Grain-oriented electrical steel
Grain-oriented electrical steel, often shortened to GOES, is the core steel named in the public large-power-transformer supply reviews. Figures below are copied from those sources.
Compiled . Dates on each claim are the dates of the linked sources.
What it is
The report says GOES is manufactured in several grades, including conventional oriented grade (CGO), high-permeability grade (HI-B), permanent domain-refined GOES (PDR), and intermediate grade (MOH). It says HI-B domain-refined grade is highly demanded by large power transformer manufacturers because of its low core loss. U.S. Department of Energy Report to Congress .
The same report says the highest grade, PDR, is only available from Nippon Steel in Japan and is not manufactured in the United States. It says an intermediate grade, MOH, is widely available from Japan and South Korea, and that AK Steel makes an equivalent to MOH that is more expensive, has no efficiency benefit, and is not commonly used by U.S. large power transformer manufacturers. U.S. Department of Energy Report to Congress .
Why it constrains supply
The review states that there are two major bottlenecks in the large power transformer supply chain. The first is U.S. GOES production capacity. The second is the testing capacity of large power transformer manufacturers. U.S. Department of Energy Electric Grid Supply Chain Review .
The review says the United States has one GOES supplier and that this company cannot meet all the demand of large power transformer manufacturers. It says some interviewees estimated that domestic supply meets about 20 percent of domestic demand, and that a 2020 Department of Commerce report indicated that all of the GOES used for large power transformer manufacturing is imported. U.S. Department of Energy Electric Grid Supply Chain Review .
The report says Cleveland-Cliffs, through its 2020 acquisition of AK Steel, is the sole active domestic GOES supplier, that the company can meet between 12 and 20 percent of domestic GOES demand, and that it is not currently profitable. It also says there is only one GOES manufacturer in the United States and that this company has been unable to meet domestic demand at quality and prices comparable to imports. U.S. Department of Energy Report to Congress .
The report quotes a 2022 Department of Energy conclusion that domestic GOES production is a major weak link in the large power transformer supply chain, with an insignificant domestic market, an insignificant global market demand, an inability to compete with the global market, a lack of technology or material substitutions, and shrinking supply because of competing applications. U.S. Department of Energy Report to Congress .
The report says domestic electric-vehicle production consumes non-oriented electrical steel, which competes for the same production capacity as domestic GOES, and that this crowds out less profitable domestic GOES production. It says ATI shut down GOES production in 2016 and that trade data showed a 155 percent increase in GOES imports the following year. It says U.S. Steel has GOES capability through its 2022 acquisition of Big River Steel and is producing non-oriented electrical steel instead. U.S. Department of Energy Report to Congress .
The review says that outside the United States there are 13 manufacturers of GOES, and that of those only Japan, South Korea, and Germany could produce GOES at the specifications outlined by the Department of Energy standards then in force. U.S. Department of Energy Electric Grid Supply Chain Review .
Current public evidence
A 2020 Department of Commerce industry survey, as cited in the report, found that GOES and continuously transposed copper each account for roughly 25 percent of final large power transformer production costs. U.S. Department of Energy Report to Congress .
The report says approximately 80 percent of GOES was imported in 2019, and that the share depends on form: uncut rolls 20 percent, pre-cut lamination sheets 88 percent, pre-assembled stacked cores 80 percent, wound cores 100 percent, completed transformers 35 percent of all transformers and 82 percent of large power transformers. It says imported GOES market penetration hovers around 20 percent, and that earlier figures put it as low as 12 percent or as high as 37 percent between 2015 and 2019. U.S. Department of Energy Report to Congress .
The report says GOES is subject to a 25 percent tariff when imported from major exporter countries, while laminations and cores are not. U.S. Department of Energy Report to Congress .
Stakeholders cited in the review gave a lead-time comparison of 5 weeks before COVID-19 and 12 weeks after it for GOES. U.S. Department of Energy Electric Grid Supply Chain Review .
The Office of Electricity page says lead times for transformer orders, particularly distribution transformers, increased from three to six months in 2019 to 12 to 30 months in 2023, and names grain-oriented electrical steel, aluminum, and copper among the materials shortages. Those months are order times for transformers, not a GOES week count. U.S. Department of Energy Office of Electricity .
The council report says grain-oriented electrical steel is difficult to source domestically, that in April 2024 the Department of Energy modified a new efficiency standard to allow more time for manufacturers to adjust, and that under the new standards 25 percent of distribution transformers will be made using amorphous steel, which lacks domestic sources of production. National Infrastructure Advisory Council report .
Buyer mitigations
The council report says most electric utilities do not source transformers under long-term contracts, that the out-years of a five-year capital budget are seldom specific about discrete projects, and that it recommends encouraging long-term contracts between transformer suppliers and the sectors driving demand. National Infrastructure Advisory Council report .
The report says that before the COVID-19 pandemic it was possible to place an order for a large transformer with a lead time of less than a year, and that later conversations with domestic producers indicated lead times up to and exceeding 36 months. It says delays also follow difficulty obtaining specialty steel laminations, specialty copper wire, or appropriately skilled labor. U.S. Department of Energy Report to Congress .
Ordering timelines that public sources state are collected in the buying guide. Typical lead times by class and region are on the grid lead-time tracker. Mid-tier manufacturers already in the directory are on the mid-tier list. A dash on that list means no public dated capacity note is on file.
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