lookingforenergy.blog

This post includes a reflection on the following publications:

https://www.bcg.com/publications/2025/delivering-energy-transition

https://www.bbvaresearch.com/en/publicaciones/spain-the-power-grid-the-overlooked-cornerstone-of-the-energy-transition/

As I continue my journey exploring the complexities of the global energy transition, I’ve been struck by a critical aspect that often receives less attention than flashy renewable technologies and their associated development: the inconspicuously relevant electricity grid. This realization deepened when I came across BCG’s February ’25 Sustainability report, “Delivering the Energy Transition Will Come Down to the Wires.” The title itself speaks volumes – while solar panels and wind turbines capture our imagination, it’s the infrastructure connecting and delivering this clean energy that may ultimately determine our success. According to the International Energy Agency, modernizing and expanding global electricity grids to support a net-zero world will require approximately $25 trillion in investment through 2050. That’s roughly one-quarter of the world’s current annual economic output and nearly equivalent to what we’ll spend on all solar and wind capacity combined over the same period. The BCG report highlights that annual global investment in transmission and distribution networks needs to increase by 88% this decade compared to 2012-2021 levels. Without this massive scale-up, our renewable ambitions will quite literally have nowhere to go.

Topically, the recent large scale power blackout in Spain was a harsh reminder of the grid’s importance and existing vulnerabilities. BBVA Research’s March 2025 publication, “Spain: The Power Grid, the Overlooked Cornerstone of the Energy Transition” presciently underscored (it was published a month before the actual blackout!) why grid resilience and modernization must be at the forefront of our energy discussions. As such, the following key points need to be addressed;

• Grid saturation and congestion: With a surge in renewable connections, Spain’s grid has become increasingly saturated, making it more susceptible to disruptions. The blackout illustrated how quickly disruptions to localized energy hubs can cascade across regions, affecting millions.
• Aging infrastructure: Much of Spain’s transmission and distribution network was designed for a different era – one with centralized predictable power flows. Today’s decentralized, variable renewable generation places new stresses on these old systems.
• Investment gap: Despite ambitious renewable targets, Spain (along with other Eurozone countries) have underinvested in grid upgrades. The blackout has reignited the debate over the pace and scale of needed investment, echoing the global trends highlighted in the BCG report.

Relevant to these areas for improvement, 5 key interconnected challenges related to grid upgrades/expansions were outlined in the BCG report;

• Equipment needed to build out our grids are produced through already constrained supply chains resulting in severe shortages and higher prices
• Most grid companies don’t possess the skilled workforce required to act on increased investment from energy players
• In spite of government leaders calling for faster project completions, local regulatory environments continue to create costly hurdles for grid companies
• Increased capital requirements will propagate into higher electricity bills, which in turn will affect consumer sentiment around financing
• As previously discussed, grid congestion has further complicated timelines and build-outs for grid expansions

With these issues in mind, streamlining the initiation, planning & execution of these projects will be necessary if we’re to break the vicious cycle of renewable upgrades stuck in limbo leading to a slower transition which in turn leads to further decomposition of existing systems which consequently increases investment requirements for upgrades.

While the challenges are complex, the BCG report posits four paradigm shifts that can serve as guidelines for grid companies and investors alike;

• Rethinking network planning: beyond grid companies, multiple stakeholders must be involved in planning the build-outs for a more integrated energy solutions
• Eliminate waste: specific to capital expenditures, reducing wastage through prioritization, sequencing, and resource management, will be required to build more efficiently
• Standardizing supply chains: shifting from project-specific proposals & contracts to bulk sourcing strategies and deeper supplier collaborations will help address the ongoing supply chain disruptions being experienced by the energy generation industry
• Incentivizing stakeholders: More crucial than onboarding them in the planning stage, grid companies need to actively engage stakeholders (regulators, governments, local communities etc.) to transform existing environments to be more supportive of infrastructure development. This underscores, once again, that the energy transition is as much a social and political challenge as it is a technological one.

What has stayed with me after reading these reports is how the grid, the most physically tangible part of our energy system, has seemingly become a mirror for our societal choices vis-a-vis consumption. As the BCG report notes, “Whether the issue is net zero or load growth through AI or more efficient use of existing grid capacity – such as through more flexible demand management – we will need a lot more electricity grid.” This statement connects directly to topics I’ve explored previously on this blog-from the energy paradox of AI to broader questions about energy transition versus reduction. The grid expansion challenge forces us to confront difficult questions: How do we balance infrastructure expansion with land conservation? Who bears the costs of transition? How do we maintain reliability while transforming the system’s foundation? More difficult questions which will have to be answered on our path to a sustainable future!

What do you think? Is grid expansion receiving enough attention in energy transition discussions? Have you noticed changes to transmission infrastructure in your community? I’d love to hear your thoughts and experiences as we navigate this critical aspect of our sustainable future together.