Electrification is accelerating. Can the grid keep up?

The energy transition is usually discussed in terms of renewable generation. But there is another important side to it that must be looked at: how much of our energy consumption is actually electric?

Globally, electricity represents around 20% of final energy consumption, highlighting how much of the energy system still depends on other fuels. Europe provides a well-defined example of the direction and scale of the transition. Today, electricity represents only 23% of final energy consumption in the EU while the European Commission has set an indicative target of 46% by 2040.

These figures point to a wider global challenge that the transition isn't just about producing more renewable energy but is also about electrifying the industrial processes and applications that are still dependent on fossil fuels.

As electricity takes a larger role in our energy system, the grid is also becoming more decentralized with energy storage, electric vehicles (EVs) and other distributed energy resources (DERs) being increasingly integrated into the system.

The scale of this change is significant. By 2030, the grid could be handling 7x more DERs, increasing the complexity of balancing supply and demand. This means we are not simply asking the grid to carry more electricity but to manage it differently.

Rather than electricity flowing predominantly from centralized generation towards consumers, power networks need to accommodate variable generation and more complex, multidirectional power flows. As a result, greater visibility, flexibility and intelligence across the grid are needed to balance supply and demand.

Developing the grid at the required pace will need substantial investment. It is estimated that annual global grid investment[M5.1] needs to increase by approximately 50% by 2030 from today’s level of around $400 billion. The investment is not only about building new transmission and distribution infrastructure but is also about modernising ageing networks and using available grid capacity more efficiently.

Timing is another challenge as grid infrastructure can take between 5-15 years to plan and construct while other mega-trends like data centres and EV-charging infrastructure that are driving new electricity demand can be developed considerably faster. Demand can therefore emerge before the grid is even ready to accommodate it.

The mega-trends mentioned above are not only creating new sources of electricity demand but are also changing where, when and how that demand appears.

AI and data centres are an example of such trends. Global electricity consumption associated with data centres is projected to exceed 1,000 TWh by 2030. As well as that, data centres can create large and concentrated loads in specific locations which places pressure on local grid capacity and creates more complex connection and infrastructure requirements.

A second example is EV infrastructure. As electric mobility expands into commercial fleets and heavy-duty transport, charging demand will become important to grid planning. High-power and megawatt-scale charging could create particularly concentrated demand around logistics hubs and transport corridors.

Together, these mega-trends along with others like energy storage solutions increase the need for both grid expansion and optimisation. New physical capacity will be necessary but so will smarter use of the infrastructure already in place.

For industrial companies, this transition also extends to the equipment and material level. More electrification, together with the growth of mega-trends means greater use of power electronics and power-conversion equipment at higher power densities in demanding environments.

These conditions place greater demands on thermal management, electrical insulation and protection from contamination and other environmental exposure. Material science can help address these requirements, which influence equipment performance, reliability and operating life. Designing for reliability therefore becomes increasingly important as electrification scales.

Ultimately, these equipment-level challenges are part of the same wider transition. The energy transition is not only about generating more renewable electricity. It is also about having the grid, technologies and materials capable of supporting that change.