Global expansion of electricity transmission infrastructure is struggling to keep pace with surging demand while procurement lead times and costs of key components have nearly doubled since 2021, according to a new report from the International Energy Agency (IEA).
The report, Building the Future Transmission Grid: Strategies to Navigate Supply Chain Challenges, notes that bottlenecks in sourcing essential equipment, including power transformers and cables, are emerging as a major obstacle to grid expansion.
Rising costs and delayed procurement
An IEA survey of industry leaders found that procurement times for critical components have risen sharply with lead times now extending to two to three years for cables and up to four years for large power transformers – twice the duration observed in 2021. The situation is even more severe for direct current cables often used for long-distance transmission where procurement now exceeds five years.
Cost increases are also a concern. In real terms, the price of power transformers has risen by approximately 75% since 2019 while cable costs have nearly doubled. These trends create financial and logistical challenges for utilities and grid developers worldwide. “The ability to expand and modernise electricity grids is becoming a limiting factor in the energy transition. Supply chain constraints, if not addressed, could delay critical projects and increase costs for consumers,” the report says.
Competing demand and workforce shortages
The delays and cost escalations stem from several factors including a surge in global grid development projects occurring simultaneously and the increasing deployment of offshore wind power, which has driven demand for specialised high-voltage subsea cables.
Manufacturers are expanding production capacity to address these shortages but implementation remains slow due to uncertainty about future demand and a shortage of skilled labour, the report says. It estimates that approximately eight million people are currently employed in grid construction, operation and maintenance. The workforce needs to grow by at least 1,5 million by 2030 to meet projected demand.
Investment and policy recommendations
With more than 1 600 GW of solar and wind projects currently awaiting grid connections, the report stresses the urgency of addressing these bottlenecks. While global investment in power transmission increased by 10% in 2023 to reach US$140 billion (R2,63 trillion), the IEA estimates that annual spending will need to exceed US$200 billion (R3,76 trillion) by the mid-2030s to support rising electricity demand.
To stabilise supply chains and enable future grid expansion, the IEA recommends several measures including improved transparency in infrastructure planning, proactive investment in grid expansion, streamlined permitting processes and policies that enhance supply chain diversity and resilience. The report also notes the need for digital solutions to optimise existing grid infrastructure and reduce the strain on new capacity development.
“Timely and well-coordinated action is required across the supply chain to ensure reliable power system development. Failure to address these issues could lead to prolonged delays and higher costs undermining efforts to achieve energy security and sustainability,” the report says.
