---
title: "Grain-oriented electrical steel and the grid supply chain | Entogo"
description: "Every power transformer needs grain-oriented electrical steel (GOES), and the DOE estimates it is roughly a quarter of large-transformer cost. North…"
url: https://entogo.ca/insights/grain-oriented-electrical-steel-supply-chain/
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image: https://entogo.ca/_astro/entogo-pad-mounted-transformer-warehouse.B5pxtmo4.jpg
datePublished: 2026-05-28
dateModified: 2026-05-28
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---

Home › Insights › Grain-oriented electrical steel: why one Pennsylvania mill sets the clock for the North American grid

Market & Supply Chain

# Grain-oriented electrical steel: why one Pennsylvania mill sets the clock for the North American grid

Entogo May 28, 2026

![Entogo pad-mounted transformer warehouse — vertically integrated transformer production buffered from the North American GOES bottleneck](https://entogo.ca/_astro/entogo-pad-mounted-transformer-warehouse.B5pxtmo4_rjHfn.webp)

In short

Every power transformer needs grain-oriented electrical steel (GOES), and the DOE estimates it is roughly a quarter of large-transformer cost. North America has one domestic producer — Cleveland-Cliffs' Butler Works. This is the supply chain behind the one-to-four-year lead time.

The most consequential industrial chokepoint in the North American grid is not a chip foundry or a battery gigafactory. It is a steel mill in **Butler, Pennsylvania**, that makes the silicon-iron sheet that goes inside the core of every power and distribution transformer on the continent. There is exactly one domestic producer of grain-oriented electrical steel (GOES) — **Cleveland-Cliffs’ Butler Works** — and its output, together with imports from a small set of mills in Japan, Korea, Germany, China and India, sets the manufacturing pace for every transformer the grid needs to keep growing.

The U.S. Department of Energy made this concrete in its **July 2024 Large Power Transformer Resilience Report**: GOES is roughly **25% of large-transformer production cost**, current large-power-transformer (LPT) lead times have stretched to **80 to 210 weeks** (about 1.5 to 4 years), and the majority of GOES used in U.S. LPT manufacture is not produced domestically. The companion **NIAC report of June 2024** treated the transformer shortage as a national-security concern.

Below is how that supply chain actually works — and what the policy response is changing, and on what timeline.

## What GOES is, and why nothing replaces it cleanly

Grain-oriented electrical steel is a silicon-iron alloy, typically around 3% silicon, that is cold-rolled and decarburised through a sequence of annealing steps that align its crystal grains in the rolling direction. That alignment gives GOES two properties that the core of an efficient transformer cannot practically do without: very low **hysteresis loss** in the rolling direction, and high **magnetic permeability** under AC excitation.

The alternative most often discussed is **amorphous metal** ribbon. It carries lower no-load loss at low excitation and is a real option for distribution transformers, especially in countries that have mandated it. But amorphous ribbon is more fragile, has a lower saturation flux density (about 1.56 T versus 2.03 T for GOES), and is itself produced by a handful of mills worldwide. The substitution is not free, and at large power-transformer scale GOES still dominates.

This is why the DOE’s final 2024 distribution-transformer efficiency rule explicitly **allowed up to 75% of distribution-transformer cores to use GOES**, walking back an earlier proposed rule that would have forced a rapid shift to amorphous metal. Industry comments — including from Cleveland-Cliffs and representatives of the Butler Works workforce — argued that a forced shift would strand the only domestic GOES producer and worsen the very supply problem the rule was meant to ease.

## The producer map

The geographic concentration is the heart of the issue. The world’s GOES output sits at fewer than ten primary producers, and the share landing in North America is smaller still.

| Producer (parent) | Country | Notes |
| --- | --- | --- |
| **Cleveland-Cliffs** (Butler Works, PA) | **United States** | **Sole U.S. producer of GOES; only domestic high-perm grade (TRAN-COR®).** |
| Nippon Steel | Japan | Long-established producer; large export volumes. |
| JFE Steel | Japan | Major exporter to Asia and North America. |
| POSCO | South Korea | Large integrated producer. |
| thyssenkrupp Electrical Steel | Germany | European supply leader. |
| Baowu / multiple Chinese producers | China | Largest national output, primarily for domestic use. |
| thyssenkrupp Electrical Steel India (JFE / JSW JV) | India | Smaller-volume regional supply. |

(Compiled from public corporate filings and the DOE’s 2024 LPT Resilience Report; specific mill mix shifts over time.)

The headline that the United States has **one** domestic producer is load-bearing on the rest of the supply story. Every Section 232 trade action, every IRA credit, every utility resilience programme has to reckon with that fact before it touches anything else.

## How GOES sets the lead time

Inside a power transformer, the cost stack looks roughly like this:

| Line item | Approximate share of large power transformer cost |
| --- | --- |
| **Grain-oriented electrical steel (core)** | **~25%** |
| Copper or aluminium windings | ~20% |
| Insulation system (oil, paper, board) | ~10% |
| Tank, structural steel, fittings | ~10% |
| Bushings, tap changer, accessories | ~10% |
| Labour, testing, transport | ~15% |
| Engineering, overhead, margin | ~10% |

(Cost shares per the DOE’s July 2024 LPT Resilience Report and the 2020 U.S. Department of Commerce industry survey it cites; individual unit mix varies.)

Because GOES is the largest single bill-of-materials line, supply discontinuities in GOES propagate through the entire production schedule with no easy buffer. Several effects then compound. Mills allocate GOES to their largest and most strategic customers first. Transformer manufacturers begin **locking in steel forward** on contract, which is rational at the firm level but tightens the spot market. Spec-changing buyers (a utility that has to add on-load tap changers or change a winding configuration) lose their slot and re-enter the queue at the back. The result is the **80-to-210-week** range the DOE now treats as the operative figure for large transformers.

This is also why distribution transformers — historically a few months — have stretched to **a year or more** for many lines. They draw from the same steel mill, and they are now competing for it with utility-scale orders.

## The policy response and its timeline

Three coordinated threads of policy are in motion.

**The Section 45X Advanced Manufacturing Production Credit**, established by the Inflation Reduction Act, pays a credit per kilogram of domestically produced electrical steel and per VA of domestically produced transformer. It is the direct industrial-policy incentive to expand both ends of the supply chain simultaneously. Bills such as the **CIRCUIT Act** have proposed extending the credit’s scope and rate further to specifically target transformer manufacturing, though as of mid-2026 these remain proposals rather than enacted law.

**The DOE’s final efficiency rule for distribution transformers** (2024) settled on the **75% GOES allowance** described above, reducing the regulatory pressure that would otherwise have forced rapid substrate substitution.

**Capacity is being added on the supplier side.** Cleveland-Cliffs announced a **$150 million transformer-production plant in Weirton, West Virginia** — co-invested with the West Virginia Economic Development Authority and slated to start production in early 2026 — explicitly to consume more of the GOES it already makes at Butler Works. The company has indicated plans to increase domestic GOES tonnage by roughly 30–40%. New transformer capacity has been announced by several OEMs in Mexico, the U.S. Southeast, Tennessee and Quebec.

None of this changes 2026 procurement. New mill capacity routinely takes three to five years from commitment to qualified, certified output. New transformer lines need engineering, hiring and the same supply chain everyone else is using. The realistic expectation is that conditions begin to ease in the **late 2020s**; the merchant queue does not.

## What this means for the next 24–36 months

There is a procurement implication that surfaces in nearly every project review right now. The merchant market is **not** a free market in any meaningful sense of the term; it is a queue. A position in that queue is set by when the order was placed and how strategic the buyer is. Spec changes, late additions and specification ambiguities are all expensive in calendar time.

Two practical responses tend to work.

The first is to **freeze the spec early and order against it**, accepting that a small amount of engineering pessimism is cheaper than re-entering the queue. The second is to **source outside the merchant queue altogether** — from a manufacturer that runs its own source factory and a vertically integrated production line. The relevant queue then is that manufacturer’s own production schedule, not the broader market.

## Where Entogo fits

Entogo manufactures transformers, prefabricated substations and switchgear in its own source factory with a vertically integrated production and supply chain. Its European-standard (IEC/CE) catalogue transformers ship in an average of [12 weeks](https://entogo.ca/about/manufacturing), and within 36 weeks even when a product requires new UL or other North-American certification — set against the DOE’s 80-to-210-week figure for the merchant LPT market. The companion piece on [transformer lead times in North America](https://entogo.ca/insights/transformer-lead-times-north-america-2026) treats the procurement decision in more detail.

For projects on the critical path through 2026 and 2027 — data centers, substation rebuilds, renewables interconnections, utility fleet replacement — the GOES chokepoint is the single most useful thing to understand about the North American transformer market. It explains why merchant lead times look the way they do, why policy is moving in the direction it is, and why **sourcing strategy** is now a project-management variable, not just a procurement preference.

- Transformers
- Grain-oriented electrical steel
- GOES
- Supply chain
- DOE
- IRA
- Grid reliability

Glossary: [Lead time](https://entogo.ca/glossary#lead-time) [Taps](https://entogo.ca/glossary#taps)

FAQ

## Common questions

- **What is grain-oriented electrical steel (GOES) and why does every transformer need it?**: GOES is a silicon-iron alloy (roughly 3% silicon) processed and cold-rolled so its crystal grains align in the rolling direction. That alignment cuts magnetic losses and improves permeability, which is why it is the standard core material in power and distribution transformers, generator step-up units and inductors. A power transformer cannot reach modern efficiency targets without it, and there is no drop-in substitute at scale.
- **Who actually makes GOES for North America?**: One company, in one country. Cleveland-Cliffs' Butler Works in Pennsylvania is the only U.S. producer of grain-oriented electrical steel — including the high-permeability TRAN-COR® grade, the only domestic high-perm material — per Cleveland-Cliffs' own filings and the U.S. Department of Energy's July 2024 Large Power Transformer Resilience Report. The rest comes from a small set of mills in Japan, Korea, Germany, China and India. The DOE notes that the majority of GOES used in U.S. large-power-transformer manufacturing is not produced domestically.
- **How much of a transformer's cost is the steel?**: For a large power transformer, GOES is approximately 25% of total production cost, per a 2020 U.S. Department of Commerce industry survey cited by the DOE's July 2024 LPT Resilience Report. Other major cost lines are copper or aluminium windings, transformer oil or solid insulation, tank steel, and the labour and testing to assemble the unit. GOES is the largest single bill-of-materials item and the line most exposed to upstream constraints.
- **What is the U.S. policy response to the GOES and transformer bottleneck?**: Three threads are active. The Inflation Reduction Act's Section 45X Advanced Manufacturing Production Credit pays a per-component credit on domestic electrical-steel and transformer output. The DOE's final distribution-transformer efficiency rule (published 2024) allows up to 75% of distribution-transformer cores to use GOES, walking back an earlier proposal that would have forced rapid substitution to amorphous metal. And Cleveland-Cliffs announced a $150 million transformer-production plant in Weirton, West Virginia in 2024, with state co-investment and a planned 2026 startup, aimed at consuming more of the GOES Cliffs already makes at Butler Works.
- **How long will it take for North American transformer supply to catch up with demand?**: Most analysts expect the imbalance to persist into the late 2020s. The DOE's July 2024 report puts current LPT lead times at 80 to 210 weeks — roughly 1.5 to 4 years — and new electrical-steel and transformer capacity takes years to commission. The practical near-term lever is sourcing — a manufacturer with its own source factory and a vertically integrated supply chain delivers far inside the merchant-market figures, because the relevant queue is its own production schedule, not the broader market.

Keep reading

## Related insights

[![Public DC fast EV charging station with transmission lines and grid infrastructure behind it](https://entogo.ca/_astro/dc-fast-charging-site-transformer-switchgear-sizing.oT4SXZBz_15uHXg.webp) EV Charging ### What size transformer and switchgear does a DC fast charging site need? A DC fast charging site is sized from AC input kVA, not DC output kW, and EVSE loads carry no demand factor. Four 150 kW plus eight 350 kW dispensers draw 3,615 kVA, needing 5,000 kVA of transformer and two 3,000 A mains at 480 V. View](https://entogo.ca/insights/dc-fast-charging-site-transformer-switchgear-sizing)[![Distribution transformer and secondary conductors feeding low-voltage distribution equipment, governed by NEC 240.21(C) tap rules and CEC Rule 26-256](https://entogo.ca/_astro/transformer-secondary-conductors-nec-240-21c-tap-rules.BX_tOclr_UXL9N.webp) Power & Distribution ### How long can transformer secondary conductors be? NEC 240.21(C) tap rules and CEC 26-256 Transformer secondary conductors get no next-size-up rule. NEC 240.21(C) allows 10 ft and 25 ft runs with ampacity floors of one-tenth and one-third of the primary device times the voltage ratio; CEC 26-256 instead demands 125% of rated secondary current at any length. View](https://entogo.ca/insights/transformer-secondary-conductors-nec-240-21c-tap-rules)[![Three-phase distribution transformer and low-voltage switchgear at a North American facility substation](https://entogo.ca/_astro/choosing-a-facility-distribution-voltage.B10infhs_Z2obSGL.webp) Power & Distribution ### 208, 480, or 600 volts? Choosing a facility distribution voltage North American facilities are served at 120/208, 277/480, or 347/600 volts. A higher voltage moves the same power at lower current, cutting conductor size and losses while adding transformer and safety cost. Here is how to match the voltage to the load. View](https://entogo.ca/insights/choosing-a-facility-distribution-voltage)

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