While supply chain issues caused by the COVID-19 pandemic (remember the run on toilet paper?) may be in the rearview for regular consumers, new bottlenecks in the flow of goods and services are challenging electric cooperatives nationwide to deliver affordable and reliable service. And the circumstances squeezing the supply chains for electric co-ops are unlikely to ease in the foreseeable future.
First, we’re talking about a higher demand for electricity. Plus, the supply of equipment needed to maintain or build more power plants has not kept up. Then there’s a skilled labor shortage to get the job done and tariffs on imported materials. All these things add up to delayed energy projects at increased costs.
With all things digital from phones to thermostats, electricity use is up. To sustain the growing digital economy, huge data centers with appetites for electricity akin to that of a small city are sprouting up across rural America and electric co-ops’ service territories. These centers soak up extreme amounts of power to serve the internet’s relentless demand for high-speed networking, data storage and AI (artificial intelligence) that make the internet user-friendly.
But even in this post-pandemic world, there still remains a scarcity of materials, equipment and workers to get new power generation sources built.
After the pandemic forced manufacturing to shutter for months in 2020, a lot of experienced employees retired or never even went back to their jobs making transformers and other equipment essential to distributing electricity to consumers. The supply of some transformers has never been fully replenished, and the lack of a competent workforce today makes that a constant game of catch-up.
U.S.-based engineering, procurement and construction firms are scrambling to meet work orders for new power projects as there is more demand today than they can keep up with, says Stephanie Crawford, regulatory affairs director at the National Rural Electric Cooperative Association.
Electric co-ops are “finding that these firms cannot respond to requests, they’re charging price premiums, or that planning for projects four years out is already ‘too late,’” she says.
As a result, equipment crucial for electricity projects — from new substations to power plant maintenance and outage repairs after storms hit — is delayed and coming in at much higher prices.
Co-ops are seeing lag times of up to four years between an order for a transformer and its ultimate delivery. Prices are up 70% to 100% compared to 2020. Lead times for new gas turbines for a power plant can range from three to six years and cost 25% more than just three years ago.
According to one industry insider, an electric co-op that spent $10 million on materials and equipment for electricity projects and maintenance in 2020 had to spend more than $15.5 million in 2025 to keep up.
So, what is your electric co-op doing to maintain reliable and affordable service?
Collaboration, which is baked into every co-op’s DNA, is key. Co-ops are finding themselves working with equipment suppliers and contractors closer than ever and planning their orders at least a year in advance of construction to work out the snags of the current supply chain.
Knowing their exact inventory and the physical storage space also helps co-ops keep necessary equipment on hand, materials flowing and projects as near to schedule as possible.
By working as a team, electric co-ops, manufacturers and their industry partners will be able to improve forecasting their equipment needs, stay ahead of potential demand changes and experience a smoother supply chain.
