According to a new IEA report, efforts to expand and modernize electricity transmission grids around the world are facing challenges as prices and procurement times for essential components like power transformers and cables have almost doubled since 2021, creating obstacles for grid developers.
The report, Building the Future Transmission Grid: Strategies to Navigate Supply Chain Challenges, highlights that developing transmission infrastructure is essential for energy security and reliable electricity delivery. The supply chain challenges are due to the Age of Electricity, with global power consumption expected to increase in the future.
The trend results from the growing electrification of industrial activity; rising use of air conditioning, appliances, electric vehicles and heat pumps; and the expansion of data centres to support the rapid development of artificial intelligence.
An IEA survey of industry leaders found that procurement takes two to three years for cables and up to four years for large power transformers. Specialised components experience longer delays, with lead times for direct current cables, used for long-distance transmission, extending beyond five years. In real terms, cable costs have nearly doubled since 2019 while power transformer prices have increased by around 75%.
The increased development of offshore wind power projects has further increased demand for specialized high-voltage subsea cables, putting additional pressure on the strained supply chains.
The report showed that manufacturers are responding with plans and investments to increase production capacity, but these expansions will take time to implement, and uncertainty is constant regarding future demand levels and the availability of skilled workers. The report found that around 8 million people worldwide are currently employed in constructing, maintaining and operating grids, and this workforce is expected to grow by at least 1.5 million by 2030 to meet projected demand.
More than 1,600 GW of solar and wind projects are in advanced development stages awaiting grid connections. The report noted that while global investment in power transmission grew by 10% in 2023 to reach $140 billion, this is anticipated to arrive at $200 billion annually by the mid-2030s to meet rising electricity demand.
The IEA recommended enhancing the visibility of future infrastructure needs through transparent and credible advance planning, encouraging proactive grid investment, designing effective procurement frameworks, and ensuring a skilled workforce across the sector. Additional recommendations include streamlining permitting processes, optimizing the use of existing grid infrastructure through digital technologies, and measures by policymakers to encourage greater diversity and resilience in supply chains.
The report emphasizes that coordinated efforts across the entire supply chain will be essential to overcome the challenges and enable reliable power system development for the future.
