DOE opens $237M funding round to shore up grid equipment supply chains

The US Department of Energy opened a $237 million funding round on October 30, 2026 aimed at the parts shortage behind the grid build-out: up to $50 million for projects that refurbish and reuse existing grid equipment, and up to $187 million for projects that increase the use of alternative materials and subcomponents sourced and made in the US. The round, Grid Supply Chain Alternatives to Lead Energy Dominance (Grid SCALED), is the first under DOE's Grid Supply Chain Program, which DOE says is authorized to provide up to $375 million. Applicants must submit a concept paper by November 20, 2026 to qualify for the full application, due February 8, 2027.

DOE estimates the round will deliver $125 million a year in utility savings and keep $50 million a year in the US economy that would otherwise go to foreign suppliers. "America should never have to rely on foreign suppliers to keep the lights on," said Katie Jereza, assistant secretary for the Office of Electricity. Wood Mackenzie expected imports to account for about 80% of US power transformer supply in 2025.

Two pots, two clocks

The fast money is in refurbishment. Topic Area 1, refurbishment and reuse, expects about 3 to 20 awards of roughly $2.5 million to $15 million each, over up to 24 months, according to the funding notice. The target is equipment taken out of service for reasons such as storm damage or end of life: distribution and power transformers, circuit breakers, switchgear, reclosers, insulators, busbars and high-voltage bushings, among others, repaired or recertified and returned to inventory, or stripped for materials such as copper, aluminum and electrical steel. The notice describes refurbished distribution transformers as quicker to put back into service than new ones, and typically cheaper. General waste management and household recycling are explicitly not wanted.

Topic Area 2 is the larger pot: about 7 to 50 awards of roughly $1 million to $25 million, for US suppliers and manufacturers adopting domestically sourced alternative materials and subcomponents that are already at technology readiness level 6 or higher. The notice's examples include electrical steel, ceramic bushings, insulation, continuously transposed conductors and other copper windings, and chemical precursors used in grid equipment or battery energy storage systems. These projects run up to 48 months in two phases, with the second contingent on a go/no-go decision, and applications need letters of commitment from upstream suppliers.

Both topic areas fund demonstrations, not research: the notice rules out early-stage R&D and, for completeness, technologies not based on sound scientific principles, such as one that "violates the laws of thermodynamics." Every project needs non-federal cost share of at least 50% of total project costs, so each federal dollar comes with at least one more from elsewhere. Institutions of higher education, for-profit and nonprofit organizations, state and local governments and Indian Tribes can apply if they are legally formed in the US and have a physical location for business operations there; DOE national laboratories can join only as subrecipients, and foreign entities need a waiver. DOE anticipates notifying selections on June 25, 2027 and making awards on September 23, 2027.

Where the shortage sits

Transformer demand has outrun the factories. Wood Mackenzie, whose figures the notice cites, estimated in an August 14, 2025 release that US demand had grown 116% for power transformers and 41% for distribution transformers since 2019, and forecast 2025 supply deficits of 30% and 10% respectively. It counted $1.8 billion in capacity expansions announced since 2023 by the largest manufacturers targeting the North American market, and its analyst Ben Boucher said the constraints "will persist well into the 2030s."

New factories alone do not fix the inputs. The notice says manufacturers have cited raw material constraints and technical labor shortages as bottlenecks to expansion, and names grain-oriented electrical steel, copper and aluminum as in critically short supply. Industry money has been moving to the same layer: Hitachi Energy plans a transformer pressboard insulation plant in Ontario, and GE Vernova has agreed to buy bushing maker Trench Group. Insulation and ceramic bushings are among Topic Area 2's examples.

Boucher's prescription started with the buyers: utilities "must embrace standardization to unlock manufacturing efficiencies, while policymakers need to balance trade protection with supply security." DOE's release points the same way: it anticipates more funding announcements in 2027, both to strengthen supply chains for next-generation technologies such as solid-state transformers and to "promote common configurations to streamline manufacturing."

The round comes from the same office that in September selected 31 SPARK grid projects for $1.9 billion in federal funding, and two months after Executive Order 14420 authorized the Energy Secretary to prohibit transactions in foreign-produced grid equipment that he determines traces to a covered foreign entity and poses an undue risk. The order gave the department a way to keep some foreign equipment out; Grid SCALED pays to refurbish more of it and to make more of its inputs at home.