Transformers: An Essential Link of the Electrical Grid

Sourcing Transformers UtilitiesLook through your office or home window. If you can see a power line, there are chances a power transformer may be in the area.

What does a transformer actually do?

These heavy pieces of equipment transform the voltage of electricity, either stepping it up for transmission lines to carry electricity from power plants over long distances; or stepping it down to carry electricity to residential and commercial areas. The large power transformers (LPTs), located in substations, can be found near power plants, transmission lines, industrial zones and residential areas. LPTs can be the size of a small house. Other transformers, on poles, are as small as a garbage bin.

Transformers are essential for utilities as they are key links of the electrical system.Electric Grid Representation VeracityBy the way, do not forget that your charging cords are also transformers!

 Capital investment

Utilities started to heavily invest in the electrical infrastructure in the 1960s and 1970s. The capital spending is now reaching is lowest point in 50 years, even though power consumption is increasing by 2% a year.

The following graph by ABB shows a decrease in investment with a reduced amount of transformers ordered every year. This first wave of capital spend ended in 1990s, and should be naturally followed by a wave of replacement. Nevertheless, utilities cannot always afford it and numerous have decided to extend their transformers’ life, with the drawback of increased outage and failure risks.

Power Transformer Investment ABB Risks of failure and outage

Every product goes through 3 main stages in its life-cycle, as shown on the “bathtub” graph:

Bathtub curve Product“Infant Mortality” highlights failures due to defects and the quality of materials used. The end-of-life stage shows the most “natural” or logical failures due to wear and tear.

The main causes of failure are:Power transformer failure causeThe following elements can help determine when and how a failure would occur:

  • Year (vintage)
  • Manufacturer
  • Operating history and Test results
  • Operating environment
  • Failure history

Utilities use asset management solutions which help them monitor conditions of their transformer fleet on a daily basis. Models based on algorithms are used to determine risks of outage or failure depending on the life-cycle stages and help make the right decision before an event occurs.

Who manufactures transformers?

Less than 15 companies manufacture LPTs in North America. For transformers of lower voltage, the choice is larger, but is still considered as capital investment for utilities, with increasing lead time.Power Transformer ManufacturerPrice and lead time

With an average life of 40-50 years, numerous transformers are reaching their end of life. With an average lead time of 750 days and a price range from several thousands to over 7 million dollars, sourcing a transformer has become a long-term issue for utilities.

The skyrocketing prices of copper and electrical steels are the main cause of increased prices for transformers. Stricter standards also require the installation of costly monitoring devices and software.

Copper Steel Price Tranformer Electrical

The following table gives a better idea of the price range depending on capability and voltage.Large Power TransformerCase study

As the CEO of a utility company, your engineer in chief has let you know that a large power transformer, purchased 35 years ago, shows increased risks of failure in the next 6 months, probably due to extreme weather conditions the year before. Its replacement by a new unit is obviously already planned, but not within two years. What happens if it fails? As a small utility, you are able to manage your electricity load via other transformers, but for a short period of time. You cannot wait for a new unit and the storms alerts urge you to quickly find a plan B.


* Life-extension: manufacturers like ABB offer specific programs to rejuvenate or refurbish transformers. Nevertheless, the transformer will eventually need to be replaced by a new unit, in order to be up to standards and grid specifications.

* Buddy system: call and email your colleagues from fellow utilities. You can be lucky and have access to a spare transformer. But it rarely happens, unless one of your colleagues works at a large utility company.

* Critical Spares, collaboration: pooling and sharing strategies are an efficient alternative in order to source transformers and other heavy equipment. Although each utility has its own territory, collaboration is essential when capital investment cannot be afforded, while maintaining a high-quality customer service.

Veracity offers a platform specifically designed for the utility sector, Veracity Connect. Through a cloud interface, utilities can get a proactive approach to critical spares management:

  • Asset Management: the utility can upload its transformer/substation data including description pictures, maintenance records and current state indicators. The search for matching spares is made easier.
  • Critical Spares Access: utilities can directly locate available matching spares from fellow utilities, equipment brokers and reconditioners, Original Equipment Manufacturers (OEM) and industry partners such as state/province associations.
  • Surplus Management: companies can offer equipment to other utilities. These are what will contribute to the pool of available spares. It is a good way to monetize idle equipment and increase the power of collaboration.

Veracity Connect, collaborative platform

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Key points from “Economic Benefits of Increasing Electric Grid Resilience to Weather Outages”

Grid Resilience Veracity Asset Management GroupThe report “Economic Benefits of Increasing Electric Grid Resilience to Weather Outages” from the Executive Office of the U.S. President, released in August 2013, is worth being looked at again as the grid and utility companies have to cope with new challenges. Our critical spares management solution Veracity Connect answers some of these challenges met by utilities, as described at the end of the article.

  • The U.S. grid connects 5,800 power plants and delivers electricity to over 144 million customers via 450,000 miles of high voltage lines.

U.S. Grid Infrastructure Veracity Asset Management Group

  • The grid is aging and needs to be modernized: “Seventy percent of the grid’s transmission lines and power transformers are now over 25 years old and the average age of power plants is over 30 years (Campbell 2012).”

U.S. Billion-dollar weather outages Veracity Asset Management Group

  • Due to its aging infrastructure, the grid is exposed to increased risks due to extreme weather conditions (storms, thunderstorms, floods). The U.S. Department of Energy (DOE) reports more than 670 power outages between 2003 and 2012 each affecting more than 50,000 customers. “The U.S. energy sector in general, and the grid in particular, is vulnerable to the increasingly severe weather expected as the climate changes (DOE 2013).”The damages caused by the 144 main weather disasters since 1980 have totaled more than $1 trillion.

Outages US Utility Veracity Asset Management Group

  • Through the “Recovery Act” in 2009, the U.S. Department of Energy has been allocated $4.5 billion to modernize the grid’s resilience toward severe weather.” A more resilient grid is one that is better able to sustain and recover from adverse events like severe weather – a more reliable grid is one with fewer and shorter power interruptions. Methods for improving the resilience and reliability of the grid include both high and low-tech solutions.”
  • The U.S. Government sees an industry-wide program as one of the strategies to increase the grid resilience. “Grid resilience strategies require a partnership across all levels of government and the private sector to promote a regional and cross-jurisdictional approach.”

Availability of Critical Components and Software Systems” is one of the priorities of the U.S. government to improve the grid’s resilience. “utilities can employ asset management strategies that lead to greater availability of critical components”, such as large power transformers. Our cloud-based platform Veracity Connect intends to answer this priority by offering utilities a clear view of available critical equipment through a cloud platform, by putting them in direct contact with other utilities, OEMs, brokers and industry partners.

Some of the benefits are:

  • Mitigate risks by adopting a proactive approach to potential failures.
  • Locate out of stock or hard to replace equipment.
  • Offset capital expenditures by sourcing and comparing available assets. No comparable solution offers to put you in direct contact with other utility members.
  • Network with industry partners and get updated on critical spares market trends.
  • Store key data (e.g. asset specifications, pictures) and get reports on matching assets.
  • Liquid surplus or idle items and maximize their value.
  • Ongoing assistance from Veracity’s Team.

Veracity Connect, collaborative platformFull report “Economic Benefits of Increasing Electric Grid Resilience to Weather Outages”

Go further with:

North American Reliability Corporation

The North American Electric Reliability Corporation (NERC) is a not-for-profit international regulatory authority whose mission is to ensure the reliability of the bulk power system in North America. NERC develops and enforces Reliability Standards; annually assesses seasonal and long‐term reliability; monitors the bulk power system through system awareness; and educates, trains, and certifies industry personnel. NERC’s area of responsibility spans the continental United States, Canada, and the northern portion of Baja California, Mexico.

Federal Energy Regulatory Commission

The Federal Energy Regulatory Commission, or FERC, is an independent agency that regulates the interstate transmission of electricity, natural gas, and oil. FERC also reviews proposals to build liquefied natural gas (LNG) terminals and interstate natural gas pipelines as well as licensing hydropower projects.

The Independent Statistics & Analysis U.S. Energy Information Administration recently released maps of energy facilities and risk areas, especially the “flood vulnerability assessment map” you can find here:

9 Key Facts from the “Large Power Transformers and the U.S. Electric Grid” Study:

Why Do Transformers Fail:

Why Do Transformers Fail?

With an aging infrastructure and extreme weather conditions, transformers may sometimes fail due to various reasons. Are the causes the same for all incidents?Transformer Failure Fire Veracity Asset Management In “An Analysis of Transformer Failures”, William H. Bartley, P.E., from Hartford Steam Boiler Inspection and Insurance, points out key elements regarding transformer failures.

The average age at failure is 18 years. Most of the transformers installed in the 1950s to 1980s have entered the aging part of their life cycles. “Power consumption continues to increase at a rate of about 2 percent per year, even though installation of new transformers is declining.” (William H. Bartley).

 Overview of the main causes of failure: Power Transformer Failure Veracity Asset Management Group

Preventing transformer explosions, leakage and other damages is not always possible. Factors like a proper installation and operation, oil test and thorough maintenance can help decrease failures. Nevertheless, even with the best efforts, no one can prevent a lightning to strike a transformer or other electrical equipment.

The bathtub curve

The following graph describes the relative failure rate of a whole group of similar products. During their life cycle, products will go through three different periods of failure rates, which explains the “bathtub” shape.

Bathtub Curve Failure Rate Veracity Asset

Let’s describe them:

  • Infant Mortality: failures are the least expected. Design, manufacturing or material defects are common causes and requires from the manufacturer a deep analysis of the incidents.
  • Normal Life, also called Useful Life: random failures occur. This is the lowest constant failure rate.
  • End of Life Wear-Out: wear and tear make products fail more often, and signal the end of their life cycle.

As mentioned by William H. Bartley, a large population of transformers is now reaching the end of life wear-out stage. This is a challenge for companies to anticipate upcoming failure, as the lead time for new transformers is from 6 months on to a couple of years, and the extreme weather is also increasing risks.

How then can we improve our answer to such issues?

Transformers are considered as critical spares. The lack of back-up slows down utility companies’ actions when a failure happens. Sourcing the right equipment with the right timing is a challenge that companies in the energy sector have to take up. One of the most relevant solutions is a collaborative platform specifically designed for the utility industry.

This is why Veracity Asset Management Group has developed Veracity Connect, a cloud-based platform designed to foster collaboration among utility industry members, suppliers and resellers. Connecting the right people, sharing knowledge and expertise allow the utilities to have immediate access to critical spares data and strategic management.

Veracity Connect, collaborative platform

When a transformer shows risks of failure – or age – the company can adopt a proactive approach to critical spares management and quickly locate a replacement. It cannot prevent the failures, but it helps utilities avoid lengthy negative situations and keep delivering quality customer service.

Contact us at 1-866-694-1252 or We will be glad to answer your questions and bring you the best of our services.

Transformers Asset Management Cloud Veracity ConnectOur website:

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Sources :

“An Analysis of Transformer Failures”, William H. Bartley, P.E., Hartford Steam Boiler –

The Transformer & Electrical Co Ltd – General Causes of Transformer Failure in the Field –

The Bathtub Curve and Product Failure Behavior –

9 Key Facts from the “Large Power Transformers and the U.S. Electric Grid” Study

Strategic Critical Spares Management

The development of a critical spares management strategy is no longer nice to have, but rather a must have to avoid the risks associated with large power transformer failures… With aging infrastructure, threats of physical vandalism and extreme weather events utilities must assess their supply of critical spares. Utilities can no longer afford to take an internal approach and must focus on external collaboration to share both risks and costs associated with transformer failures. Due to long lead times and cost of these units, it only makes sense to adopt an industry wide spares program.

An updated report, “Large Power Transformers and the U.S. Electric Grid” has been published in April 2014, by the Infrastructure Security and Energy Restoration Office of Electricity Delivery and Energy Reliability U.S. Department of Energy. This report not only shows how critical Large Power Transformers are but also exposes the real risks of these units going down. Large Power Transformers and The U.S. Electric Grid Veracity Critical Spares

The 52-page report points out the critical role played by large power transformers (LPTs): “LPTs have long been a concern for the U.S. Electricity Sector, because the failure of a single unit can cause temporary service interruption and lead to collateral damage, and it could be difficult to quickly replace it. Key industry sources have identified the limited availability of spare LPTs as a potential issue for critical infrastructure resilience in the United States”. You can find the full report here.

“The limited availability of [spare] extra-high-voltage transformers in crisis situations presents potential supply chain vulnerability.” – A Framework for Establishing Critical Infrastructure Resilience Goals, National Infrastructure Advisory Council, 2010

9 key facts about LPTs:

  • Large Power Transformers are custom-designed, with a wide magnitude of features:

Large Power Transformers Features Veracity

  • Manufacturing a LPT is a difficult, lengthy and costly process. “The procurement and manufacturing of LPTs is a complex process that includes 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 an extended lead time that could stretch beyond 20 months if the manufacturer has difficulty obtaining certain key parts or materials.” Large Power Transformers Manufacturing Process Lead Time Veracity
  • Copper and steel for the electrical industry represent more than 50% of the cost of an LPT. Their increasing price negatively affects the manufacturing and the procurement process.Veracity Asset Management Group Copper Steel Price Veracity
  • LPTs are aging: “The average age of installed LPTs in the United States is approximately 38 to 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 potentially subject to an increased risk of failure.”Large Power Transformers Retirement Veracity
  • Less than 12 companies manufacture LPTs in North America and sourcing abroad brings bigger challenges: “the potential for an extended lead time due to unexpected global events 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 an experienced in-house workforce that is able to address procurement and maintenance issues.”Large Power Transformers NA Manufacturing Facilities Veracity
  • Redundancy helps, but is not enough: “although reliability and redundancy are built into the system, the electricity industry identified that the limited domestic manufacturing capacity of high-voltage power transformers could present a potential supply issue in the event that many LPTs failed simultaneously.”
  • By 2040, China will be leading in terms of power generation.Large Power Transformers Veracity
  • Electrical disturbances are the first cause of failures, followed by lightning and insulation defect. Large Power Transformers Failure Causes
  • Physical attacks on LPTs are increasing. “On March 7 2014, the Federal Energy Regulatory Commission (FERC) directed NERC to develop mandatory physical security standards within 90 days in the wake of attacks on transmission facilities in the United States in 2013. Owners and operators are to first identify critical facilities, and then develop and implement plans to protect against physical attacks that may compromise the operability or recovery of such facilities.” Read more about the FERC study:

Critical Spares Programs will be progressively implemented: “EEI’s Spare Transformer Equipment Program and NERC’s Spare Equipment Database Program are designed to provide ways in which utilities may identify and share spare transformers across North America during an emergency. 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.”

In this way, Veracity Asset Management Group has designed Veracity Connect, a cloud-based platform for utilities that consolidates spare inventories – especially transformers – of utilities, brokers, resellers, industry and Origin Equipment Manufacturers in North America. Distribution, transmission and generation companies can access available equipment and have a proactive approach to transformer failures. Veracity Connect helps utilities enhance risk mitigation strategies, sharing/pooling strategies, capital budgeting; and answers challenges highlighted by “Large Power Transformers and the U.S. Electric Grid” study by making critical spares available to its utility members.

Learn more about our Critical Spares Management Services: and by clicking here:

Veracity Connect, collaborative platformContact us at 1-866-694-1252 or Share your feedback with us!

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In Your Mail Box: Veracity Connect June Newsletter

Veracity Connect Newsletter Investment Recovery

Our June Newsletter is out! This month, we zoom on:

  • The 7 R’s of Investment Recovery – “Recondition”
  • Veracity Connect presented to the Utilities Standards Forum Members
  • Your Feedback about our services!
  • Investment Recovery & Corporate Sustainability
  • The Value of Critical Spares
  • Veracity at the EDA Commercial Steering Committee

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Veracity Newsletter Investment Recovery Critical Spares

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Veracity Connect Presentation at the Utilities Standards Forum, Guelph, June 11th, 2014


Veracity Asset Management Group is proud to introduce Veracity Connect to the Utilities Standards Forum Members in Guelph, June 11th, 2014!

Utilities Standards Forum (USF) is a volunteer-based corporation owned by 50 Ontario electricity distributors that serve over 1.9 million customers.  Its primary purpose is to develop system design standards approved to Regulation 22/04. USF also offers member representatives a mechanism for collaboration and networking on other common technical challenges and regulatory requirements.

Veracity Connect is a web-based service available 24/7. Veracity Connect is designed to help utility companies manage critical spares. Transformers, breakers, switchgears are examples of critical equipment and parts. Our platform helps companies anticipate and find available critical assets in case of failure or aging infrastructure, serving their primary goal of providing high-quality ongoing operations and exceptional customer service. Another key aspect is to unlock the power of collaboration among the utility industry members, by sharing expertise and asset intelligence.

 Overview of Veracity Connect:

  • Identify critical assets
  • Get immediate access to available critical spares pools
  • Connect with industry members and supply chain partners
  • Share knowledge and anticipate economic and regulation changes
  • Access parts and inventories lists
  • Gain in economies of scale and efficiency
  • Take advantage of preplanned logistics
  • Get advanced reporting and an extensive overview of spares management

Veracity Connect Utilities Critical Assets

Click on our logo to learn more about  Veracity Connect, collaborative platform

or check our LinkedIn Showcase page Critical spares Utility asset management

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In Your Mail Box: Veracity Connect May Newsletter

Our May Newsletter is out! This month, we zoom on:

  • What is Investment Recovery and the 7R’s of the surplus management process
  • Substation decommissioning: Veracity’s process to maximize sales proceeds
  • Our cloud-based tool for the utility companies: Veracity Connect
  • What’s in a Name: what “Veracity” really means

Click on the following picture to have full access to the document. You can even download it as a pdf!

Share your thoughts and topics you would like to know more about!

Veracity Connect Newsletter Asset ManagementVeracity Connect Newsletter Asset Management

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Veracity presents its collaborative platform “Veracity Connect” at the OCE Convention May 12-13th

Check out our collaborative platform Veracity Connect at the Convention today and tomorrow! Veracity ConnectVeracity Connect is a web based tool specifically for the energy sector that helps them take a proactive approach to Critical Spares Management. Using Veracity Connect, distribution, transmission and generation companies can access available equipment from fellow Connect members, Equipment Resellers, OEM’s and Major Industry.

Once a company has joined with Veracity Connect, Veracity takes that companies fleet of critical equipment and goes out to the marketplace to source available spares that match that companies fleet specifications. Veracity provides regular updated reports both on matched spares and those critical assets that spares are not available. This information can them be used to assist with capital equipment planning as well as provide relevant information for risk mitigation planning.

Check out Veracity Connect’s web page! Contact us at 1-866-694-1252 to share your needs in terms of critical spares and find out how we can help you manage them!

Unlock the POWER of Collaboration with Veracity Connect

Unlock the POWER of Collaboration

Enhancements in efficiency and greater economies of scale can be achieved by effective collaboration among Utilities, OEM’s, Resellers and Industry Partners. Veracity Connect gives you the tools you need to achieve the benefits of collaboration and virtual horizontal integration.

Veracity Connect, collaborative platform

The benefits are numerous:

  •   Immediate access to Critical Spares and preplanned Logistics
  •   Connect to Utility Members
  •   Connect to supply chain partners to efficiently source equipment and parts
  •   Get accurate reporting and understand your critical assets

Source critical spares through Veracity Connect

For electric power utilities, transformers are one of the most vital components of the network. In the event of network failure, access to spare transformers is a key element in recovery efforts. In fact, the marketplace for used, reconditioned, rewound, remanufactured and new surplus transformers exists because of several critical challenges to the market for new equipment. The most critical challenge is availability. Many transformers are not available from stock and may take weeks to deliver. Large transformers may take months. Generation, Transmission and Distribution transformers come in so many different sizes, voltages, and physical configurations that there is seldom immediate stock. The sudden need for a transformer typically has drastic consequences if an immediate replacement cannot be found.

Veracity Connect consolidates the spare inventories of utilities, brokers, resellers, OEM’s and industrial end users, allowing you to access critical spares from across North America. Veracity Connect allows you to quickly locate the equipment you need, help reduce surplus stock and identify replacements for no longer manufactured items.

Veracity Connect allows members to leverage asset intelligence to ensure reliability, mitigate risks, and offset capital expenditures.

Contact us at 1-866-694-1252 and learn more about how Veracity Connect can help you manage Critical Spares!

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