At least $14trn will need to be invested in the world’s grids by 2050 to support ever larger amounts of variable renewable energy, as well as increased electricity demand from the heating and transport sectors, according to BloombergNEF (BNEF).

This means that by mid-century, annual global investment in both distribution and transmission grids would need to reach $636bn a year, a 170% increase on the $235bn spent in 2020, says the BNEF report, Power Grid Long-Term Outlook 2021.

The study explains that $4.7trn will need to be invested in the digitalisation of grid infrastructure, including a massive roll-out of sensors and automated systems.

Increased digitalisation will be required to enable network operators to manage increasingly complex distribution and transmission grids, with millions of electric vehicles, heat pumps, rooftop solar and demand-response systems, all powered predominantly by variable wind and solar power.

The increased demand for electric heating and transport will require $2trn of global grid investment, including the upgrading of existing customers’ connections and the installation of billions of electric vehicle charging points.

The distribution grid — which connects homes and business to the higher-voltage transmission system — will require up to 63% of the annual global grid investment by 2050, up from 52% in 2020.

And over the next 30 years, one fifth of total global grid investment will occur in China alone, totalling $2.9trn, with ultra-high-voltage transmission systems enabling the integration of vast amounts of renewable energy from remote areas.

Any underinvestment in grid infrastructure could result in power networks slowing down the energy transition and hindering the march to net-zero emissions by 2050, BNEF adds.

Technology

Global energy transition requires $14trn of grid investment by 2050: BNEF