According to the IEA, global electricity demand is projected to grow at nearly 4% annually through to 2027.
This will be driven by industrial expansion, air conditioning, electric vehicles, artificial intelligence and other technologies.
Without proactive investment and grid modernisation, nations risk gridlock, hampering economic growth and energy security, the IEA points out in its latest report, Building the Future Transmission Grid: Strategies to Navigate Supply Chain Challenges.
Electricity grids serve as the backbone of the energy system, connecting new power generation sources with growing demand centres.
The expansion and modernisation of transmission infrastructure is essential for integrating renewables cost-effectively, reducing energy losses and enhancing cross-border electricity trade, said the report.
Over the past decade, 1.5 million kilometres of new transmission lines have been added globally. However, grid expansion has struggled to keep pace with the rapid increase in renewable energy installations.
The mismatch between generation capacity and grid infrastructure has created severe bottlenecks.
As of 2024, the IEA tracks 1.65GW of solar and wind projects in advanced development stages that are awaiting grid connections – “a major missed opportunity to bring clean, cost-effective sources of generation into the mix.”
Additionally, grid access remains a challenge, with 750 million people still lacking electricity, around 80% of whom reside in sub-Saharan Africa.
Ensuring universal access requires not only extending transmission networks but also investing in off-grid and decentralised solutions to meet the energy needs of remote communities, said the IEA.
Investment in transmission infrastructure is rising.
The report said that global spending increased by 10% in 2023, reaching $140 billion, with leading investments from Europe, the US, China, India and parts of Latin America. However, a strong regional imbalance persists, as advanced economies and China account for nearly 80% of total investments.
“Under today’s policy settings, this spending would need to exceed $200 billion per year by the mid-2030s to meet rising needs for electricity, and to reach $250-300 billion in scenarios that achieve national and global emissions goals in full. The required increases in investment are particularly steep in many emerging market and developing economies outside China,” said the report.
Despite the financial push, supply chain bottlenecks remain a major constraint.
Procurement delays and rising costs of critical components – such as cables, transformers and power electronics are slowing project timelines.
An IEA survey of leading industry players conducted for this report finds that it now takes two to three years to procure cables and up to four years to secure large power transformers.
Average lead times for cables and large power transformers have almost doubled since 2021. Some specialised components are even more difficult to source: waiting times for direct current cables – often preferred for long-distance transmission lines – extend beyond five years.
“High demand has also substantially driven up prices. Prices for individual orders are highly dependent on their complexity and capacity, which vary from project to project, but the results of our survey suggest that prices for cables have nearly doubled since 2019, and the price of power transformers rose by around 75%,” said the report.
Shortages of key materials – including copper, aluminium and grain-oriented electrical steel – further contribute to price volatility.
The report noted that currently, eight million people work in grid construction, maintenance, and operations worldwide.
The IEA estimates that this workforce will need to increase by 1.5 million by 2030 under today’s policy settings “and even more rapidly in scenarios that meet emissions goals in full.”
To accelerate grid expansion and overcome supply chain hurdles, the IEA outlines eight key strategies:
The IEA said that without urgent investment in transmission infrastructure, energy transitions will stall, economic growth will be constrained and millions will remain without electricity.
It suggests that to avoid future gridlock, policymakers, regulators and industry leaders must adopt proactive strategies to modernise, expand and strengthen global transmission networks.
The Agency said that the next decade will be decisive.
The report said that as electricity demand surges, strategic investments and coordinated global action will determine whether the grids of the future will be built today – or face increasing bottlenecks and energy insecurity.
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