the latest statistics of the market share by
84 In this paper, the term annual production capacity represents the capability of a manufacturer to produce
transformers of all types and sizes, ranging from small to large, in an annual basis.
manufacturer are unavailable. In 2011, key manufacturers and analysts reported that ABB,
Siemens, and Alstom Grid were the dominant suppliers of power transformers worldwide but
indicated that emerging players also had a formidable presence in the global market place.85
Figure 13 illustrates the dynamics of key power transformer manufacturers in the global market
in 2011, including several emerging suppliers.
Figure 13. Global Suppliers of Power Transformers in 2011

Note: HHI stands for Hyundai Heavy Industries; HICO stands for Hyosung Power and Industrial Systems; JAPES stands for Japan AE
Power Systems Corporation; TBEA stands for Tebian Electric Apparatus Stock Co.; TWBB stands for Baoding Tianwei Baodian Electric
Co.; and XD stands for Xian XD Transformer.
Source: Alstom, 2011.
According to company reports, ABB had 20 transformer manufacturing plants worldwide in

2011, while Siemens and Alstom Grid had 21 and 13, respectively.86 In terms of annual
production capacity, ABB and Alstom Grid each had approximately 200,000 MVA and 130,000
MVA of annual production capacity, respectively.87 Alstom Grids production capacity reflects
the additional manufacturing base it obtained through a recent acquisition of AREVAs
transmission business in 2010.
Global Industry Analysts, Inc., October 5, 2011; Shareholders Meeting, Alstom, June 28, 2011,
85
http://www.alstom.com/assetmanagement/DownloadAsset.aspx?ID=326a901d-467d-4bc3-8504-
2ab917598501&version=d568ca975d59485db0ae81a9c8fa76be1.pdf&lang=2057 (accessed December 1, 2011);
ABB Strategy 2011, Sept. 5, 2007,
http://www02.abb.com/global/abbzh/abbzh259.nsf/bf177942f19f4a98c1257148003b7a0a/b78db666da1a0697c1257
34f003ba49a/$FILE/ABB+Strategy+2011.pdf (accessed December 1, 2011).
86 ABB: http://www.eyeproject.cl/files/94151d_ABB-BR-31-TrafoStar-FlipChart12Reasons.pdf; Siemens:
http://www.energy.siemens.com.cn/CN/powerTransmission/Transformers/Documents/TR%20China%20catalog_E
N_2010.pdf; Alstom Grid: http://www.alstom.com/grid/news-and-events/press-releases/upgrade-project-at-Alstom-
Grid-s-Rocklea-factory/ (all accessed December 3, 2011).
87 ABB: http://www.eyeproject.cl/files/94151d_ABB-BR-31-TrafoStar-FlipChart12Reasons.pdf and
http://www.abb.mu/cawp/seitp202/51719ef8b8b364ee48257690001f063a.aspx; Alstom Grid:

http://www.alstom.com/grid/solutions/high-voltage-power-products/electrical-power-transformers/; Siemens does
not disclose its total annual production capacity; however, it has an annual manufacturing capacity of 70,000 MVA
in China. See http://www.stcl.com.cn/stcl/en/aboutus.asp (all accessed December 3, 2011).
In addition, several local players have emerged in recent years and have been extending their
offer coverage and geographical reach. These include HHI and Hyosung Power and Industrial
Systems (HICO) of South Korea; Crompton Greaves of India; Tebian Electric Apparatus Stock
Co., Ltd. (TBEA), Baoding Tianwei Baobian Electric Co., Ltd. (TWBB), and Xian XD
Transformer of China (XD) (see Figure 13). Each of these companies boasts an annual
production capacity in the range of 70,000 to 125,000 MVA. While Chinese firms currently do
not have considerable presence in the North American market, HHI and Hyosung of South Korea
already contribute a significant share of the North American market and are expanding their
footprint in other geographical regions. As these local players have emerged in the global
marketplace, traditional global firms have experienced a wave of consolidations. The following
section provides brief insight to these phenomena that have been occurring since the 1980s.
5.2.1 CONSOLIDATION OF POWER EQUIPMENT MANUFACTURERS

Over the past few decades, the power equipment industry has witnessed a series of mergers and
acquisitions (M&As) and consolidation of operations to remove excess capacity and move their
operations offshore, fueled by dramatic run-ups in commodity metals prices. In doing so, the
firms also took advantage of lower labor costs in certain countries and their rapidly growing
domestic electricity demand. Table 5 is a summary of global M&A activities among power
equipment manufacturers that have taken place since the 1980s.
Table 5. Key International Mergers and Acquisitions of Power Equipment Industry From 1980 to 2010
1980s
GEC (UK) + Alcatel (France) = GEC Alstom
ASEA (Sweden) + BBC (Switzerland) = ABB
ABB (Switzerland): Acquired 39 companies, plus power
transmission and distribution (T&D) business of Westinghouse
Electric Corporation to become a technology leader in T&D business
1990s
In 1998, Siemens (Germany) acquired:
o Westinghouses fossil power plant activities
o Voiths (Germany) Hydro division
o Parsons Power Engineering (UK)
Babcock Borsig Power took over B&W (Spain)
GE Hydro (Canada) bought Kvaerner (Norway)
GEC Alstom + ABB = ABB-Alstom Power (AAP)
Early 2000s
Alstom (France) bought ABBs stake in AAP
GE (USA) acquired EGT (France)
Siemens AG took over Alstoms industrial turbine business
AREVA (France) acquired Alstom T&D business
Hitachi (Japan) took over the assets of insolvent Babcock Borsig
JAEPS (Japan) created a joint venture among Hitachi, Fuji and
Meidensha
20052010
2005: Crompton Greaves (India) acquired Pauwels (Belgium)
2005: Siemens took over VA Techs (Austria) T&D business
2008: ABB acquired Kulman Electric (US)
2010: Alstom took over AREVAs transmission business
Schneider took over AREVAs distribution business
Sources: 1980early 2000s, http://dhi.nic.in/indian_capital_goods_industry.pdf ;
http://www.hitachipowersystems.us/products/power_transformers_breakers/index.html
For 20052010:
Crompton Greaves: http://www.cgglobal.com/pdfs/annual-report/AR_05-06.pdf
Siemens: http://tdworld.com/news/Siemens-VA-Tech-takeover/
ABB: http://tdworld.com/business/abb_acquire_kuhlman_electric/
Alstom/Schneider: http://www.areva-td.com/
These mergers have reduced the number of firms competing in the global market, and through
them, stronger companies have emerged with increased size, economies of scale, wider product
ranges and enhanced financial strength . . . [who benefit] from having greater access to markets
and higher bargaining power as a result of combined technological strengths.88
5.3 LARGE POWER TRANSFORMER MANUFACTURING CAPACITY IN NORTH AMERICA

The United States was not an exception to the global, strategic consolidation of manufacturing
bases. By the beginning of 2010, there were only six manufacturing facilities in the United States
that produced LPTs. Although certain manufacturers reported having the capability to produce
power transformers with a capacity rating of 300 MVA or higher, industry experts cautioned that
the capacity to produce does not necessarily warrant actual production of power transformers of
that magnitude.89 Often, domestic producers did not have the required machinery and equipment
to produce power transformers of 300 MVA, or 345 kV, and above. A number of firms identified
constraints in equipment (cranes, ovens, testing, winding, and vapor phase systems) and the
availability of trained personnel set limits to their production capacity.90
Figure 14 is a map of power transformer manufacturing facilities in North America in 2012 and
the maximum rating of LPTs they are capable of producing.91 In this figure, the blue triangles
indicate facilities that produce LPTs with a voltage rating up to 345 kV, the red circles indicate
facilities with the capacity to produce LPTs with a voltage rating greater than 345 kV, and the
green stars indicate proposed new plants or expansion at existing facilities. In 2010, although a
few domestic facilities including EFACEC of South Rincon, Georgia and ABB of St. Louis, MO
were capable of producing EHV power transformers, it is unclear whether they actually produced
any. While the exact statistics of EHV power transformers produced by domestic facilities are
unavailable, this suggests that the United States procured almost all of its EHV power
transformers overseas. (See Figure 14, which includes two manufacturing plants in Canada and
three companies in Mexico.)
The limited domestic production capacity for LPTs is improving, however. In addition to the
opening of EFACECs first U.S. transformer manufacturing facility in Rincon, Georgia in April
2010, the United States has gained and will gain additional capabilities to produce LPTs in 2012
and beyond. Key global power transformer producers have discerned a market potential for LPTs
88 Final Report on the Indian Capital Goods Industry, http://dhi.nic.in/indian_capital_goods_industry.pdf (accessed

December 14, 2011).
90
91 Figure 14 represents all LPT manufacturing plants in North America as of May 2012. SPX completed an
expansion of existing facility in April 2012 and increased its capacity to produce EHV power transformers. Also
Hyundais new facility in Montgomery, Alabama was inaugurated in November 2011; therefore, it was not
considered in the 2010 LPT market analysis.
and announced plans to develop manufacturing capacity in the United States. An industry source
advised that the strong dollar and shipping costs are the biggest factors influencing foreign
companies building factories in the United States.
Here are the three manufacturers who have announced expansion or development plans in the
past few years, two of which have recently completed their efforts:
HHIs new 404,000 square feet power transformer manufacturing plant was inaugurated
in November 2011 and is expected to produce power transformers of a capacity rating up
to 550 MVA/500 kV and up to 200 power transformers annually.92
SPX Transformer Solutions, Inc. (SPX, also formally known as Waukesha Electric
Systems, Inc.) completed an expansion at its existing facility in Waukesha, Wisconsin in
April 2012.93 With a total of 432,000 square feet and additional crane capacity now up to
500 tons, the plant is expected to produce power transformers with a capacity rating up to
Figure 14. Large Power Transformer Manufacturing Facilities in North America in 2012
Note: Hyundai is the latest entrant whose plant in Montgomery, Alabama was inaugurated in November 2011. Also, SPX completed an
expansion in April 2012 and increased its production capacity. Further note, CG stands for Crompton Greaves; HHI stands for Hyundai
Heavy Industries; PTTI stands for Pennsylvania Transformer Technology Inc.; VTC stands for Virginia Transformer Corp.
Source: ICF International.
92 Hyundai Heavy Completes Transformer Factory in Alabama, November 21, 2011,

93
SPX Unveils Newly Expanded SPX Transformer Solutions Manufacturing Facility in Waukesha, Wisconsin,
April 12, 2012, http://www.spxtransformersolutions.com/large_power.html (accessed June 5, 2012).
1,000 MVA/500 kV.94

Mitsubishi is building a new, 350,000 square feet facility in Memphis, Tennessee and
plans to manufacture EHV power transformers from this plant starting in 2013.95
Appendix E, Large Power Transformers Manufacturing Facilities in North America, provides a

list of all LPT manufacturing plants in North America, including the aforementioned new or
proposed plants. The remainder of the section examines the recent historical trend of LPT
imports in the United States, as well as the forecast for future market demand.
5.4 HISTORICAL IMPORTS OF LARGE POWER TRANSFORMERS TO THE UNITED STATES

The upward trend of transmission infrastructure investment in the United States starting around
1999 has continued in the 21st century. Figure 15 presents the historical LPT (capacity rating
greater than or equal to 100 MVA) imports in terms of value (USD) and quantity (units) between
2005 and 2011.96 In 2005, the United States imported 363 LPT units, with a total value of $284
million USD; in 2011, the United States imported 505 units, totaling $817 million USD.97 In
other words, the LPT markets monetary value grew at a much faster pace than the number of
Figure 15. U.S. Imports of Large Power Transformers by Country From 2005 to 2011
Source: USITC Interactive Tariff and Trade DataWeb, 2012.
94
Ibid.; Large Power Transformers, SPX,
http://www.spxtransformersolutions.com/assets/documents/LP%20Brochure_web.pdf (accessed December 22,
2011).
95
Mitsubishi Electric To Build Transformer Factory in Memphis, Mitsubishi Press Release, February 14, 2011,
http://www.mitsubishielectric.com/news/2011/0214-a.html (accessed December 2, 2011).
96 See Appendix D. Historical Imports of Large Power Transformers in the United States for the data used in Figure
15.
97 USITC Interactive Tariff and Trade DataWeb, http://dataweb.usitc.gov/scripts/user_set.asp (accessed June 5,
2012).
units, at an average annual growth rate of 31 percent, as compared with seven percent,
respectively.98 Nonetheless, LPT imports showed a strong growth both in terms of value and
quantity. Between 2007 and 2011, the United States imported more than 500 LPT units each
year.
Figure 15 also shows a prominent, rapid market penetration by South Korean imports during this
period. Between 2005 and 2011, the total value of LPT imports in the United States grew by 31
percent. During the same period, LPT imports from South Korea increased by 124 percent, from
$33 million in 2005 to $279 million in 2011.99 In 2011, South Korea was the largest LPT
supplier in the United States and obtained more than 34 percent of the total U.S. import market
in terms of USD value and 40 percent in terms of number of units.
Below is a global representation of LPT import activities in the United States in 2011 (see Figure
16). Two South Korean firms, HHI and Hyosung, were the largest exporters of LPTs to the
United States. HHI, particularly, is recognized as a key global supplier of LPTs in North
America. HHI holds an annual production capacity of 120,000 MVA at its Ulsan, South Korea
plant, which is considered the largest transformer manufacturing facility in the world.100 Other
Figure 16. Global Suppliers of Large Power Transformers to the United States in 2011
Note: CG stands for Crompton Greaves; HHI stands for Hyundai Heavy Industries; HICO stands for Hyosung Power and Industrial
Systems; JAPES stands for Japan AE Power Systems Corporation.
Source: USITC, ICF International Analysis.
98 Ibid.
99 USITC Interactive Tariff and Trade DataWeb, 2012.
100 Ibid.; HHI Electro Electric Systems, http://www.hyundai-elec.com/new/eng/product/product.jsp?p_code=A0100
notable global exporters of LPTs to the United States include ABB and Crompton Greaves of
Canada, Siemens of Austria, and Prolec GE of Mexico. Smit Transformer of the Netherlands and
various power equipment firms from Japan supplied 11 percent and five percent of the total LPT
imports in the United States in 2011, respectively. A brief profile of these and some of the
worlds largest power transformer manufacturers is provided in Appendix F. Selected Global
Power Transformer Manufacturers.
Power transformers are a globally traded product, and the demand for this equipment is
forecasted to continue to grow in the United States (see Figure 17). According to two major
power transformer manufacturers, the North American power transformer market is expected to
grow at a CAGR of three to seven percent between 2011 and 2015.101 In terms of units, one
source estimated that the demand for LPTs in the United States would be around 500 to 600 units
per year.102 According to Goulden Reports, a research firm specializing in the electricity and
electrical equipment markets, the U.S. transformer market will grow to $4.3 billion USD by
2015.103 However, the demand for LPTs has varied greatly over time as the electricity growth
rates have changed.
In addition to the aging of power transformers, key demand drivers for LPTs include:
transmission expansion to integrate solar and wind renewable sources; electric reliability
improvement; and new capacity addition in thermal and nuclear power generation.
Figure 17. Projected Demand Growth for Large Power Transformers in the United States through 2030
Note: As noted in earlier discussions, utilities were not investing in the 1990s due to uncertainty surrounding regulation.
Source: SPX Electrical Products Group, May 2010. SPX analysis based on EIA data and research.
101 SPX Electrical Products Group, May 2011 and an industry source estimate.
102 SPX Electrical Products Group, May 2011.
103 Hyundai Heavy Completes Transformer Factory in Alabama, November 21, 2011,
5.5 CHALLENGES IN GLOBAL SOURCING OF LARGE POWER TRANSFORMERS

The global demand for LPTs has increased significantly since the late 1990s to meet the power
demand growth and the need to replace aging power transformers. Purchasing decisions in the
global marketplace is more complex than simply comparing prices. Some of the challenges
associated with global procurement of LPTs are as follows:104
Ocean and inland transportation, compliance with specifications, quality, testing, raw
materials, and major global events (e.g., hurricanes) can significantly influence a
suppliers lead time and delivery reliability. In addition, some railroad companies are
removing rail lines due to infrequent use and other lines are not being maintained. This
can pose a challenge to moving the LPTs to certain locations where they are needed.
Fluctuations in currency exchange rates and prices of materials during the time in which a
power transformer is being manufactured can quickly change the competitive bid price
for the order.
Cultural differences and other communication barriers can be challenging. In many
cultures, what the buyer-manufacturer relationship entails may vary from what is written
in the contract.
Foreign factories may not understand the U.S. standards such as the Institute of Electrical
and Electronics Engineers and American National Standards Institute standards or have
appropriate testing facilities.
Foreign vendors may not have the ability to repair damaged power transformers in the
United States.
It is expensive to travel overseas for quality inspections and to witness factory acceptance
testing.
The utility industry is also facing the challenge of maintaining experienced, well-trained
in-house workforce that is able to address power transformer procurement and
maintenance issues.
Utilities can minimize potential risks related to global sourcing by focusing on proactive
business strategies, planning effectively, and managing a portfolio of qualified and experienced
suppliers.
VI. CONCLUDING REMARKS

This report examined the global power-transformer
manufacturing industry, one that is characterized by We build upon the solid
continuous adaptations because of shifting and difficult- foundation of previous efforts but
to-predict market dynamics. In particular, this report also look ahead to the future we
are working to create. Our
addressed the considerable dependence the United States Strategy is therefore one of
has on foreign suppliers to meet its growing need for continuity and change.
LPTs. The intent of this study is to inform decision-
makers about the potential supply concerns of LPTs in the - The National Strategy for Global
Supply Chain Security, the White
United States, and this report provides the following House, 2012
104Judson Schumacher, T&D World, May 1, 2006,

http://tdworld.com/business/power_buying_transformers/index.html (accessed January 11, 2012).
observations:
Demand for LPTs is on the rise globally and domestically. Key drivers of demand
include the development of power and transmission infrastructure in emerging economies
(e.g., China and India) and the replacement market for aging infrastructure in mature
economies (e.g., United States), as well as the integration of alternative energy sources
into the grid and an increased focus on nuclear energy in light of climate change
concerns.
Two key raw materialscopper and electrical steelare vital to LPT
manufacturing. However, there are limited supply sources for special grades of
electrical steel needed for the LPT core, and both steel and copper have experienced wide
price fluctuations since 2004. Their price volatility is expected to continue as the demand
for these commodities, especially from developing economies (i.e., China and India), is
forecasted to grow in the next several years.
LPTs require a long lead time and transporting them can be challenging. The
average lead time for an LPT is between five and 16 months; however, the lead time can
extend beyond 20 months if there are any supply disruptions or delays with the supplies,
raw materials, or key parts. Its large size and weight can further complicate the
procurement process, as an LPT requires special arrangements and special rail cars for
transport.
The United States has limited production capability to manufacture LPTs. In 2010,
only 15 percent of the Nations demand for power transformers (with a capacity rating of
60 MVA and above) was met through domestic production. Although the exact statistics
are unavailable, power transformer market supply conditions indicate that the Nations
reliance on foreign manufacturers is even greater for EHV power transformers, which
have a capacity rating of 300 MVA and above (or a voltage rating of 345 kV and above).
However, domestic production of LPTs is expected to improve in the near future. In
addition to the opening of EFACECs Rincon, Georgia plant in 2010, at least three new
or expanded facilities will produce EHV LPTs in the United States starting 2012 and
beyond, including: SPXs recently expanded Waukesha, Wisconsin plant; HHIs newly
inaugurated Montgomery, Alabama plant; and Mitsubishis proposed Memphis,
Tennessee plant.
A NERC effort may enhance understanding of LPT spares. During 2012, NERC is
implementing its Spare Equipment Database Program that will help determine the extent
to which spare transformers are available across North America. As this information
becomes available, this will help decision makers understand what additional programs or
incentives may be needed to increase the number of available spares.
New recovery transformer (RecX) concept may provide some relief. The U.S.
Department of Homeland Securitys (DHS) Science and Technology Directorate, along
with their partners, the Electric Power Research Institute, ABB, and CenterPoint Energy
(CNP), and the support of DOE and DHS Office Infrastructure Protection, have
developed a prototype EHV transformer that will drastically reduce the recovery time
associated with EHV transformer issues. The Recovery Transformer (RecX) is lighter
(approximately 125 tons), smaller and easier to transport and quicker to install than a
traditional EHV transformer. The prototype transformer delivery and set up was
successfully demonstrated in March of 2012 in an exercise that included the
transportation, installation, assembly, commissioning and energization of the transformer

in less than 1 week. The RecX is currently operating in CNPs grid for a one-year
monitoring period. The RecX is a 345:138kV, 200 MVA per phase transformer
(equivalent to 600MVA) and was designed to be an applicable replacement for over 90
percent of transformers in this voltage class, which is the largest voltage class of EHV
transformers.105
The U.S. electric power grid is one of the Nations critical life-line infrastructure on which many
other critical infrastructure depend, and the destruction of this infrastructure can cause a
significant impact to national security and the U.S. economy. The U.S. electric grid faces a wide
variety of threats, including natural, physical, cyber, and space weather. LPTs are large, custom-
built electric infrastructure. If several LPTs were to fail at the same time, it could be challenging
to quickly replace them. While the potential effects of these threats on the electric grid are
uncertain, the Electricity Subsector continues to work on a variety of risk management strategies
to address these potential severe risk impacts. Understanding the characteristics of todays power
transformer procurement and supply environment is indispensable to both public and private
sectors. The assessment of LPTs in this DOE report provides background to the industry and
government stakeholders who continue their efforts to enhance critical energy infrastructure
resilience in todays complex, interdependent global economy. More information on this and
additional relevant references are provided in the appendixes.
105For more information about RecX, see: http://www.dhs.gov/files/programs/st-snapshots-prototyping-
replacement-ehv-transformers.shtm (accessed June 11, 2012) and
http://www.nytimes.com/2012/03/15/business/energy-environment/electric-industry-runs-transformer-replacement-
test.html?_r=1 (accessed June 11, 2012).
APPENDIX A. ACRONYMS
CAGR Compound annual growth rate
CG Crompton Greaves
CNP CenterPoint Energy
CRGO Cold-rolled grain-oriented
DHS U.S. Department of Homeland Security
DOE U.S. Department of Energy
EEI Edison Electric Institute
EHV Extra high voltage
EIA U.S. Energy Information Administration
FOB Free on Board
GMD Geomagnetic disturbance
JAEPS Japan AE Power Systems Corporation
HHI Hyundai Heavy Industries
HICO Hyosung Power and Industrial Systems
HILF High-Impact Low-Frequency
HSPD-7 Homeland Security Presidential Directive-7
IEA International Energy Agency
ISO International Organization for Standardization
kV Kilovolts
LPT Large power transformers
M&A Mergers and acquisitions
MVA Megavolt amperes
NERC North American Electric Reliability Corporation
NIPP National Infrastructure Protection Plan
OECD Organization for Economic Co-operation and Development
PTTI Pennsylvania Transformer Technology Inc.
ReX Recovery Transformer
SGCC State Grid Corporation of China
TBEA Tebian Electric Apparatus Stock Co., Ltd.
TWBB Baoding Tianwei Baobian Electric Co., Ltd.
T&D Transmission and Distribution
USD U.S. dollar
USITC United States International Trade Commission
VTC Virginia Transformer Corp.
W/kg Watts per kilogram
Name Description
Acesita SA Acesita SA, a Brazilian company with an annual steel production capacity of 850,000
metric tons, was founded in 1944. Acesita offers two types of grain-oriented electrical
steel and three types of nonoriented electrical steel.
AK Steel, founded in 1899 and headquartered in Middletown, Ohio, employs more than
8,400 people in Ohio, Kentucky, Indiana, and Pennsylvania. This company, with over $5
AK Steel billion in sales, produces flat-rolled carbon, stainless, and electrical steel products. AK
DOE / OE / ISER
Steel June 2012a33
produces range of electrical steels, including oriented steel grades of M2, M3,
M4, M5, and M6 nonoriented standard steel grades of M15 to M47, and domain-refined,
laser-scribed steels, H-O DR, H-1 DR, and H-2 DR.
Allegheny Ludlum Corporation, headquartered in Pittsburgh, Pennsylvania, operates
Allegheny specialty metals, manufacturing facilities in Pennsylvania, Connecticut, Massachusetts,
Indiana, and Ohio. Allegheny Ludlum employs approximately 3,800 people, and in
Ludlum
addition to its other stainless and specialty steel products, produces grain-oriented steel
with grades from M2 to M6.
A
BlueScope B. G
PPENDIX BlueScope LOBAL E
Steel, a LECTRICAL S M
TEELin flat-steel
manufacturer specializing ANUFACTURER
products, is the leading
P
Steel
ROFILES producer of steel in Australia and New Zealand. Ly-Core, BlueScope's nonoriented
electrical steel line, is produced in three grades.
China Steel China Steel Corporation, the only integrated steel producer in Taiwan, was founded in
Corporation 1971 and exports nearly 30 percent of its steel production volume. It currently produces
four grades of nonoriented electrical steel with a thickness of 0.50 mm.
Corus, an international metal company providing steel and aluminum products
worldwide, entered into a joint venture with Svenskt Stal AB (SSAB) to form Cogent
Cogent Power Power, Ltd. Corus owns 75 percent of the joint venture, while SSAB owns the remaining
25 percent. Cogent Power Ltd. is divided into an electrical steel division and a
Ltd.
laminations division. The electrical steel division is comprised of Orb Works, located in
South Wales, and Surahammars Bruk, headquartered in Sweden. Orb Works produces
both grain-oriented and nonoriented steels. Surahammars Bruk produces grain-oriented
steels in grades M3 through M7 and nonoriented steels in grades M15 through M47.
The Viz Stal plant was founded in 1726, as a pig iron processing facility. In 1914, the
Duferco Viz plant became the first producer of hot-rolled, nonoriented steel in Russia. Then, in 1934
Stal it began producing hot-rolled, grain-oriented steel. In 1973, the plant began producing
Metallurgical cold-rolled, grain-oriented electrical steel, and in 1978 Viz Stal became the first
Plant manufacturer of cold-rolled, nonoriented electrical steel in the Soviet Union. Duferco, a
Swiss international manufacturing and trading company, acquired the plant. Finally, in
2004, Viz Stal gained the capability to supply their customers with slit coils.
JFE Steel Another Japanese company, JFE Steel Corporation, the result of a December 2001
merger between Kawasaki Steel and NKK Corp., produces nine types (each with several
Corporation
grades) of grain-oriented electrical steel and six types of nonoriented electrical steel.
In 1970, Yawata Iron and Steel and Fuji Steel merged to form Nippon Steel. Located in
Nippon Steel Tokyo, Japan, Nippon Steel has 21,500 employees and produces over 27 million metric
Corporation tons of crude steel annually. Nippon produces eight types of grain-oriented electrical
steel and five types of nonoriented electrical steel.
Novolipetsk NLMK started in 1931, when iron ore and limestone deposits were discovered in Lipetsk,
(NLMK) Russia. NLMK is now the largest steel-sheet producer in Russia. The integrated facility
Metallurgical can produce 9.5 million metric tons of pig iron and up to 9.9 million metric tons of steel
Plant annually. NLMK also has the capacity of producing 500,000 metric tons of electrical steel
annually.
Pohang Iron POSCO, located in the port city of Pohang, South Korea, and founded in 1958, produces
and Steel 30 million tons of steel annually and has more than19,000 employees. In 2004, POSCO
(POSCO) produced 701,000 metric tons of electrical steel, 34 percent of which was exported. In
Name Description
2005, POSCO invested over $250 million to expand the capacity of their electrical steel
production facility.
POSCO recently announced a $12 billion deal in the State of Orissa, located in India.
Between 2007 and 2010, $3 billion were invested in a three million ton plant. From 2010
to 2016, three million additional tons will be added every two years, bringing the plant to
its full capacity of 12 million tons. This deal is the largest foreign investment in India.
Shanghai Baosteel, formerly Baoshan Iron & Steel, is state-owned and China's largest
Shanghai iron June
and steel maker.
DOE / OE / ISER 2012 34 Baosteel and its 22 wholly owned subsidiaries produce over 20
Baosteel million metric tons of crude steel annually. Baosteel produces nearly 500,000 metric tons
of nonoriented electrical steel annually, accounting for more than 50 percent of the
nonoriented electrical steel produced in China.
ThyssenKrupp Steel, a subsidiary of ThyssenKrupp AG, entered the electrical steel
market in 1989. In 2002, ThyssenKrupp Electrical Steel (TKES) was formed to
consolidate all of the company's electrical steel activities. Further restructuring in 2004
created ThyssenKrupp Stahl AG to handle the company's nonoriented electrical steel
ThyssenKrupp products. TKES now deals solely with grain-oriented steels. ThyssenKrupp produces
over one million tons of electrical steel each year, making it the largest electrical steel
Steel
producer in Europe and the second largest producer worldwide.
ThyssenKrupp Steel is headquartered in Essen, Germany, and has plants in Germany,

India, and France. EBG India, a joint venture between Thyssen Krupp and Raymond
Ltd., is a producer of both grain-oriented and nonoriented steels. EBG India is located in
Nashik, India. A plant in Isbergues, France, was acquired by TKES in 2002.
WCI, a U.S. manufacturer based in Warren, Ohio, produced nonoriented electrical steel
WCI Steel until exiting the business in January 2004. In September 2003, WCI filed for protection
under Chapter 11 of the U.S. Bankruptcy Code. WCI management cited continuing
volume deterioration and negative profit margins for the halt of steel production.
Wuhan Iron Wuhan, a Chinese company with an annual steel production capacity of 10 million metric
tons, was expected to add significant electrical steel production capacity beginning in
and Steel
September 2006.
Source: Distribution Transformers Final Rule Technical Support Document, Appendix 3A. Core Steel Market Analysis, DOE, Office of Energy
Efficiency and Renewable Energy, September 2007,
http://www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/transformer_fr_tsd/appendix_3a.pdf (accessed November 4,
2011).
APPENDIX C. PLANNED TRANSMISSION LINES IN THE UNITED STATES

Projected Circuit Miles of Transmission Additions by Voltage Level, 20112015
Notes: Derived from EIA Form 411, Table 6. Proposed High-voltage Transmission Line Additions Filed Covering Calendar Year 2009,
December 2010. EIA Form 411 is a voluntary report to NERC and EIA by IOUs, coop/munis, State/Federal power agencies, ISOs/RTOs, and
merchant developers.
Source: Employment and Economic Benefits of Transmission Infrastructure Investment in the U.S. and Canada, WIRES (Working Group for
Investment in Reliable and Economic Electric Systems) In Conjunction with The Brattle Group, May 2011,
http://www.wiresgroup.com/images/Brattle-WIRES_Jobs_Study_May2011.pdf (accessed December 1, 2011).
Large Power Transformers2005

and the U.S.
2006 Electric
2007 Grid2008 2009 2010 2011 Market Annual
Country Share 2011 Growth (%)
In 1,000,000 Dollars (%) 20052011
Korea 33 73 173 255 292 331 279 34% 124%
APPENDIX D. HISTORICAL IMPORTS OF LARGE POWER
Austria 46 55 84 102 132 106 109 13% 23%
TRANSFORMERS
Mexico 51
THE U171
IN 94 STATES165
NITED 159 91 91 11% 13%
Netherlands 27 31 35 63 48 67 88 11% 38%
Table D1. Large Power
Canada 60
Transformers
56
Imports by Country, 20052011 (in USD value)
63 88 132 133 85 10% 7%
(Liquid dielectric transformers
Japan 12 having a power
0 4 handling
0 capacity
14 exceeding
17 100,000
41 kVA) 5% 40%
Spain 6 3 5 0 0 12 32 4% 72%
Germany 16 30 23 47 54 11 26 3% 10%
Brazil 7 23 47 51 87 30 23 3% 38%
Colombia 2 6 25 36 28 2 16 2% 117%
Subtotal 259 370 630 802 952 801 790 97% 34%
All Other 25 21 29 45 105 81 27 3% 1%
Total 284 391 658 847 1,057 883 817 100% 31%
2005 2006 2007 2008 2009 2010 2011 Market Annual

Country Share 2011 Growth (%)
In Actual Units of Quantity (%) 20052011
Korea 82 77 123 160 180 223 204 40% 25%
Mexico 57 85 190 156 107 63 77 15% 6%
Austria 64 38 47 45 69 33 43 9% -5%
Netherlands 24 21 21 33 22 30 40 8% 11%
Table
Spain D2. Large Power
3 Transformers
2 Imports
5 by Country,
0 20052011
0 (in14quantity) 29 6% 144%
(Liquid dielectric transformers
Canada 56 36having a power-handling
34 34 capacity
44 exceeding
43 100,000
26 kVA) 5% -9%
Germany 11 21 23 42 36 11 26 5% 23%
China 0 0 0 4 11 9 15 3% N/A
Colombia 5 10 30 37 29 2 14 3% 30%
Brazil 9 17 27 25 37 12 13 3% 7%
Subtotal 311 307 500 536 535 440 487 96% 9%

All Others 52 30 28 23 75 61 18 4% -11%
Total 363 337 528 559 610 501 505 100% 7%
Source: USITC Interactive Tariff and Trade DataWeb, http://dataweb.usitc.gov/scripts/user_set.asp, accessed June
5, 2012.
Produced
Large Power Transformers and the U.S. Electric Grid Types of Transformers
Firm Plant Location LPTs in Notes
Produced at Location
2011?
Small to large size (up to
A E. L POWER TRANSFORMERS
ABBPPENDIX South Boston,
ARGEVA Y 400 MVA and M345
ANUFACTURING
kV) and
St. Louis, MO
FACILITIES IN NORTH AMERICA midsize
Lynchburg, VA Small to medium size of 5- Expansion plan
Delta Star Y status unknown as
San Carlos, CA 230 kV and 5-180 MVA
of Oct. 2011
Both core- and shell-type New entrant to the
EFACEC South Rincon, GA Y transformers of up to 1,500 U.S. market as of
MVA and 525 kV April 2010
PTTI Canonsburg, PA Y From 60 MVA up to 500
MVA
Mid to large size power
transformers of up to 1000
SPX Goldsboro, NC MVA, 500 kV Expansion
Y
completed in April
(Waukesha) Waukesha, WI Had limited capacity to 2012
produce EHV prior to 2012
expansion
VTC Roanoke, VA Y Up to 300 MVA /230 kV
Pocatello, ID
Up to 500 kV Inaugurated
HHI Montgomery, AL N (200 units/year once fully
November 2011
operational)
Mitsubishi Memphis, TN N N/A Completion
expected in 2013
ABB Varnnes, Quebec Y Up to 1,200 MVA/800 kV Outside the U.S.
Crompton Winnipeg, Manitoba Y Up to 700 MVA/525 kV Outside the U.S.
Greaves
Industrias Mexico City, Mexico Y Up to 650 MVA/525 kV Outside the U.S.
IEM
Prolec GE Monterrey, Mexico Y Up to 1,000 MVA/550 kV Outside the U.S.
WEG Huehuetoca, Mexico Y Up to 350 MVA/550 kV Outside the U.S.
Source: Open source research.

Large Power Transformers

Company and the
Number & Location of U.S.Annual
Electric Grid
Production Presence & Primary
LPT Production Notes
Name Plants Capacity (MVA)* Markets Served
20 worldwide 200,000 MVA
ABB
A PPENDIX
(Brazil, Canada, F. S
ELECTED
(50,000 MVALOBAL
in G POWER TLPTs
Full range RANSFORMER
up to MANUFACTURERS Remains
Worldwide
the larges
transformer manufa
China, Germany, India, Chongqing, China;
800kV/1200 MVA and the global lead
Poland, Spain, Sweden, 15,500 MVA in
transformer techno
Thailand, Turkey, USA) Quebec, Canada)
Alstom Full range LPTs up to Worldwide Primary markets ar
13 worldwide 130,000 MVA Asia/Pacific, Ameri
(AREVA) 1200 kV
and Europe/Africa
Bharat Heavy India 45,000 MVA Asia, Middle East, Africa,
Electricals Europe
Acquired Belgium-b
(Belgium, Canada, Pauwels Group and
Crompton Hungary, India, 70,000 MVA 100 MVA1100 MVA gained facilities in 5
Greaves Ltd. Indonesia, Ireland, countries: Belgium
France, UK, USA) Ireland, Canada, U
and Indonesia
120,000 MVA Worldwide Construction of a n
HHI 3 (South Korea, Full range LPTs up to Market presence in 2009:
(Excluding a new U.S. U.S. plant complete
Bulgaria, USA) 800 kV/1500 MVA North America (46%)
plant) Nov. 2011
Middle East (28%)
HICO 4 (South Korea, China) 75,000 MVA 765 kV/2200 MVA Korea; North America
Mitsubishi Japan N/A 1050 kV/3000 MVA Worldwide USA plant to open i
Prolec GE Mexico 100,000 MVA Full range LPTs up to Americas, Africa, the
550kV/1000MVA Middle East
21 worldwide Total production Full range LPTs up to Primary markets ar
Siemens (VA (China, India, Austria, Worldwide
capacity unavailable. 800kV/1000 MVA Europe, China, and
Tech) Brazil)
70,000 MVA in China North America
Smit Netherlands, Germany, N/A 800 kV/1200 MVA Germany, Netherlands, Exports to the USA
Transformers Malaysia USA, Malaysia
Expansion complet
SPX USA N/A 500 kV/1200 MVA North America April 2012 in Wauke
Wisconsin
*Note: The term Annual Production Capacity (MVA) represents a combined capability of each manufacturer to produce a range of transformers (from small to large) fro
m all of its facilities in an annual
basis.
APPENDIX G. POWER TRANSFORMER INDUSTRY IN CHINA

China is the largest rising market for power transformers in both manufacturing capacity and
demand, and whose market conditions undoubtedly affect those of the world and the United
States. The vast majority of Chinas power transmission system is run by the State Grid
Corporation of China (SGCC), a state-owned enterprise that constructs, owns, and operates the
transmission and distribution systems in Chinas 26 provinces.106 Established in 2002, SGCC
implemented a centralized bidding system for the procurement of transmission and distribution
equipment.
Chinas transformer market is dominated by 220 kV transformers and below, despite the
strengthening of super-high and ultra-high voltage power grid construction in recent years. In
Annual
Company Name2011, approximately 81 percent of the SGCCs
Production Notesbidding capacity was for 220
Contact kVUnited
in the and below,
States Web site
while power transformers
Capacity* of 500 kV and above occupied less than 17 percent. In 2010, the
107
Tebian Electric total bidding capacity for power transformers

China's of 220 kV and above
largest transformer wasE.150,337
3452 MVA,
Foothill Blvd., Ste.after
1020a 25
Apparatus Stock percent 100,000
Co., Ltd decline MVA manufacturer
from the prior year. At present, Chinas transformer market shows signs of
108 produces transformers Pasadena, CA http://www.tbea-usa
(TBEA) oversupply,(Two plantsapproximately
boasting up to 1,00030kV,manufacturers
with technical of transformers
Phone:of0016267921037
220 kV and above and http://en.tbea.com.c
combined) advantage on transformers 220 kV Fax: 0016266283459
more than 1,000 manufacturers of power transformers of 110 kV Email:
and above. and below. 109
shilin@tbea-usa.com
In 2008, JSHP delivered 832 4030 MoorparkAve.,Ste. 222
JiangSu HuaPengIn addition to local companies, large multinational firmsSiemens Sanand ABB
Jose, CA in particularalso
95117 http://www.jshp.com
100,000 MVA transformer units with a capacity of
Transformer Co.,play
Ltd. main roles in the manufacturing of 220 kV and above transformers in China. With
Phone: +14088501416
110kV345kV, or a total of 59,253
(JSHP Transformer)
manufacturing facilities in the mainland, they share 20 to 30 Fax:of
percent +14085197091
Chinas transformer
MVA.
Email: sales@jshp.com
market and continue to expand their footprint by ofleveraging advanced technology.110 As of
Xian XD Transformer Produces a wide range http://www.xdxb.co
December 2011, Siemens had three transformer
transformers (10kV1000 manufacturing
kV) and plants in China, boasting a total
Co., Ltd (XD 50,000 MVA N/A nglish/index.asp
annual production capacity has of over 70,000
technical MVA. withABB had five transformer manufacturing
advantage
111
Transformer)
facilities in China, and its largest facility110
transformers inkV
Chongqing
and above.had an annual production capacity of
50,000 MVA. Rotterdam, New York 12303
Baoding Tianwei 125,000 MVA Exports 230kV/400MVA Phone: 5183579290 http://www.twbb.co
Baobian Electric Co., (Three plants transformers to over 30 countries, Cell: 5184214081 /einfo.asp?bid=8
Ltd. (TWBB) Table G1 provides
combined) the top eight Chinese
including the U.S.transformer manufacturers in terms of sales value in
Email:wpesales@worldpowereq
2009. As of 2011, the primary market for these Chinese manufacturers was inland; however,
uipment.com
Shandong DaChisome of theN/A firms have begun extending
Main products their
includefootprints
550 kV/400 overseas. With what appears to be large
N/A http://www.chinada
excess capacity, some ChineseMVAmanufacturers
power transformers,
already 35kV/200
export transformers abroad. Some of them
Electric m/index.asp
MVA, and distribution transformers.
have established sales offices in the United States, including TBEA, TWBB, and JiangSu
Mainly produces 35 kV distribution http://www.sunten.c
HuaPeng Co.,
Sunten Areva Electric N/ALtd.
transformers.
N/A
/ENGLISH_B/index
Changzhou Xiandian 28,000 MVA Produces transformers of capacity N/A http://www.czxd.com
Transformer 500kV and below. n/about.asp
106 Corporate Profile, State Grid of Produces
Hangzhou Qianjiang Corporationtransformers with capacity
of China, http://www.sgcc.com.cn/ywlm/aboutus/profile.shtml http://www.qre.com
N/A up to 400 kV and distributes N/A
Electric Group (accessed January 5, 2012). Another state-owned enterprise, China Southern Power Grid manages the power index.aspx
transformers.
transmission and distribution systems in the remaining five provinces in the mainland.
107
Research and Markets: China's Power Transformer Industry Report, 20102011, Reuters, September 18, 2011,
http://www.reuters.com/article/2011/09/19/idUS19990+19-Sep-2011+BW20110919 (accessed December 14, 2011).
108 Ibid.
109
Research and Markets: China's Power Transformer Industry Report, 20102011, Reuters, September 18, 2011.
110
Frbiz Analyzes China's Power Transformer Market, PR News, July 26, 2011,
http://www.prnewswire.com/news-releases/frbiz-analyzes-chinas-power-transformer-market-99231019.html
111
Siemens Transformers China,
2010,http://www.energy.siemens.com.cn/CN/powerTransmission/Transformers/Documents/TR%20China%20catalo
g_EN_2010.pdf (accessed December 21, 2011).
Table G1. Top Chinese Power Transformers Manufacturers

Company Name URL
ABB China http://www.abb.us/cawp/cnabb051/81b11d62d13b6c0548256f9c00090f88.aspx
ABB Transformers http://www.abb.com/transformers
Alstom http://www.alstom.com/grid/solutions/high-voltage-power-products/electrical-
power-transformers/
Bharat Heavy http://www.bhel.com/home.php
Electricals
Crompton Greaves, http://www.cgglobal.com/index.aspx
Ltd.
Delta Star, Inc. http://www.deltastar.com/default.aspx
EFACEC http://www.efacec.pt/PresentationLayer/efacec_competencias_00.aspx?idioma
=2&area=2&local=68
Fortune Electric http://www.fortune.com.tw/2004/english/index.asp
Hitachi (JAEPS) http://www.hitachipowersystems.us/products/power_transformers_breakers/inde
x.html
Hyosung Power and http://www.hyosungpni.com/eng/main/main1.do
*Note: The Systems
Industrial term Annual Production Capacity (MVA) represents a combined capability of a manufacturer to produce a range of transformers (from small to large) from a
Hyundai Heavy
ll of its facilities
Industry Electro in an annual http://www.hyundai-elec.com/new/eng/product/product.jsp?p_code=A0100
basis.
Electric Systems
Source:
Iljin 2009 - Top 10 China Transformer
Electric Manufacturers, China National Transformer Association, June 22, 2010, http://www.dsius.com/Top10_TR_inChina.pdf (acc
http://www.iljinelectric.com/main.asp
essed November 3, 2011). http://www.mitsubishielectric.com/bu/powersystems/products/transmission/trans
Mitsubishi
formers/index.html
Mitsubishi Power http://www.mpshq.com/
Pennsylvania
Transformer http://www.patransformer.com/
Technology, Inc.
Prolec
DOEGE / OE / ISER Junehttp://www.prolecge.com/interneten/
2012 41
Shihlin Electric & http://www.seec.com.tw/en/public/public.asp?selno=363&no1=270&no2=356&n
Engineering
o3=363
Corporation
Siemens China http://www.stcl.com.cn/stcl/en/aboutus.asp
Large Power Transformers
Siemens Transformer
and the U.S. Electric Grid
http://www.energy.siemens.com/hq/en/power-transmission/transformers/
Smit Transformers http://www.powersystempartners.com/smit_power_transformers.html
SPX Transformer http://www.spxtransformersolutions.com/
A
PPENDIX
Solutions, Inc. H. P OWER T M
RANSFORMER ANUFACTURERS EB SITES W
Toshiba http://www.toshiba.co.jp/sis/en/tands/trans/index.htm
Virginia Transformer http://www.vatransformer.com/Default.aspx
Corp.
WEG http://www.weg.net/us/Products-Services/Generation-Transmission-and-
Distribution-of-Energy/Transformers/Power-Transformers
APPENDIX I. BIBLIOGRAPHY
ABB Group. 12 good reasons for buying an ABB transformer. Retrieved December 3, 2011 from
http://www.eyeproject.cl/files/94151d_ABB-BR-31-TrafoStar-FlipChart12Reasons.pdf
ABB Group. ABB unveils its largest transformer components center in China. Retrieved
December 3, 2011 from
http://www.abb.mu/cawp/seitp202/51719ef8b8b364ee48257690001f063a.aspx
ABB Group. ABB Power Products Divisions. Retrieved December 21, 2011 from
http://www.abb.us/cawp/cnabb051/81b11d62d13b6c0548256f9c00090f88.aspx
ABB Group. (2002, November 26). ABB signs US$ 200 million agreement for power
transformers in United States. Retrieved December 15, 2011 from
http://www.abb.com/cawp/seitp202/c1256c290031524bc1256c7d003d7992.aspx
ABB Group. The evolution of power transformers: 110 years of power transformer technology.
Retrieved December 7, 2011 from
http://www.abb.com/cawp/db0003db002698/1d5674d769397bc8c12572f40045bd75.aspx
ABB Group. Railcar rental program for power transformer relocation. Retrieved January 12,
2012 from
http://www05.abb.com/global/scot/scot252.nsf/veritydisplay/36bcc4e173d5c1558525760
b00711641/$file/1zul004605-300_railcar_r4.pdf
ABB Group. (2007). Service handbook for transformers.
ABB Group. (2007, September 5). ABB strategy 2011. Retrieved December 1, 2011 from
http://www02.abb.com/global/abbzh/abbzh259.nsf/bf177942f19f4a98c1257148003b7a0a
/b78db666da1a0697c125734f003ba49a/$FILE/ABB+Strategy+2011.pdf
Alstom. (2011, June 28). Shareholders Meeting. Retrieved December 1, 2011 from
http://www.alstom.com/assetmanagement/DownloadAsset.aspx?ID=326a901d-467d-
4bc3-8504-
2ab917598501&version=d568ca975d59485db0ae81a9c8fa76be1.pdf&lang=2057
Alstom Grid. Queensland Minister commemorates successful completion of upgrade project at

Alstom Grids Rocklea factory. Retrieved December 3, 2011 from
http://www.alstom.com/grid/news-and-events/press-releases/upgrade-project-at-Alstom-
Grid-s-Rocklea-factory/
Alstom Grid. Power Transformers. Retrieved December 3, 2011 from

http://www.alstom.com/grid/solutions/high-voltage-power-products/electrical-power-
transformers/
Bartley, P.E., & William, H. (2003). Analysis of Transformer Failures. Retrieved November 18,
2011 from Hartford Steam Boiler Inspection & Insurance Co. Web site:
http://www.bplglobal.net/eng/knowledge-center/download.aspx?id=191
Brandolph, A. (2011, December 30). 340-ton transformer makes 9-mile trek. Retrieved
January 12, 2012 from
http://www.pittsburghlive.com/x/pittsburghtrib/news/s_774162.html
Campbell, R. J. (2011, October 28). Regulatory incentives for electricity transmissions: Issues
and cost concerns. Congressional Research Service. Retrieved November 23, 2011 from
http://www.ieeeusa.org/policy/eyeonwashington/2011/documents/electrans.pdf
Copper Development Association Inc. Transformer manufacturer uses only copper. Retrieved
November 1, 2011 from
http://www.copper.org/applications/electrical/energy/pdf/transformer_manufacturer_a610
0.pdf
Edison Electric Institute. (2005, May). EEI Survey of Transmission Investment. Retrieved
http://www.eei.org/ourissues/ElectricityTransmission/Documents/Trans_Survey_Web.pd
f
Electrical Monitor. (2007, November). Future bright for transformer lamination industry.
Retrieved November 15, 2011 from http://www.kryfs.com/05_EM_Interview.pdf
Electromagnetic Pulse Commission. (2008, April). Report of the Commission to Assess the
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LARGE POWER TRANSFORMERS AND

THE U.S. ELECTRIC GRID

Infrastructure Security and Energy Restoration

Large Power Transformers and the U.S. Electric Grid

Large Power Transformers and the U.S. Electric Grid

FOR FURTHER INFORMATION

Tiffany Y. Choi of ICF International contributed to this report.

Cover photo sources:

DOE / OE / ISER June 2012 ii

Large Power Transformers and the U.S. Electric Grid

DOE / OE / ISER June 2012 iii

Large Power Transformers and the U.S. Electric Grid

Appendix C. Planned Transmission Lines in the United States ................................................... 36

DOE / OE / ISER June 2012 iv

Large Power Transformers and the U.S. Electric Grid

DOE / OE / ISER June 2012 v

Large Power Transformers and the U.S. Electric Grid

DOE / OE / ISER June 2012 vi

Large Power Transformers and the U.S. Electric Grid

The Office of Electricity Delivery and Energy Reliability,

DOE / OE / ISER June 2012 1

Large Power Transformers and the U.S. Electric Grid

Therefore, this report examines the following:

The Electricity Subsector has long embraced resilience as

6 The National Security Strategy, the White House, May 2010,

Department of Homeland Security, 2009, http://www.dhs.gov/xlibrary/assets/NIPP_Plan.pdf (accessed December

http://www.nerc.com/files/HILF.pdf (accessed November 30, 2011).

DOE / OE / ISER June 2012 2

Large Power Transformers and the U.S. Electric Grid

Coordinating Council advised electricity sector

1.3 SCOPE AND DEFINITION OF LARGE POWER TRANSFORMERS

DOE / OE / ISER June 2012 3

Large Power Transformers and the U.S. Electric Grid

2011, http://www.nerc.com/docs/pc/sedtf/SEDTF_Special_Report_October_2011.pdf (accessed November 22,

DOE / OE / ISER June 2012 4

Large Power Transformers and the U.S. Electric Grid

II. POWER TRANSFORMER CLASSIFICATION

Figure 1. Electric Power Grid Representation

December 15, 2011).

DOE / OE / ISER June 2012 5

Large Power Transformers and the U.S. Electric Grid

2.2 PHYSICAL CHARACTERISTICS OF LARGE POWER TRANSFORMERS

Figure 2. Core-Type Large Power Transformer Showing Major Internal Components

21 ABB, http://www.abb.com/cawp/db0003db002698/1d5674d769397bc8c12572f40045bd75.aspx (accessed

DOE / OE / ISER June 2012 6

Large Power Transformers and the U.S. Electric Grid

345-13.8kV 300 $2,500,000 185 tons (370,000 lb)

76526kV 500 $5,000,000 325 tons (650,000 lb)

Department of Energy, 2006.

http://www.nerc.com/docs/pc/sedtf/SEDTF_Special_Report_October_2011.pdf (accessed November 11, 2011).

DOE / OE / ISER June 2012 7

Large Power Transformers and the U.S. Electric Grid

III. LARGE POWER TRANSFORMER PROCUREMENT AND

3.1.1 PREQUALIFICATION OF MANUFACTURERS

DOE / OE / ISER June 2012 8

Large Power Transformers and the U.S. Electric Grid

3.1.2 BIDDING PROCESS

3.1.4 LEAD TIME

DOE / OE / ISER June 2012 9