The power grid is arguably the backbone of modern society, and we’re now at a critical convergence of the demand ramp-up of an increasingly electrified economy and an aging power grid that requires significant improvement, especially in incorporating more renewable but intermittent energy, such as solar and wind.
In addition, a significant bottleneck to the global expansion of data centers — facilities that organizations use to house their computer systems and related components — is the availability of power, and the grid is part of that bottleneck. The rapid expansion of data centers, coupled with the broad trend of rising electric vehicle penetration, is lifting power demand far beyond prior expectations.
Much of the grid was built decades ago — for very different patterns of power supply and demand — and is need of substantial improvements, including new power line construction and greater grid flexibility. But many obstacles stand in the way of grid modernization: high upfront costs, regulatory and permitting challenges and lack of coordinated planning, not to mention investments in technology and workforce training. There is also a lack of coordinated planning given the fragmented nature of the power sector, with multiple stakeholders and jurisdictions.
Resolving these obstacles requires government support, more private sector participation, and more innovative solutions beyond building more power lines. Governments need to have supportive policies and incentives to speed up grid modernization, such as grants, tax credits and simpler permitting processes. Facilitating public-private partnerships helps to share risks and leverage resources, as investors and project developers have different investment horizons and risk appetites. And yet, amid vast Energy Transition opportunities, which ones are the right ones?
Our new Must C report, Overcoming Gridlock: Powering Our Future, is about finding and evaluating these solutions.
