IEA urges investing in grids today to prevent gridlock tomorrow

As the world transitions towards a more electrified economy, the International Energy Agency (IEA) has emphasised the importance of expanding and modernising electricity transmission grids. In its latest report, 'Building the Future Transmission Grid', the agency highlights that without timely investments, grid capacity constraints could slow the integration of renewable energy and the broader energy transition.

The growing demand for electricity

Global electricity demand is expected to grow by nearly 4% annually through 2027, according to the IEA, with factors such as population growth, urbanisation, and industrialisation playing key roles. This aligns with research from the International Renewable Energy Agency (IRENA), which suggests that decarbonisation efforts, electrification of transport and heating, and the rise of digital industries will further accelerate demand. Technologies such as electric vehicles, heat pumps, and artificial intelligence-driven data centres are reshaping consumption patterns, making grid flexibility and capacity more crucial than ever.

At the same time, renewables are playing a central role in electricity generation. The International Energy Forum notes that renewable energy accounted for over 80% of new power capacity additions globally in 2023, reflecting a long-term shift away from fossil fuels. However, integrating variable renewables, such as wind and solar, presents challenges in balancing supply and demand. To address this, modern grids need enhanced transmission capacity and storage solutions to manage intermittency effectively.

A decade of insufficient progress

Over the past ten years, approximately 1.5 million kilometres of new transmission lines have been built worldwide, yet infrastructure development has struggled to keep pace with the rapid adoption of renewables and rising electricity needs. According to the IEA, as of 2024, around 1,650 gigawatts of wind and solar projects are awaiting grid connection—illustrating the scale of the challenge. Meanwhile, the World Bank highlights that nearly 750 million people, primarily in sub-Saharan Africa, still lack access to electricity, reinforcing the need for continued grid expansion.

Supply chain and workforce considerations

Global investment in power transmission rose by 10% in 2023, reaching $140 billion, but supply chain pressures remain a key concern. The IEA reports that lead times for crucial grid components, such as cables and transformers, have nearly doubled since 2021, with some specialised equipment now taking up to five years for delivery.

Price increases have also been notable, with cable costs nearly doubling and transformer prices rising by around 75% since 2019. These supply-side challenges are echoed in research by the Energy Systems Catapult, which suggests that a combination of rising material costs, geopolitical factors, and a shortage of skilled labour is impacting the sector. The IEA estimates that an additional 1.5 million workers will be required by 2030 to build and maintain the necessary grid infrastructure.

A coordinated strategy for grid expansion

To address these challenges, the IEA has outlined several key recommendations aimed at improving grid readiness:

1. Improving long-term planning – Governments and industry stakeholders should develop integrated, forward-looking strategies that align energy generation with infrastructure development. This would help manufacturers and suppliers anticipate demand and manage supply chain constraints more effectively.
2. Enhancing industry collaboration – Strengthened cooperation between governments, regulators, transmission operators, and manufacturers could mitigate delays in grid expansion and ensure a more resilient energy system.
3. Encouraging proactive investment – Regulatory frameworks that incentivise early grid expansion could prevent bottlenecks. Other research, such as that from the Rocky Mountain Institute, suggests that a shift towards decentralised energy systems could complement traditional grid expansion efforts.
4. Improving procurement strategies – Long-term agreements could provide greater price stability and encourage manufacturers to scale up production of critical components.
5. Streamlining permitting processes – Lengthy approval times for new projects have been identified as a major constraint. Simplifying these procedures could help accelerate infrastructure deployment.
6. Optimising existing grid assets – Digital technologies, such as real-time monitoring, advanced analytics, and automation, can enhance efficiency and increase transmission capacity without requiring extensive new construction.
7. Strengthening supply chain resilience – Diversifying suppliers and fostering local production can help reduce dependency on a few manufacturers, improving overall system reliability.
8. Developing a skilled workforce – Addressing labour shortages through training programmes and workforce development initiatives will be crucial for long-term grid expansion.

Looking ahead

The IEA’s report presents one viewpoint on the evolving electricity landscape, highlighting the need for expanded and modernised grids. While the challenges outlined by the agency are significant, broader research underscores that multiple pathways exist for ensuring a reliable, affordable, and decarbonised electricity system.

Whether through increased transmission investment, smarter grid management, or new technologies, the energy sector will need to adapt to the realities of a more electrified world. The direction and speed of this transition will depend on coordinated action across policymakers, industry leaders, and technology providers in the coming years.