What the IEA’s Latest Report Classifies as Grid Challenges and Opportunities

If you are a part of the power industry, you’re likely familiar with the International Energy Agency (IEA), a global, autonomous, and intergovernmental organization that is responsible for industry data analysis and policy recommendations. In parallel with the aforementioned responsibilities, the agency publishes reports at regular intervals on topics related to the energy sector. On October 17, 2023, the IEA released a report titled “Electricity Grids and Secure Energy Transitions”, whose focus was two-fold: first, it took on a global view of electric grids and what the industry needs to do to effectively navigate through the energy transition.

At a high level, the report consolidates the challenges of the Energy Trilemma and the required path forward for a successful grid of the future. Overall, the themes are nothing new: we know the innovation and collaboration that’s critical. We also know the magnitude of the problem. At least, I thought we did.

Challenge 1: Magnitude
While the topics of the report were not a surprise, the data was alarming. With a global growth in power consumption, the grid needs to almost double in size by 2040. Problematically, there are at least 3,000 GW of renewable power projects in connection queues, meaning the grid is becoming a bottleneck for the transition to net-zero emissions.

The scale of the problem is increasing. In fact, it’s evident that numerous factors are compounding. Grid congestion is growing – and it’s increasing operating costs. Higher electricity prices are causing regulators to shift to output-based schemes, but grid-related outages are simultaneously having a major economic impact worldwide. In fact, per the report, outages amounted to “a global economic loss of at least $100 billion USD in 2021.” At the same time, voltages are increasing, and as the voltage increases so does the complexity of the grid.

Challenge 2: Speed
To complement the rise in electricity generation and the magnitude of the challenges the grid is facing, modernizing our networks needs to be done at a faster pace. Aging infrastructure is a setback while the race to the future is upon us, and if we don’t pick up the speed, we’ll collectively fall behind. Of course, software is faster to design and implement than hardware, so while digitization and automation can be deployed at a faster rate, high-voltage equipment, for example, takes between 5-13 years to develop and build. To provide you with further general benchmarking, software-defined engineering can take anywhere from days to hours, automation systems typically take months, and physical equipment like power lines takes years. And years are a luxury we don’t have.

What Needs to Be Done
A lot needs to be done in order to (re)build the “foundations of resilient, sustainable, and affordable power systems”. Innovation, investment, collaboration, and unison in policy are key instruments in accelerating the speed at which we expand the grid of the future. To meet decarbonization objectives, investment needs to nearly double in the next six years. There also needs to be a stronger emphasis on modernizing our systems for resilience, reliability, and overall security. Predictive monitoring and autonomous control are areas to examine closely. With that said, urgency around these matters is apparent. On October 18, 2023, shortly before the release of the IEA report, the U.S. Department of Energy announced a massive billion-dollar+ investment in the Grid Resilience and Innovation Partnerships Program aimed at enhancing grid resilience through selected projects in the U.S.