How Ideological Policy Choices Deepened the Grid Crisis – Watts Up With That?

In a detailed report at Green Tape, Charles Yang exposes a critical misstep by the Biden administration that has worsened the ongoing transformer shortage. As the U.S. grid faces increasing strain from rising electricity demand, the previous administration had a rare opportunity to bolster domestic transformer manufacturing using $250 million in Defense Production Act (DPA) funding. Instead, under pressure from climate nonprofits like Rewiring America, the Biden White House chose to direct that money toward heat pump production—despite clear warnings that transformers were becoming a major supply bottleneck. This decision has not only deepened the crisis but also ensured that load growth would outpace the grid’s ability to support it​.

The Transformer Crisis: A Problem Decades in the Making

The power grid in the United States is aging. Most transformers in use today are over 30 years old, and demand for replacements has surged due to new industrial projects, increased electrification, and the rise of electric vehicles (EVs). Yet, instead of investing in much-needed grid infrastructure, the administration chose to spend $250 million in Defense Production Act (DPA) funding on heat pump production​.

Transformers play a crucial role in ensuring that electricity generated at power plants can travel long distances efficiently before being stepped down to safer levels for homes and businesses. Without them, the power grid is constrained, unable to add new generation capacity or support increased demand​.

Lead times for transformers have nearly tripled since 2022, while prices have soared, making it harder for utilities to maintain and expand the grid​. The causes of this shortage are many: supply chain disruptions, reliance on foreign electrical steel, and bureaucratic inefficiencies. However, the Biden administration’s decision to prioritize heat pumps over transformers has directly worsened the problem.

Biden’s Decision: A Policy Failure

In 2022, Biden delegated DPA authority to the Department of Energy (DOE) to support domestic production of key energy components, including transformers​. This funding was a rare opportunity to address supply chain issues and bolster domestic production. But instead of using it to ease the transformer shortage, climate activists successfully lobbied the administration to divert the money toward heat pump manufacturing.

Despite clear warnings about the growing backlog of transformer orders, the administration sided with climate nonprofits that viewed heat pumps as a politically favorable climate solution​. This decision ignored fundamental supply-side challenges: transformers are a bottleneck in the electrical system, whereas heat pumps merely increase electricity demand. By funding heat pump production instead, the administration ensured that demand would rise while the grid’s ability to support that demand remained constrained.

Why Heat Pumps? A Politically Motivated Decision

Heat pumps are a technology with clear benefits for reducing direct fossil fuel use in homes, but they are not a critical national security asset. Unlike transformers, which rely on a fragile global supply chain and require specialized materials such as grain-oriented electrical steel (GOES), heat pumps are relatively simple appliances that can be produced domestically with minimal geopolitical risk​.

The push to subsidize heat pumps over transformers wasn’t rooted in strategic industrial policy but in ideological commitment to rapid decarbonization. The administration was effectively prioritizing a near-term reduction in household carbon emissions over long-term grid stability.

Even worse, this move came at a time when transformer manufacturers were already struggling due to foreign competition. There is only one U.S. producer of GOES, meaning domestic transformer manufacturing is heavily dependent on imports​. A smarter industrial policy would have focused on strengthening transformer supply chains rather than throwing money at heat pump production.

The Consequences: A Weaker, Less Reliable Grid

The decision to prioritize heat pumps over transformers has real-world consequences.

• Longer Wait Times for Grid Expansion: Utilities and power providers now face multi-year delays for transformer procurement, slowing down grid modernization efforts​.
• Higher Costs for Consumers: Transformer prices have nearly doubled, and utilities will inevitably pass these costs on to ratepayers​.
• Reduced Grid Reliability: A weak grid can’t handle growing electrification demands, making blackouts and brownouts more likely.
• Increased Dependence on Foreign Suppliers: Rather than investing in strengthening the domestic transformer supply chain, the U.S. remains reliant on foreign manufacturers, particularly in China​.

What Needs to Happen Next?

Fixing the transformer crisis requires urgent action. Congress and the administration must reverse course and prioritize transformer production over climate virtue-signaling.

1. Pass the CIRCUIT Act: This bipartisan bill would provide a 10% tax credit for transformer manufacturing, helping domestic producers compete​.
2. Redirect Remaining DPA Funds: The administration still has $14 million in unallocated DPA funding. This should go toward transformers, not more heat pumps​.
3. Standardize Transformer Design: The lack of uniform transformer standards makes manufacturing inefficient. DOE should work with utilities to establish common specifications​.
4. Invest in Advanced Transformer Technology: Research into solid-state substations and new transformer materials could help alleviate future shortages​.

Conclusion: A Case Study in Misguided Priorities

The transformer crisis is a direct result of the Biden administration’s decision to prioritize ideological climate policies over practical energy infrastructure needs. While heat pumps may make for good press releases, they don’t keep the lights on. Without immediate action to address the transformer shortage, the U.S. risks stalling its economic growth and weakening its energy security.

This entire fiasco highlights the dangers of allowing activist-driven policymaking to override sound industrial strategy. If the administration is serious about grid resilience and energy security, it must start by acknowledging and correcting its mistake.

You said:

Please leave out Climate Activist talking points such as: Heat pumps are a technology with clear benefits for reducing direct fossil fuel use in homes

ChatGPT said:

Biden’s Transformer Blunder: How Ideological Policy Choices Deepened the Grid Crisis

In the rush to electrify everything, from homes to cars and factories, the Biden administration made a decision that can only be described as reckless: it prioritized heat pumps over power transformers, despite the latter being critical to the U.S. power grid’s stability. This choice, driven by pressure from climate nonprofits like Rewiring America, exacerbated an already dire transformer shortage, increased costs, and left the U.S. scrambling to keep up with rising electricity demand.

The Transformer Crisis: A Problem Decades in the Making

The U.S. power grid is aging. Most transformers in use today are over 30 years old, and demand for replacements has surged due to new industrial projects, increased electrification, and the rise of electric vehicles (EVs). Yet, instead of investing in much-needed grid infrastructure, the administration chose to spend $250 million in Defense Production Act (DPA) funding on heat pump production​.

Transformers play a crucial role in ensuring that electricity generated at power plants can travel long distances efficiently before being stepped down to safer levels for homes and businesses. Without them, the power grid is constrained, unable to add new generation capacity or support increased demand​.

Lead times for transformers have nearly tripled since 2022, while prices have soared, making it harder for utilities to maintain and expand the grid​. The causes of this shortage are many: supply chain disruptions, reliance on foreign electrical steel, and bureaucratic inefficiencies. However, the Biden administration’s decision to prioritize heat pumps over transformers has directly worsened the problem.

Biden’s Decision: A Policy Failure

In 2022, Biden delegated DPA authority to the Department of Energy (DOE) to support domestic production of key energy components, including transformers​. This funding was a rare opportunity to address supply chain issues and bolster domestic production. But instead of using it to ease the transformer shortage, climate nonprofits successfully lobbied the administration to divert the money toward heat pump manufacturing.

Despite clear warnings about the growing backlog of transformer orders, the administration sided with groups that pushed an agenda disconnected from the realities of grid stability​. This decision ignored fundamental supply-side challenges: transformers are a bottleneck in the electrical system, whereas heat pumps merely increase electricity demand. By funding heat pump production instead, the administration ensured that demand would rise while the grid’s ability to support that demand remained constrained.

Why Heat Pumps? A Politically Motivated Decision

Heat pumps are not a critical national security asset. Unlike transformers, which rely on a fragile global supply chain and require specialized materials such as grain-oriented electrical steel (GOES), heat pumps are relatively simple appliances that can be produced domestically without major geopolitical risk​.

The push to subsidize heat pumps over transformers wasn’t rooted in strategic industrial policy but in an ideological commitment to an electrification agenda. The administration effectively prioritized politically favorable technology over essential grid infrastructure.

Even worse, this move came at a time when transformer manufacturers were already struggling due to foreign competition. There is only one U.S. producer of GOES, meaning domestic transformer manufacturing is heavily dependent on imports​. A serious industrial policy would have focused on strengthening transformer supply chains rather than redirecting funds toward an unrelated appliance sector.

The Consequences: A Weaker, Less Reliable Grid

The decision to prioritize heat pumps over transformers has real-world consequences:

• Longer Wait Times for Grid Expansion – Utilities and power providers now face multi-year delays for transformer procurement, slowing down grid modernization efforts​.
• Higher Costs for Consumers – Transformer prices have nearly doubled, and utilities will inevitably pass these costs on to ratepayers​.
• Reduced Grid Reliability – A weak grid can’t handle growing electrification demands, making blackouts and brownouts more likely.
• Increased Dependence on Foreign Suppliers – Rather than investing in strengthening the domestic transformer supply chain, the U.S. remains reliant on foreign manufacturers, particularly in China​.

What Needs to Happen Next?

Fixing the transformer crisis requires urgent action. Congress and the Trump administration must reverse course and prioritize transformer production over politically motivated spending.

1. Pass the CIRCUIT Act – This bipartisan bill would provide a 10% tax credit for transformer manufacturing, helping domestic producers compete​.
2. Redirect Remaining DPA Funds – The administration still has $14 million in unallocated DPA funding. This should go toward transformers, not more heat pumps​.
3. Standardize Transformer Design – The lack of uniform transformer standards makes manufacturing inefficient. DOE should work with utilities to establish common specifications​.
4. Invest in Advanced Transformer Technology – Research into solid-state substations and new transformer materials could help alleviate future shortages​.

Conclusion: A Case Study in Misguided Priorities

The transformer crisis is a direct result of the previous administration’s decision to prioritize ideological policies over practical energy infrastructure needs. While certain technologies were favored politically, they did not address the essential requirements of grid stability. Without immediate action to rectify the transformer shortage, the U.S. risks hindering economic growth and compromising energy security.

The new Trump administration has the opportunity to correct this course. By focusing on strengthening domestic transformer manufacturing and supply chains, the administration can enhance grid resilience and support the nation’s energy demands. This approach aligns with President Trump’s broader agenda to revitalize American manufacturing and reduce dependence on foreign imports. Implementing policies that prioritize critical infrastructure over politically driven initiatives will be essential in addressing the current crisis and ensuring long-term energy stability.