IEA’s latest report: The era of grid 'involution'—no more capacity expansion, only efficiency enhancement

The supply-side narrative is equally compelling. By 2030, renewable energy and nuclear power combined are projected to account for 50% of global electricity generation. Solar photovoltaics (PV) will drive growth, adding over 600 TWh annually. Nuclear power generation will hit a new all-time high in 2025, with China accounting for 40% of global new nuclear capacity. Coal-fired power shows regional divergence: In China and India, coal generation will decline in 2025 due to slowing demand and displacement by renewables; in the United States, however, coal generation rebounds amid rising natural gas prices and policy shifts. Globally, coal generation is expected to fall back to its 2021 level by 2030—yet it will remain the single largest source of electricity. Natural gas-fired generation will grow at an average annual rate of 2.6% over the next five years, primarily to meet rising demand in the U.S. and to replace oil and gas in power generation across the Middle East. The grid has become the biggest bottleneck—2,500 GW of projects queued up Beneath the surface of this boom lies crisis. Over 2,500 GW of renewable energy, energy storage, and high-load projects worldwide remain stuck in interconnection queues—equivalent to three times the EU’s total electricity demand. Annual grid investment must rise by 50% to USD 60 billion to keep pace—but land acquisition and environmental permitting make building new transmission lines a near-impossible task. The report proposes surprisingly innovative solutions: deploying ‘grid-enhancing technologies’—such as dynamic line rating and advanced power flow control—alongside flexible interconnection agreements could immediately unlock 1,200–1,600 GW of stranded capacity—without erecting a single new transmission tower. Meanwhile, battery storage is quietly evolving from a simple electricity storage tool into a grid ‘voltage stabilizer’, enabling transmission lines to operate boldly near their 100% physical capacity limit, rather than conservatively at just 70%. Emissions and electricity prices: A mixed bag of good and bad news The power sector has finally reached a historic inflection point—decoupling CO₂ emissions from economic growth. Global power-sector CO₂ emissions will plateau in 2025 and enter a stable phase from 2026 to 2030, while carbon intensity per unit of electricity generated declines rapidly. Yet residential electricity prices have risen faster than incomes since 2019, and electricity tax burdens exceed those on natural gas—undermining incentives for electrification. Intensifying international price competition: Wholesale natural gas prices in Europe and the U.S. rose in 2025, pushing up electricity prices, whereas prices fell in Australia and India. Energy-intensive industries face persistent regional cost disparities. Blackouts surge—security and resilience are now existential imperatives The warning signs of 2025 cannot be ignored. Widespread blackouts struck Chile, the Iberian Peninsula, and Mexico; critical infrastructure increasingly suffers both physical and cyberattacks. As grid operations push ever closer to physical limits, upgrading physical security, reforming operational standards, and building robust monitoring and early-warning systems have shifted from technical options to survival necessities.

How should grid operators respond to the grid stability challenges posed by large-scale integration of new energy sources?

Integrate additional flexible resources, carry out flexibility retrofits, and build smart grids.

smartEn Warns Grid Controls Risk Squeezing Demand-Flexibility Revenues

1 day ago

Industry association smartEn warns that increasing grid operator control over consumption risks undermining demand-side flexibility markets. They urge market-based mechanisms to support industrial electrification and ensure fair revenue opportunities for consumers.

icis

2026-10-28

smartEn Warns Grid Controls Risk Squeezing Demand-Flexibility Revenues

smartEn Warns Grid Controls Risk Squeezing Demand-Flexibility Revenues

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