By Nicole Jao
       NEW YORK, Nov 15 (Reuters) - U.S. developers building
renewable energy projects and power storage for grids are
scrambling to procure critical components, leading to rising
costs and project delays. 
    Supply chain problems have tightened supply of high-voltage
transformers necessary to connect wind and solar farms and
batteries to the grid, projects that are key to the energy
transition.
    The long lead-time for delivery of the transformers, which
can be the size of a large truck and need to be custom built,
has forced some project developers to order equipment before
commercial agreements to sell power from the projects are in
place, said Vanessa Witte, senior energy storage analyst at Wood
Mackenzie.
    That and the higher prices they are paying for the equipment
means developers are having to take a big bet on getting all the
deals and approvals they need to make a project viable, she
added.
   "It's incredibly risky," she said.
    The delivery time for transformers and other associated
equipment has grown from 50 weeks a year ago to 150 weeks now,
said Ben Pratt, CEO of Nova Clean Energy, a utility-scale
project developer based in Chicago.
    "We just have to be open and honest with the off-takers
about the impact of delays as we move along," Pratt said,
referring to buyers of power from renewable projects.
    "We realistically can't hit the original commercial
operation date we've been discussing."
    Some large developers stockpiled transformers and associated
equipment before measures to accelerate the deployment of
renewable energy in the government's Inflation Reduction Act
(IRA) triggered another spike in demand.
    "It was a situation that was easily predictable... but the
IRA accelerated something that was already in process," said
Reagan Farr, CEO of Silicon Ranch, a solar farm developer. 
    Silicon Ranch spent over $100 million stockpiling
transformers and switchgears, Farr said. Developers that did not
pre-order equipment are paying a lot more for large transformers
and have a lead time for delivery of at least three years, he
said.
    The IRA, signed into law in August 2022, provides billions
in green energy tax credits to accelerate and increase the
installation and deployment of renewable energy.
    
    LONGER LEAD TIMES
    Large-scale battery projects to store energy on grids and to
smooth out the variance of wind and solar power are also seeing
longer lead times. They are taking around 12 to 18 months to
complete, around six months longer than they would take without
the supply issues, said Andrew Waranch, chief executive of
battery energy storage system developer Spearmint Energy.
    That has improved since the summer, when completion time
reached about 100 weeks, he said. 
    "The biggest bottleneck I face today, and most developers
face today is (procuring) transformers, substation equipment ...
simple, old-fashioned electrical engineering equipment," Waranch
said.
    Developers added a record 1,510 megawatts (MW) of grid-scale
battery storage in the second quarter, according to a report
from Wood Mackenzie and the American Clean Power Association.
That, however, was lower than anticipated because of the supply
chain problems.
    For the full year, developers and power plant owners plan to
add 9,400 MW of battery storage capacity to the existing total
of 8,800 MW, according to the U.S. Energy Information
Administration. The capacity is expected to nearly double again
to reach 30,000 MW by 2025.
    Swiss-based Energy Vault, which provides equipment and other
services to power producers in the U.S., has started to bake in
longer timelines and higher costs for storage projects to
minimize the impact of delays, said Marco Terruzzin, chief
commercial and product officer.
    Utility AES Corp         has stockpiled supplies of the
equipment it needs to build battery storage projects through
2025, a company spokesperson said.
    A shortage of raw materials that has contributed to
transformer supply delays is unlikely to ease soon,
manufacturers said.
    Electrical steel supplies have been tight since the pandemic
due to factory shutdowns in China, said Doug Banty, president
and chief operating officer at MGM Transformer, a
California-based transformer manufacturer.
    "This is an industry that is not accustomed to rapid
production expansion ... most of us are playing catch up," Banty
said.     
    Export restrictions imposed on Russia after it invaded
Ukraine exacerbated the shortages, said Banty.
    The supply-demand dislocation has worsened with the rapid
scale-up of wind, solar and storage projects.
    U.S. producers have been slow to expand capacity due to the
expense, John Darby, president of Niagara Transformer, a New
York-based manufacturer.    

    
 (Reporting by Nicole Jao; Editing by Simon Webb and Nick
Zieminski)