Rewiring the Power Grid
Global grids must adapt to rapidly growing electricity demand, aging infrastructure, a shift toward more distributed energy systems, and increasingly severe weather events. AI and data centers, electrification of transport and heating, and other new sources of demand are putting additional pressure on the grid, while much of the existing infrastructure is reaching the end of its design life.
At the same time, the transition to a more decentralized and multidirectional electricity system and the need to strengthen grids against extreme weather require significant investment and modernization.
Global electricity demand is entering a new era of growth, with electrification, data centers, and other emerging loads driving rising demand across nearly all major regions, and a recent CKI workshop on Power Grids explored how grids can keep pace, what can be optimized today, what needs to be modernized, and where expansion is unavoidable.
AI (and the data centers that power it) are adding urgency to the drive to update the grid because of their massive demand requirements — and those same forces may apply the pressure to finally fix it. By 2030, data centers are projected to account for roughly half of U.S. demand growth, and the scale and urgency of that demand is doing something federal grants alone haven't: it’s forcing utilities, regulators, and investors to treat grid investment as unavoidable rather than optional.
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Of the three levers, optimization is the one utilities and developers can pull almost immediately. It means squeezing more capacity out of infrastructure that already exists, largely through software like load-shifting tools, distributed energy resource management systems (DERMS), virtual power plants (VPPs), and other forms of demand response (DR).
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The “modernization” lever concerns the hardware layer just above optimization: grid-forming inverters, grid-scale battery storage, flexible AC transmission systems, advanced metering, digital twins. It is more capital-intensive than optimization, requiring an estimated $200 billion to $400 billion a year globally between 2030 and 2035, but still faster to deploy than large-scale grid expansion.
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Even with aggressive optimization and modernization in place, workshop participants agreed that grid expansion (that is, new transmission and interconnection capacity) is both unavoidable and an untapped opportunity. It is slower and more capital-intensive than optimizing or modernizing the grid, and will require an estimated $200 billion or more annually from 2030 to 2035 and five to fifteen years to deliver, but it needs to happen anyway: even moderate U.S. load and clean-generation growth scenarios require transmission capacity to rise by 20 to 25 percent.
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Rewiring the Power Grid: Key Insights from Industry Leaders
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