Last month, a nationwide power outage in Sri Lanka caused by a monkey tripping an electricity transformer drew attention to the urgent need for resilient power grids as the global economy becomes more electrified and digitalized. Medical facilities and water purification plants in Sri Lanka had to rely on backup generators to maintain critical operations while traffic was gridlocked because traffic lights went dark.
The International Energy Agency (IEA) says the world is entering the “age of electricity” but grid bottlenecks and gaps in infrastructure mean investments need to double between now and 2030 to ensure security of supply to a growing population. In the next 10 years, global demand for electricity will grow six times faster than energy demand or by 7,000 terawatt hours.
This is equivalent to the total electricity consumption of US and the EU put together, IEA Executive Director Fatih Birol said on February 25 at the International Energy Week conference in London.
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Upgrades and more investments needed
The biggest driver of electricity demand is air conditioning as developing nations become more prosperous and temperatures rise, Birol said. Yet electricity grids designed decades ago need to be upgraded and adapted to accommodate intermittent renewable energy sources. Birol noted that last year 1,600 gigawatts of renewables were in a queue waiting to be connected to the grid, a situation he said was “economically criminal.”
The IEA said in its Electricity 2025 report that in the period to 2040, the world needs to build or refurbish 80 million kilometers of new grids, enough to reach the moon 200 times. This means investments would need to rise from an average $330 billion per year, to $700 billion annually. The transition to interruptible sources of electricity has exacerbated problems with grids globally because investment in infrastructure has not kept pace with investments in wind, solar and other renewable energy sources.
Failure to address the issue risks delaying the transition and causing imbalances that would lock out renewable energy from systems that have traditionally relied on fossil fuels as baseload sources of power generation. With the rapid growth in data centers expected to lead to a surge in demand for electricity, investing in more resilient and smarter grids has become more urgent.
Growing renewable energy capacity
In the GCC countries, which still rely heavily on natural gas and liquid fuels for power generation, Saudi Arabia and the UAE are investing in modernizing their grids as they grow their renewable energy capacity. Saudi Arabia is adding renewables at a rapid pace with a target of generating 50 percent of its electricity from renewables by 2030.
This has placed enormous pressure on the grid and the kingdom is in the process of upgrading and modernizing its transmission and distribution network. Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said last November that this will entail expanding the transmission network to 160,000 kilometers from 95,000 kilometers. He said the outdated network needs an overhaul to support renewables.
High voltage interconnections and storage are included in the plans. Prince Abdulaziz said in late 2023 that Saudi Arabia would invest more than SR1 trillion ($270 billion) in its power sector by 2030 to boost clean energy generation capacity and modernize its transmission and distribution networks.
The UAE, which has nuclear power in addition to mainly solar renewable energy in its energy mix, is also making significant investments to modernize and expand its grid infrastructure with the Dubai Electricity and Water Authority (DEWA) alone allocating nearly $2 billion to its Smart Grid Program. The UAE and Saudi Arabia are members of the GCC Interconnection Authority (GCCIA), which links all six members of the GCC and is being expanded to supply more electricity to Kuwait and recently completed a link to Iraq, which is not a member.
Baghdad is trying to ease reliance on Iran for electricity and erratic gas supplies because of inadequacies in its grid and lack of sufficient capacity to cope with peak demand. Kuwait, which has been a laggard in developing its renewable energy capacity, suffers from frequent power cuts during the summer months despite its significant oil wealth and has had to import electricity.
Although Kuwait imported record amounts of electricity through the GCCIA interconnection, it suffered from power cuts in the summer as peak demand rose by more than 4 percent for a second successive year. Without subsidy reforms, electricity demand is set to increase further. In the meantime, Kuwait has had to rely on its neighbors and last summer it contracted to secure 500MW of imports from Qatar and Oman through the GCCIA.
Oman’s Ministry of Energy and Minerals on 13 February said it had signed an agreement to finance a $700 million, 1.7GW interconnection project with the GCCIA and the Qatar Fund for Development. According to the ministry’s announcement, construction will begin this year with operations starting in 2027. Oman has managed to stay on top of rising power demand in recent years and is pursuing a further 2.4GW of gas-powered capacity by 2029 to shore up its baseload generation. Oman is unlikely to look at the GCC interconnection as an essential source of electricity, but perhaps as an opportunity to expand power trading.
Developing economies mean greater electricity consumption
The IEA’s Electricity 2025 report forecasts that electricity consumption will increase at an annual rate of close to 4 percent through 2027 with 85 percent of additional demand coming from emerging and developing economies.
Across the world, outdated and overwhelmed grids are struggling to keep up with rapid electrification and the shift to renewables. Without urgent investment in transmission and distribution infrastructure, nations risk supply disruptions, stalled renewable energy projects, and an inability to meet growing energy demand.
Whether in oil-rich Kuwait, rapidly transitioning Saudi Arabia, or emerging economies like Sri Lanka, the message is clear: Modern, flexible, and interconnected grids are essential to sustaining the energy transition and ensuring reliable power in an increasingly digital and electrified world.
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