Scarce supply and increasing vulnerability of transformers poses catastrophic risk: Lloyd’s

The scarce supply, heightened demand and increasing age and cost of electrical transformers poses a catastrophic risk, warns Lloyd’s.
Transformers are the links between the generation, distribution and transmission networks within an electrical grid. According to Lloyds.com, there are less than 100 built around the world each year. A recent surge in demand from emerging economies and a shortage in the supply of copper has increased costs and pushed back delivery times. “Meaning that if a transformer fails it can take three years before a replacement is delivered,” Lloyds.com reported.
While many countries have arrangements to ensure there is spare capacity within the system should a transformer fail, this puts enormous pressure on the remaining network, which could lead to supply disruptions, Lloyd’s continued.
“Ageing infrastructure means the probability of their equipment failing is uncertain. So-called ‘cascade failures’ where other parts of the system go down, whether by coincidence or because of the increased pressure, mean the weakened grid could buckle under the stress, causing blackouts,” Lloyds.com reports.
Terrorist attacks and geomagnetic storms are two of the “extreme” threats to transformers, Lloyds.com continues.
For example, in 1859 a geomagnetic storm was set off by a powerful solar flare that created an enormous electric charge that hit Earth. If it were to be repeated today it could cause between $1 trillion and $2 trillion of damage to high-tech infrastructure and could take four to 10 years to recover from, according to a study by the U.S. National Academy of Sciences.