Smarter grids

Global electricity grids are struggling to keep up, threatening the rollout of renewable energy. The International Energy Agency (IEA) has warned that inefficient grid connection processes, outdated infrastructure, and slow permitting procedures are becoming the biggest obstacles to clean energy transitions. The IEA notes that without immediate action to modernise and expand grid connections, the transition to renewable energy will stall, despite record investments in clean technologies. 

Decisive action is crucial, as grid modernisation and expansion projects typically require between five and 15 years to complete – far longer than the one to five years needed for renewable energy projects or less than two years for EV charging infrastructure. These lengthy timelines highlight the urgent need for immediate investment to avoid future energy gridlock.

Grid challenges and solutions: UK 

In the UK, one of the biggest challenges in fully transitioning to renewable energy is overcoming the existing backlog of connectivity. The lack of available connections is creating a backlog of approximately 600 projects waiting to be connected to the grid, resulting in delays. Addressing the backlog through streamlined planning and permitting frameworks holds the promise of unlocking significant investment to modernise and expand the grid through upgrading infrastructure, deploying smart technologies, and improving grid flexibility to reduce this backlog.

The National Energy System Operator (NESO) is implementing various short- and long-term strategies to tackle this challenge. Established under the UK’s 2023 Energy Act, NESO was created to improve grid efficiency, reduce connection delays, and enhance coordination between electricity and gas networks. As the country’s strategic energy planner, it works toward the transition to net zero while ensuring energy security, lowering costs, and providing expert sector guidance.

 In the short term, NESO is focusing on: 

• managing the queue for grid connections in order to reduce the time for new generators to connect to electricity transmission networks
• special measures for the deployment of battery energy storage systems (BESS) 

NESO is speeding up the connection process for BESS projects by allowing them to connect to the grid before other non-essential upgrades are completed. This will help reduce delays, enabling battery storage systems to play a bigger role in stabilising the grid. At the same time, NESO is developing policies to better manage the impact of these systems and improve energy storage integration.

NESO announced in January a temporary pause on new connection applications to the electricity transmission system from 29 January to manage an overwhelming volume of more than 1,700 applications received across 2023 and 2024.

In the long term, NESO is planning key reforms to improve the electricity transmission network. These include prioritising connections for ready projects, reassessing existing projects to align with updated criteria, and requiring financial commitments to deter speculative applications. These measures aim to streamline processes and ensure capacity is allocated effectively.

Grid bottlenecks in the US 

Like the UK, the US faces significant grid connectivity challenges. Over 2,600 GW of renewable energy and storage capacity, more than double the total installed capacity of the US power grid, is awaiting connection. Only 20% of interconnection projects since 2000 have been completed, and median wait times have risen by 70% over the past decade.

Infrastructure investment is critical to resolving US grid bottlenecks, yet regulatory uncertainty remains a major barrier. At the Global Infrastructure Investor Association, we have emphasised the need for clear cost-allocation frameworks and streamlined permitting that will attract private capital. Public-private partnerships and tax incentives could reduce risks for investors and accelerate funding for grid modernisation projects. The Federal Energy Regulatory Commission (FERC) introduced Order No. 1920 in May 2024 to modernise the grid and bolster transmission resilience. The order mandates a 20-year regional planning horizon with five-year updates, emphasising scenario-based planning to meet growing demand. In doing so, the FERC lays a foundation but must provide greater clarity on long-term investment returns to unlock private sector participation. 

The FERC Order directly addresses how the costs of new grid projects are shared, a topic of debate in the US, whereas the EU’s network development plan is more focused on expanding the grid itself.

The EU's grid modernisation efforts 

While the EU’s energy transition is advancing with record investments in clean technology, strains in the grid are increasingly apparent. According to the European Council on Foreign Relations, 40% of Europe’s electricity infrastructure is more than 40 years old and nearing the end of its lifespan. This ageing infrastructure contributes to energy losses and creates bottlenecks that hinder the integration of new renewable energy sources. Former EU Energy Commissioner Kadri Simson has warned that unless the grid is rapidly modernised, Europe will struggle to meet its 2030 renewable energy targets.

More than 600 GW of wind and solar projects are stuck in the pipeline in just four European countries, while restrictions on renewable energy generation are becoming more frequent. However, the European Network of Transmission System Operators for Electricity’s (ENTSO-E) Ten-Year Network Development Plan (TYNDP) identifies investment gaps. It proposes enhancing cross-border interconnections, to promote market efficiency and achieve EU energy goals.  

Accelerating grid modernisation through investment and policy reform 

To address EU grid bottlenecks, regulatory and investment frameworks must align with infrastructure investors' priorities. GIIA highlights the need for clear cost-allocation models and targeted incentives to attract private capital for modernisation. Green bonds and sustainability-linked loans are essential but require support from transparent auction systems to streamline renewable energy connections. Performance-based regulation, tying operator incentives to connectivity targets, can further drive progress. These measures are key to reducing congestion, minimising curtailments, and ensuring sustained investment to meet the EU’s 2030 energy goals.

A lack of grid capacity is slowing renewable energy expansion worldwide. With a growing backlog of projects, governments must act now to reform regulations and improve planning. Investors are ready to deploy capital into enhancing grid and generation capacity, but without policy changes, energy bottlenecks will stall climate progress and economic growth. By aligning policies with investors’ priorities, governments can unlock funding, accelerate renewable energy projects, and build a more resilient grid to meet long-term climate and economic goals.