Electricity Grids Failing to Keep Pace with Renewable Energy Growth: IEA

Report recommends doubling annual investments in grid infrastructure by 2030

October 17, 2023


The world must add or replace 80 million kilometers of electricity grids by 2040 which are equal to all grids globally today to meet national climate targets and support energy security,  the International Energy Agency (IEA) said in a report.

The IEA’s Electricity Grids and Secure Energy Transitions report warned that unless policymakers and companies take swift action to improve and expand the world’s electricity grids,  efforts to tackle climate change and reliable supply of electricity could be put at risk.

The IEA’s first-of-its-kind stocktake of grids worldwide found that they are lagging behind compared to the growth rate of key clean energy technologies such as solar, wind, electric cars and heat pumps.

Unless there is greater policy attention and investment, these shortfalls regarding the reach and quality of grid infrastructure could make it difficult to achieve the goal of limiting global warming to 1.5 °C.

The report recommends doubling the currently stagnated investments to more than $600 billion annually by 2030, while also making major changes in grid operation and regulation.

average annual turnover by region

Interconnection queues

The report pointed out that 1,500 GW capacity of renewable projects at advanced stages of development are waiting grid connection. This is five times the amount of solar PV and wind capacity that was added worldwide last year.

Capacity of renewable energy projects in connection queues, selected countries bySource: IEA

“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,” said IEA Executive Director Fatih Birol.

For instance, in the United States alone, over 2 TW of generation and storage were waiting in line for interconnection at the end of 2022, according to the Federal Energy Regulatory Commission.

The grid congestion has also increasingly concerned system operators and policy makers, as electricity transfer capacity is not enough to transmit all available power from one point on the grid to another.

In advanced economies, electricity grids tend to be older, with infrastructure that has sometimes been operational for 50 years or more, mainly due to early electrification. However, there is a growing need to modernize this ageing infrastructure to enhance efficiency and reliability, and accommodate new energy resources. In total, only around 23% of the grid infrastructure in advanced economies is less than 10 years old, and more than 50% is more than 20 years old. In contrast, emerging market and development economies have newer grids with about 40% of their total grid infrastructure being less than 10 years old.

In September, Europe’s power industry called for ramping up investments in aging grid infrastructure by 84% every year until 2050.

The need for decisive action is urgent because of the long lead times for modernizing and extending grids. New grid infrastructure often takes 5 to 15 years to plan, permit and complete – compared with 1 to 5 years for new renewables projects and less than 2 years for new charging infrastructure for electric vehicles, the IEA report said.