Electricity grids are the backbone of modern life and the energy transition. But after decades of underinvestment, they are struggling to keep pace with surging demand and rapid growth in clean power. Failure to invest in grids in a timely manner risks serious economic and climate consequences.
At New York Climate Week, Global Grid Catalyst (GGC) launched with an initial $50 million fund and a goal to mobilise $200 million per year in grants to help fix this. Analysis done by Systemiq for the Pooled Fund for International Energy, hosts of the GGC, sets out what’s at stake and the scale of the opportunity.
The economic case for grid investment
Governments have signed the COP29 Global Grids Pledge to expand or upgrade 25 million kilometres of grids by 2030 – a target essential to meeting future demand. To serve that demand, grid networks worldwide will need to grow two to three times in length across all regions.
New analysis by Systemiq, supported by the Pooled Fund for International Energy, shows that delivering on the COP29 Global Grids Pledge to expand or upgrade 25 million kilometres of grids by 2030 could also unlock significant economic growth.
The economic reward is substantial. Electricity grid Gross Value Add (GVA) multiplier estimates range from 0.4 to 2.4, meaning that every dollar invested has the potential to generate significantly wider value in the economy. Applying these multipliers, our study finds that grid investments could deliver an annual GVA impact of $1.1–3.2 trillion globally through to 2050 if all the grid investments required by net zero are made.
Grid investments therefore provide equivalent economic impact to other critical infrastructure, such as roads, rail and energy assets.
The case for acceleration
Electrification is the single biggest lever for driving more useful output from our energy consumption whilst decarbonising buildings, transport and industry. But without grids buildout, the electrification transition stalls.
This is especially urgent in the Global South, where electricity demand is rising fastest and where recent Energy Transitions Commission analysis suggests that solar rich countries could have significantly more competitive costs of power. Our initial estimates suggest that grids could serve as an economic growth lever, much like other critical transport infrastructure.
The wider benefits
While GVA captures the near-term economic output, grid investments also unlock wider and longer-lasting economic benefits:
- Lower system costs and cheaper power for households and businesses
- Improved reliability and resilience to extreme weather and shocks
- Regional development and jobs, including in new manufacturing and services
- Energy security through diversified, flexible systems
- Environmental gains, enabling faster clean energy build-out and air-quality improvements
Based on our findings, we recommend a more comprehensive assessment of grid investment impact.
Although a number of academic and project specific assessments already exist on grid investment GVA, a more holistic view may be helpful for governments looking to prioritise public spending. The study recommends next steps of developing a more holistic, consistent framework for evaluating grid investment GVA that also includes factors such as avoided curtailment, interconnection backlogs cleared, reliability gains, business formation and community benefits.
Developing this framework will help policymakers and investors prioritise public spending and make smarter decisions about where and how to invest.
Grids connect cheap, clean electricity to people and businesses. With the right policies, finance and expertise, modernising them is one of this decade’s biggest economic and climate wins.
Read the full analysis to explore the findings in detail and see how grids could accelerate the global energy transition and drive economic growth.
