IEA Report Highlights Transmission Grid Challenges
Over the past decade, 1.5 million kilometers of new electric transmission lines have been built worldwide. While a significant expansion, it remains insufficient to keep pace with rising energy demand and the rapid integration of wind and solar power into the grid.
The International Energy Agency (IEA) has released a new report, Building the Future Transmission Grid: Strategies to Navigate Supply Chain Challenges, which examines the evolving landscape of transmission infrastructure investments and key supply chain trends. The report not only assesses existing and future challenges but also identifies practical strategies to address them, focusing on transmission lines operating above 66 kilovolts.
Global Investments in the Electric Transmission Grid
The need for grid expansion and modernization is well known. A robust and upgraded transmission network is critical to ensuring a secure, cost-effective, and sustainable energy system. This is especially true in an era of increasing electrification—driven by rising use of air conditioning, household appliances, electric vehicles, and heat pumps, along with the growing energy demands of data centers.
However, scaling the sector to match global electricity consumption requires substantial resources. The IEA estimates that, under current policies, transmission infrastructure investments must exceed $200 billion annually until the mid-2030s. Beyond that, investments will need to rise to $250–300 billion per year to align with decarbonization targets.
But unlocking these investments is not just a matter of financial commitment. Significant structural obstacles must also be overcome.
Key Challenges Facing the Electric Transmission Grid
One of the biggest hurdles is the slow permitting process. “The grid infrastructure has struggled to keep up with the pace at which new renewable energy sources are being integrated,” the IEA states. “This mismatch has led to project delays and increased financial uncertainty.”
These uncertainties have been exacerbated by supply chain bottlenecks. An IEA survey of industry leaders found that the lead times for power cables and transformers have doubled since 2021, now taking 2–3 years and up to 4 years, respectively.
For more specialized components, delays are even longer. High-voltage direct current (HVDC) cables, for example, now require more than five years for delivery.
Rising costs are another major concern. Since 2019, real costs for cables have nearly doubled, while transformer prices have surged by approximately 75%. Basic raw materials such as copper, aluminum, and grain-oriented electrical steel have also seen significant price increases. These factors are driving up overall project costs and slowing deployment.
IEA Strategies to Address Supply Chain Challenge
The IEA report does not merely outline the challenges; it also presents actionable solutions. The agency has identified eight key recommendations to accelerate grid expansion:
- Enhance visibility into future demand through structured master plans with clear timelines, technical requirements, and regulatory considerations.
- Strengthen industry collaboration to improve coordination and efficiency.
- Encourage proactive investments in grid infrastructure.
- Develop effective procurement frameworks with long-term agreements.
- Streamline permitting processes to accelerate project approvals.
- Maximize the efficiency of existing grid infrastructure using digital technologies.
- Promote diverse, resilient, and sustainable supply chains.
- Ensure a skilled workforce to meet future infrastructure needs.
Addressing these challenges will be crucial for ensuring that the electric transmission grid can support the evolving energy landscape and meet growing global demand.