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The grid needs transformers, and transformers need foreign steel.
President Trump wants to unleash American energy dominance, reduce consumer costs, and lead on artificial intelligence. But his 25% steel and aluminum tariffs, which are set to go into effect next month, could work directly against all of those goals.
The reason has to do with a crucial piece of electrical equipment for expanding the grid. They’re called transformers, and they’re in critically short supply.
Transformers serve to reduce losses along power lines by regulating voltage as electricity travels between generators and end uses, and they are made using a specific type of steel called grain oriented electrical steel, or GOES. There’s only one domestic producer of GOES — Cleveland Cliffs — and at full capacity it cannot meet even half of the demand from domestic transformer manufacturers, according to Joe Donovan, the executive director of the Transformer Manufacturing Association of America.
“We’re forced into the international markets,” he told me. “Reliance on a single domestic supplier for this critical material is a national security risk,” he added later in an email.“The grid is the foundation of our entire economy and should not be reliant on a single source for such a critical component.”
In a fact sheet about the upcoming steel and aluminum tariffs, Trump said he wants to end the “global dumping” of cheap foreign steel into American markets. It’s not yet clear whether he will impose blanket fees on all steel imports from all countries or use a finer tooth comb. But GOES only accounts for 0.15% of global steel production, Donovan said. “Any new restrictive tariffs would not onshore domestic GOES manufacturing, but would instead increase electricity costs for American consumers and delay upgrades to the grid nationally, putting manufacturing projects and developments at risk,” he told me. He said his trade group is advocating for the tariffs to exclude GOES imports from allied countries including Italy, South Korea, Poland and Japan, as well as derivative products from Mexico and Canada.
The problem is not just that the U.S. doesn’t produce enough of this material, Donovan added. Cleveland Cliffs lacks the capacity to produce GOES “in the size or efficiency levels that are needed in modern, efficient large power transformers,” he said. “Thus, domestic transformer manufacturers are unable to procure this GOES from any domestic source.”
Transformers come in many varieties and sizes, from the small metal boxes that sit atop local power lines to the larger containers at substations that have big metal coils springing out of them. Adding anything to the grid — whether it’s a generator like a new solar farm or natural gas plant, or a new source of demand like an apartment complex or a data center — requires adding transformers.
For nearly two decades, electricity growth was stagnant in the U.S., and there wasn’t much reason to invest in transformer manufacturing or supply chains. But suddenly, the rise of artificial intelligence, coupled with a push to reshore manufacturing and electrify transport, plus worsening natural disasters that damage electrical infrastructure caused demand to soar. These pressures have not just affected the U.S., and transformer manufacturers globally have not been able to keep up. Over the past four to five years, lead times for procuring transformers went from just under a year to upwards of three years, and prices jumped 60% to 80%, according to Wood Mackenzie.
“The increase in equipment costs is both threatening the economics of projects and increasing the price of electricity,” analysts from the energy research firm wrote in October. “One small ray of light from a transformer cost perspective is that the price of grain oriented electrical steel, a key commodity input, has declined 60-70% recently.”
Trump’s tariffs will cut into those declines.
“A lot of utilities and all of our clients across the country are very nervous about the potential implications of this,” Ben Boucher, a senior analyst at Wood Mackenzie, told me. “I think everyone knows their costs are going to increase as a result, even if they source domestically, because there’s going to be more competition for domestically produced products.”
When Trump imposed tariffs on steel during his first presidency, it did not lead to new investment in domestic manufacturing of GOES. Instead, there was an uptick in imports of transformer cores, a component that already contains GOES, from Mexico and Canada, Boucher said.
I reached out to the Edison Electric Institute, the main trade group for utilities, for comment on how the transformer shortage has affected its members’ ability to meet rising electricity demand, and what the tariffs could mean for them. The group did not answer my questions and sent back a statement attributed to Scott Aaronson, the senior vice president for energy security and industry operations, which said the group supports the president’s goal of bolstering domestic manufacturing and looks forward to working with him “to ensure that any new tariffs don't raise customer energy bills due to higher commodity prices.”
Jonas Nahm, an associate professor at Johns Hopkins, who worked as a senior economist at the White House under Biden, told me there was a concerted effort to increase transformer production domestically over the past four years. Several manufacturers, including Siemens Energy and Hitachi Energy, announced new plants and plant expansions. Nahm wondered whether Trump’s tariffs on steel could end up undermining his goals by making those investments riskier. “In econ terms, it’s sort of a tariff inversion, where we’re tariffing the intermediate inputs more than we’re tariffing the import of the final product.”
We often talk about industries like the “oil industry” or the “steel industry” as if they are making homogenous, interchangeable products. In reality, neither oil nor steel is one, uniform thing, and in the context of policymaking — like President Trump’s tariffs — the differences are consequential.
My colleague Robinson Meyer wrote about this when Trump was threatening to put 25% tariffs on Canadian imports. The U.S. is the biggest producer of crude oil in the world, but the oil that comes out of our wells is “light and sweet,” meaning that it has relatively low viscosity and sulfur content. Meanwhile, many U.S. refineries are designed to process the “heavy and sour” crude oil extracted in Canada. Tariffs on imported oil would lead to spikes in gasoline prices. “You couldn’t create a better scenario to destroy the economics of U.S. coking refineries,” Rory Johnston, an oil markets analyst, told Robinson. Similarly, the U.S. is a major steel producer, but we’re still heavily reliant on imports for certain types of steel.
It’s unclear whether the administration is aware of the issue. Trump is imposing tariffs on steel and aluminum under Section 232 of the Trade Expansion Act of 1962, as he did during his first term, which requires the Department of Commerce to first conduct an investigation and confirm that the import of these products threatens U.S. national security. But there’s been no new investigation since Trump took office. In his proclamation announcing the tariffs, the President referenced the investigation his administration conducted in 2018, adding in some recent data points that make the case that the threats from then are still an issue.
“They’re operating with 2018 assumptions about the state of the world, and then threw some updated data in there in order to accelerate the process,” Nahm said. “You can see how maybe this wasn’t a big deal six years ago. Now electricity demand is going up, and it’s getting more expensive. That wasn’t something that was on the horizon in 2018 at all.”
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On Energy Transfer’s legal win, battery storage, and the Cybertruck
Current conditions: Red flag warnings are in place for much of Florida • Spain is bracing for extreme rainfall from Storm Martinho, the fourth named storm in less than two weeks • Today marks the vernal equinox, or the first day of spring.
A jury has ordered Greenpeace to pay more than $660 million in damages to one of the country’s largest fossil fuel infrastructure companies after finding the environmental group liable for defamation, conspiracy, and physical damages at the Dakota Access Pipeline. Greenpeace participated in large protests, some violent and disruptive, at the pipeline in 2016, though it has maintained that its involvement was insignificant and came at the request of the local Standing Rock Sioux Tribe. The project eventually went ahead and is operational today, but Texas-based Energy Transfer sued the environmental organization, accusing it of inciting the uprising and encouraging violence. “We should all be concerned about the future of the First Amendment, and lawsuits like this aimed at destroying our rights to peaceful protest and free speech,” said Deepa Padmanabha, senior legal counsel for Greenpeace USA. The group said it plans to appeal.
The Department of Energy yesterday approved a permit for the Calcasieu Pass 2 liquified natural gas terminal in Louisiana, allowing the facility to export to countries without a free trade agreement. The project hasn’t yet been constructed and is still waiting for final approvals from the independent Federal Energy Regulatory Commission, but the DOE’s green light means it faces one less hurdle.
CP2 was awaiting DOE’s go-ahead when the Biden administration announced its now notorious pause on approvals for new LNG export facilities. The project’s opponents argue it’s a “carbon bomb.” Analysis from the National Resources Defense Council suggested the greenhouse gases from the project would be equivalent to putting more than 1.85 million additional gas-fueled automobiles on the road, while the Sierra Club found it would amount to about 190 million tons of carbon dioxide equivalent annually.
President Trump met with 15 to 20 major oil and gas executives from the American Petroleum Institute at the White House yesterday. This was the president’s first meeting with fossil fuel bosses since his second term began in January. Interior Secretary Doug Burgum and Energy Secretary Chris Wright were also in the room. Everyone is staying pretty quiet about what exactly was said, but according to Burgum and Wright, the conversation focused heavily on permitting reform and bolstering the grid. Reuters reported that “executives had been expected to express concerns over Trump’s tariffs and stress the industry view that higher oil prices are needed to help meet Trump’s promise to grow domestic production.” Burgum, however, stressed that oil prices didn’t come up in the chat. “Price is set by supply and demand,” he said. “There was nothing we could say in that room that could change that one iota, and so it wasn’t really a topic of discussion.” The price of U.S. crude has dropped 13% since Trump returned to office, according to CNBC, on a combination of recession fears triggered by Trump’s tariffs and rising oil output from OPEC countries.
The U.S. installed 1,250 megawatts of residential battery storage last year, the highest amount ever and nearly 60% more than in 2023, according to a new report from the American Clean Power Association and Wood Mackenzie. Overall, battery storage installations across all sectors hit a new record in 2024 at 12.3 gigawatts of new capacity. Storage is expected to continue to grow next year, but uncertainties around tariffs and tax incentives could slow things down.
China is delaying approval for construction of BYD’s Mexico plant because authorities worry the electric carmaker’s technology could leak into the United States, according to the Financial Times. “The commerce ministry’s biggest concern is Mexico’s proximity to the U.S.,” sources told the FT. As Heatmap’s Robinson Meyer writes, BYD continues to set the global standard for EV innovation, and “American and European carmakers are still struggling to catch up.” This week the company unveiled its new “Super e-Platform,” a new standard electronic base for its vehicles that it says will allow incredibly fast charging — enabling its vehicles to add as much as 249 miles of range in just five minutes.
Tesla has recalled 46,096 Cybertrucks over an exterior trim panel that can fall off and become a road hazard. This is the eighth recall for the truck since it went on sale at the end of 2023.
This fusion startup is ahead of schedule.
Thea Energy, one of the newer entrants into the red-hot fusion energy space, raised $20 million last year as investors took a bet on the physics behind the company’s novel approach to creating magnetic fields. Today, in a paper being submitted for peer review, Thea announced that its theoretical science actually works in the real world. The company’s CEO, Brian Berzin, told me that Thea achieved this milestone “quicker and for less capital than we thought,” something that’s rare in an industry long-mocked for perpetually being 30 years away.
Thea is building a stellarator fusion reactor, which typically looks like a twisted version of the more common donut-shaped tokamak. But as Berzin explained to me, Thea’s stellarator is designed to be simpler to manufacture than the industry standard. “We don’t like high tech stuff,” Berzin told me — a statement that sounds equally anathema to industry norms as the idea of a fusion project running ahead of schedule. “We like stuff that can be stamped and forged and have simple manufacturing processes.”
The company thinks it can achieve simplicity via its artificial intelligence software, which controls the reactor’s magnetic field keeping the unruly plasma at the heart of the fusion reaction confined and stabilized. Unlike typical stellarators, which rely on the ultra-precise manufacturing and installment of dozens of huge, twisted magnets, Thea’s design uses exactly 450 smaller, simpler planar magnets, arranged in the more familiar donut-shaped configuration. These magnets are still able to generate a helical magnetic field — thought to keep the plasma better stabilized than a tokamak — because each magnet is individually controlled via the company’s software, just like “the array of pixels in your computer screen,” Berzin told me.
“We’re able to utilize the control system that we built and very specifically modulate and control each magnet slightly differently,” Berzin explained, allowing Thea to “make those really complicated, really precise magnetic fields that you need for a stellarator, but with simple hardware.”
This should make manufacturing a whole lot easier and cheaper, Berzin told me. If one of Thea’s magnets is mounted somewhat imperfectly, or wear and tear of the power plant slightly shifts its location or degrades its performance over time, Thea’s AI system can automatically compensate. “It then can just tune that magnet slightly differently — it turns that magnet down, it turns the one next to it up, and the magnetic field stays perfect,” Berzin explained. As he told me, a system that relies on hardware precision is generally much more expensive than a system that depends on well-designed software. The idea is that Thea’s magnets can thus be mass manufactured in a way that’s conducive to “a business versus a science project.”
In 2023, Thea published a technical report proving out the physics behind its so-called “planar coil stellarator,” which allowed the company to raise its $20 million Series A last year, led by the climate tech firm Prelude Ventures. To validate the hardware behind its initial concept, Thea built a 3x3 array of magnets, representative of one section of its overall “donut” shaped reactor. This array was then integrated with Thea’s software and brought online towards the end of last year.
The results that Thea announced today were obtained during testing last month, and prove that the company can create and precisely control the complex magnetic field shapes necessary for fusion power. These results will allow the company to raise a Series B in the “next couple of years,” Berzin said. During this time, Thea will be working to scale up manufacturing such that it can progress from making one or two magnets per week to making multiple per day at its New Jersey-based facility.
The company’s engineers are also planning to stress test their AI software, such that it can adapt to a range of issues that could arise after decades of fusion power plant operation. “So we’re going to start breaking hardware in this device over the next month or two,” Berzin told me. “We’re purposely going to mismount a magnet by a centimeter, put it back in and not tell the control system what we did. And then we’re going to purposely short out some of the magnetic coils.” If the system can create a strong, stable magnetic field anyway, this will serve as further proof of concept for Thea’s software-oriented approach to a simplified reactor design.
The company is still years away from producing actual fusion power though. Like many others in the space, Thea hopes to bring fusion electrons to the grid sometime in the 2030s. Maybe this simple hardware, advanced software approach is what will finally do the trick.
The Chinese carmaker says it can charge EVs in 5 minutes. Can America ever catch up?
The Chinese automaker BYD might have cracked one of the toughest problems in electric cars.
On Tuesday, BYD unveiled its new “Super e-Platform,” a new standard electronic base for its vehicles that it says will allow incredibly fast charging — enabling its vehicles to add as much as 249 miles of range in just five minutes. That’s made possible because of a 1,000-volt architecture and what BYD describes as matching charging capability, which could theoretically add nearly one mile of range every second.
It’s still not entirely clear whether the technology actually works, although BYD has a good track record on that front. But it suggests that the highest-end EVs worldwide could soon add range as fast as gasoline-powered cars can now, eliminating one of the biggest obstacles to EV adoption.
The new charging platform won’t work everywhere. BYD says that it will also build 4,000 chargers across China that will be able to take advantage of these maximum speeds. If this pans out, then BYD will be able to charge its newest vehicles twice as fast as Tesla’s next generation of superchargers can.
“This is a good thing,” Jeremy Wallace, a Chinese studies professor at Johns Hopkins University, told me. “Yes, it’s a Chinese company. And there are geopolitical implications to that. But the better the technology gets, the easier it is to decarbonize.”
“As someone who has waited in line for chargers in Pennsylvania and New Jersey, I look forward to the day when charging doesn’t take that long,” he added.
The announcement also suggests that the Chinese EV sector remains as dynamic as ever and continues to set the global standard for EV innovation — and that American and European carmakers are still struggling to catch up. The Trump administration is doing little to help the industry catch up: It has proposed repealing the Inflation Reduction Act’s tax credits for EV buyers, which provide demand-side support for the fledgling industry, and the Environmental Protection Agency is working to roll back tailpipe-pollution rules that have furnished early profits to EV makers, including Tesla. Against that background, what — if anything — can U.S. companies do to catch up?
The situation isn’t totally hopeless, but it’s not great.
BYD’s mega-charging capability is made possible by two underlying innovations. First, BYD’s new platform — the wiring, battery, and motors that make up the electronic guts of the car — will be capable of channeling up to 1,000 volts. That is only a small step-change above the best platforms available elsewhere— the forthcoming Gravity SUV from the American carmaker Lucid is built on a 926-volt platform, while the Cybertruck’s platform is 800 volts — but BYD will be able to leverage its technological firepower with mass manufacturing capacity unrivaled by any other brand.
Second, BYD’s forthcoming chargers will be capable of using the platform’s full voltage. These chargers may need to be built close to power grid infrastructure because of the amount of electricity that they will demand.
But sitting underneath these innovations is a sprawling technological ecosystem that keeps all Chinese electronics companies ahead — and that guarantees Chinese advantages well into the future.
“China’s decisive advantage over the U.S. when it comes to innovation is that it has an entrenched workforce that is able to continuously iterate on technological advances,” Dan Wang, a researcher of China’s technology industry and a fellow at the Paul Tsai China Center at Yale Law School, told me.
The country is able to innovate so relentlessly because of its abundance of process knowledge, Wang said. This community of engineering practice may have been seeded by Apple’s iPhone-manufacturing effort in the aughts and Tesla’s carmaking prowess in the 2010s, but it has now taken on a life of its own.
“Shenzhen is the center of the world’s hardware manufacturing industry because it has workers rubbing shoulders with academics rubbing shoulders with investors rubbing shoulders with engineers,” Wang told me. “And you have a more hustle-type culture because it’s so much harder to maintain technological moats and technological differentiation, because people are so competitive in these sorts of spaces.”
In a way, Shenzhen is the modern-day version of the hardware and software ecosystem that used to exist in northern California — Silicon Valley. But while the California technology industry now largely focuses on software, China has taken over the hardware side.
That allows the country to debut new technological innovations much faster than any other country can, he added. “The comparison I hear is that if you have a new charging platform or a new battery chemistry, Volkswagen and BMW will say, We’ll hustle to put this into our systems, and we’ll put it in five years from now. Tesla might say, we’ll hustle and get it in a year from now.”
“China can say, we’ll put it in three months from now,” he said.“You have a much more focused concentration of talent in China, which collapses coordination time.”
That culture has allowed the same companies and engineers to rapidly advance in manufacturing skill and complexity. It has helped CATL, which originally made batteries for smartphones, to become one of the world’s top EV battery makers. And it has helped BYD — which is close to unseating Tesla as the world’s No. 1 seller of electric vehicles — move from making lackluster gasoline cars to some of the world’s best and cheapest EVs.
It will be a while until America can duplicate that manufacturing capability, partly because of the number of headwinds it faces, Wang said.