Investment in electricity grids must double to more than $600 billion per year by 2030 to avoid stalling the clean energy transition and putting the 1.5 °C climate goal “out of reach”, the International Energy Agency (IEA) said in a report published today (17 October).
The report, which offers a global stocktake of the world’s electricity grids, found that investment has “remained broadly stagnant” over the past decade, while the scale of renewable energy projects has skyrocketed.
As a result, 3,000 gigawatts (GW) of renewable power projects, of which 1,500 GW are in advanced stages, are waiting in grid connection queues. This is equivalent to five times the amount of solar PV and wind capacity added in 2022.
The report says that if investment in the grid doesn’t scale up, then “there is a risk that clean energy transitions will stall,” which will put the 1.5 °C goal “out of reach”.
Global investment in energy grids needs to double to more than $600bn (£492bn) a year by 2030 to hit national climate targets after “over a decade of stagnation at the global level”, the IEA said. It will mean adding or refurbishing a total of over 80 million kilometres of grids by 2040, the equivalent of the entire existing global grid.
Speaking to The Guardian. Fatih Birol, the executive director of the IEA said “Governments need to open their eyes – if we want clean electricity, we not only need clean electricity generation, but we need to build grids. It has been a blind spot of the clean energy transition programmes of governments.”
“The recent clean energy progress we have seen in many countries is unprecedented and cause for optimism, but it could be put in jeopardy if governments and businesses do not come together to ensure the world’s electricity grids are ready for the new global energy economy that is rapidly emerging.”
Solving the challenge
The report outlines six crucial areas that policymakers must focus on to ensure the resilience of future grids.
The first and foremost is increased investment. The IEA recognises that many countries will not be able to pay for their grid upgrades without outside help. To bridge this financial gap, private sector investments and support from multilateral development banks will play a pivotal role.
For wealthy nations, the report emphasises the need to streamline planning processes and adopt a long-term perspective. It takes 5 to 15 years to plan, permit, and build new grid infrastructure, while renewable projects are often completed in just one to five years. This mismatch in timing can lead to bottlenecks, delaying the rollout of renewable technologies.
Upping the pace of development for grid capacity and deploying new technologies will place increasing strain on supply chains. To avoid this, governments will need to support expansion of these supply chains by creating firm and transparent project pipelines and by standardising procurement and technical installations.
One critical aspect highlighted in the report is the potential for increasing efficiency across the board, this will reduce costs and alleviate growing pressure on supply chains. To achieve this, the report recommends embracing digitisation, particularly through the use of AI and machine learning. These technologies can address challenges related to investment cases, supply chain growth, and public support.
The energy sector, the largest contributor to the climate crisis, remains a thorn in the side of the UK’s green ambitions. In July, National Grid announced a £54bn investment in the electricity network to support offshore wind, despite this, a recent energy auction saw no new offshore windfarms secure contracts.
You can read the full report here.
