Increasing infrastructure needs impacting transmission grid development – IEA

Rising component prices, long lead times and related market dynamics are hindering the development of transmission grid infrastructure, the IEA reports.

The importance of the grids in driving the energy transition has been gaining growing prominence to meet the increasing demand as electrification grows.

While much of the new decentralised generation is being connected to the distribution grids, the transmission grids also are essential to link new sources of generation with expanding demand centres and to enhance cross-border interconnections.

The IEA states in a new report ‘Building the future transmission grid‘ that around 1.5 million km of new transmission lines have been built worldwide over the last decade, but inadequate transmission remains a major constraint on power system development, electrification and energy security.

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However, while investment in transmission has started to pick up as countries make grid infrastructure a key priority in their national energy plans – in particular Europe, US, China, India and parts of Latin America – challenges have emerged beyond permitting, which is the most widely cited issue for delays in projects and remains the primary cause.

Supply chain bottlenecks

Now the supply of cables, transformers, materials and other components is also becoming a limiting factor, the IEA reports, commenting that a survey has found that it now takes two to three years to procure cables and up to four years to secure large power transformers – an almost doubling of the average lead times since 2021.

Some specialised components are even more difficult to source, such as DC cables with a waiting time extending beyond five years.

The high demand also has substantially driven up prices. While dependent on the complexity and capacity of individual orders, the survey suggests that prices for cables have nearly doubled since 2019 and the price of power transformers has risen by around 75%.

This combination of rising component costs, extended procurement lead times and a significant backlog of orders is contributing to higher project expenses as well as delays, the report adds.

Manufacturers response

The study finds that manufacturers are responding with plans and investments to increase production capacity, but these expansions will take time to implement.

In addition, uncertainty remains regarding future demand levels and the availability of skilled workers. Currently around 8 million people worldwide are employed in constructing, maintaining and operating grids, and this workforce will need to grow by at least 1.5 million by 2030 to meet projected demand, the report adds.

The report concludes that coordinated efforts across the entire supply chain will be essential to overcome these bottlenecks and enable reliable power system development for the future.

Eight recommendations are offered towards navigating the supply chain challenges:

1. Enhance visibility on future demand.
2. Strengthen the industry dialogue.
3. Encourage proactive grid investment.
4. Design effective procurement frameworks.
5. Streamline permitting.
6. Maximise existing grid infrastructure.
7. Promote diverse, resilient and sustainable supply chains.
8. Ensure a skilled workforce.