Institute for Energy Research:
Biden Rescinds Trump Order Banning Chinese Involvement in the U.S. Power Grid
In President Biden’s executive order revoking the international permit for the Keystone XL pipeline, several climate and energy-focused executive orders by the Trump administration were also revoked. It suspended for 90 days Trump’s “Executive Order 13920 of May 1, 2020 (Securing the United States Bulk-Power System).
The Trump order sought to ban, replace, and set new criteria on bulk-power system electric equipment coming from a foreign country or national that poses a national security threat. According to Biden’s executive order, the fate of the executive order and America’s bulk power system will be determined jointly by Biden’s Secretary of Energy and his Director of the Office of Management and Budget. It is up to these 2 political appointees to recommend whether a replacement order should be issued.
China has become the world’s leading supplier of transformers, which presents significant challenges to U.S. grid security. In his May 1, 2020 order, President Trump stated that the United States should no longer purchase transformers and other electric grid equipment manufactured in China. He signaled that it is important to end relationships that U.S. utilities have directly with Chinese businesses and multi-national companies manufacturing transformers in China, which are later plugged into the electric grid in the United States.
Chinese power equipment can be embedded with software and hardware that can be remotely accessed, enhancing China’s ability to commit cyberattacks. Because power transformers are huge and weigh between 100 and 400 tons, it is not easy to identify embedded software or hardware. There is also a potential hardware risk since counterfeit items can be easily put into large power transformers.
Issued on December 17, 2020, Trump’s Secretary of Energy Dan Brouillette issued a “prohibition order designed to reduce the risks that entities associated with the People’s Republic of China pose to the Nation’s Bulk Power System” to be effective on January 16, 2021. “The order prohibits utilities that supply critical defense facilities (CDF) from procuring from the People’s Republic of China, specific bulk power electric equipment that poses an undue risk to the bulk power system, the security or resilience of critical infrastructure, the economy, national security, or safety and security of Americans.”
This issue surfaced in a 2014 Department of Energy report. In its 2014 report, the Department of Energy found that there were six domestic manufacturers of power transformers in the United States, whereas over 30 power transformer manufacturers existed in China. The six U.S. manufacturers were only able to produce about 40 percent of U.S. demand. Since 2009, the United States has become highly dependent on Chinese transformers. Over 200 Chinese transformers were brought into the U.S. energy sector in the 10 years preceding 2019. Prior to that, there were none.
Chinese transformer manufacturers are prospering. JiangSu HuaPeng Transformer Company completed projects for customers in Houston, Las Vegas, and New Jersey. On August 5, 2020, Baobian Electric shipped the first of its three phase reactors to the New Mexico Public Utilities Service Company. TBEA Transformer Industrial Group exports its products to over 30 countries in Asia, Africa, Europe, and the Americas.
For Biden to revoke President Trump’s order means that he is not concerned about potential threats to the U.S. electric grid by China. It is not clear whether the order signed by Trump’s Secretary of Energy Dan Brouillette prohibiting the importation of Chinese equipment remains in place after Biden suspended Trump’s Executive Order. Regardless, for Biden to signal, on his first day in office, that he could be amenable to opening the American electricity grid up to problematic Chinese equipment is very troubling.