By Mark Jaffe, EUCI energy writer
Efforts to expand and modernize electric grids around the world – to cope with growing demand for power and a shift to renewable generation – are struggling to keep pace in the face of supply chain bottlenecks, according to an International Energy Agency (IEA) report.
“Prices and procurement times for essential components like power transformers and cables have almost doubled in four years, creating significant hurdles for grid developers,” the IEA said.
About 1.5 million kilometers of new transmission lines have been built worldwide over the last decade. The IEA said this is inadequate in the face of mounting electric load and new generating capacity waiting to come online.
Global investment in power transmission grew by 10% in 2023 to $140 billion, but the IEA said investment would need to exceed $200 billion annually by the mid-2030s to meet rising electricity demand.
The IEA’s latest near-term forecast is for global electricity consumption to grow at close to 4% annually through 2027. Electricity’s share of total energy consumption, now 20%, will also rise.
At the same time, grid infrastructure is having difficulty keeping pace with a surge of new renewable generation. About 1,650 gigawatts of advanced-stage wind and solar projects are awaiting grid connections. Renewables currently account for 30% of electricity generation.
“This mismatch has led to delays in project deployment and increased financial uncertainty,” the IEA said.
The time-consuming process of applying for and receiving permits is the primary cause of delays for transmission projects, particularly in advanced economies, the IEA said. Nevertheless, supply chain issues are also emerging as a severe limitation.
An IEA survey of industry leaders found that procurement now takes two to three years for cables and up to four years for large power transformers – twice as long as in 2021.
“Specialized components face even longer delays, with lead times for direct-current cables – often used for long-distance transmission – extending beyond five years,” the report said.
HD Hyundai Electric and Hyosung Heavy Industries, two of Korea’s largest transformer manufacturers, for example, reported a combined order backlog exceeding $10 billion by the end of the 2024 third quarter, reflecting a one-third increase year-on-year.
“The price increases for components are equally concerning. In real terms, cable costs have nearly doubled since 2019 while power transformer prices have increased by around 75%,” the agency said.
Basic materials like copper, aluminum, and grain-oriented electrical steel have also sustained price increases.
Aluminum accounts for about 18% of the total composition of a high-voltage overhead line with the remainder steel poles. Copper makes up about 60% of the total weight for cables, while the rest consists of insulation materials. In the case of aluminum cables, aluminum can account for up to 80% of the total weight.
Workforce is another pinch point. About 8 million people worldwide are employed in constructing, maintaining and operating grids, but employment will need to grow by at least 1.5 million by 2030 to meet projected demand, the IEA said.
Led by China, “Emerging Markets-Developing Economies” account for almost 90% of the 1.5 million kilometers of transmission built in the last 10 years. China built about a third of the lines.
India added nearly 180,000 kilometers of transmission lines, a 70% increase, and Brazil built more than 100,000 kilometers of lines, a 50% expansion of its grid.
“There is a greater emphasis in advanced economies on the replacement and modernization of aging transmission lines to ensure reliability, to accommodate digital solutions, and to integrate renewable energy sources effectively,” the EIA report said.
There is also competing demands among regions “exacerbating the bottlenecks,” the agency said. The growing development of offshore wind with its demand for specialized high-voltage subsea cables is adding additional pressure.
“Grid infrastructure is the backbone of a reliable, clean, and interconnected energy system. As electricity becomes ever more central to modern economies, strengthening grids is essential to meet growing demand and adapt to evolving needs,” the IEA said.
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