Renewable Energy Soars, But Grid Upgrades Fall Short
- February 24, 2026
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Electricity demand around the world is rising at a significant pace. According to the International Energy Agency (IEA), global electricity consumption is projected to grow by more than 3.5% per year through 2030, adding roughly 1,000 terawatt‑hours (TWh) annually. This is at least 2.5 times faster than overall energy demand growth through the end of the decade.
Fueled by rapid electrification of industry and transport, the rise of digital and data-intensive sectors, and the shift toward cleaner energy, this surge in demand marks the “Age of Electricity,” where power underpins manufacturing, cooling, and digital infrastructure.”
Emerging and developing markets in Asia, particularly China and India, are expected to drive a majority of this growth, while advanced economies also contribute meaningfully as stagnation gives way to renewed consumption.
Expansion of Renewables, Nuclear, and Gas — But Grids Are Strained
To meet this rising demand, power systems are shifting sharply toward low‑carbon and flexible generation.
Global electricity from renewables, led by record solar PV deployment, is on track to surpass coal. Nuclear output also reached a record high, and together with renewables, low-emission sources are expected to supply 50% of global electricity by 2030. At the same time, natural gas generation is projected to rise through 2030, driven by growing demand in the US and a regional shift from oil to gas in the Middle East.
Yet despite this growth in clean generation, power grids are struggling to keep pace. The same IEA analysis that highlights booming renewables also finds that more than 2,500 gigawatts (GW) of renewable and storage projects remain stalled in grid connection queues worldwide because transmission infrastructure is insufficient.
Meeting 2030 electricity demand would require a roughly 50% boost in annual grid spending from today’s $400 billion, alongside stronger grid supply chains. “At the same time, grids built for peak capacity often have substantial unused capacity during off‑peak periods,” noted IEA. “As grids and flexibility rise up the policy agenda, making more efficient use of existing systems can help relieve congestion and accelerate integration while grid expansion efforts continue.”
(Also read: Philippine M&A Deals Surge in 2025 on the Back of Renewable Energy Investments)
Grid Congestion in Practice
Real‑world examples reveal the consequences of this bottleneck.
Dutch grid under strain
In the Netherlands, grid congestion has emerged as a significant barrier to the energy transition. Between 2018 and 2023, solar PV capacity increased fivefold, largely due to distributed rooftop installations supported by a favorable net metering policy.
However, grid expansion has not kept pace with the surge in both electricity demand and distributed generation. Under the net-metering arrangement, electricity delivered to the grid is compensated regardless of market price, reducing incentives for solar installations to align output with system needs. By early 2025, roughly 10,000 large users, including consumers and batteries, and 7,500 generation projects larger than household-scale PV systems were waiting to connect to the Dutch electricity network.
Europe faces electricity bottlenecks
Germany has set new records in renewable energy production, yet grid bottlenecks regularly force northern wind farms to curtail output because electricity cannot be efficiently transported to high-demand southern regions. In 2023, these limitations led to the loss of around 19 TWh of renewable power.
While nuclear provides a stable supply in France, integrating decentralized renewables such as solar and wind demands a more flexible, modernized grid. Without significant upgrades, congestion could slow the country’s clean energy transition.
In the UK, rising demand from electric vehicles and home electrification is placing unprecedented pressure on the electricity network. The National Grid projects peak demand could increase by up to 50% by 2035. Without targeted investments in grid expansion and energy storage, congestion is likely to become widespread.
US electricity networks under pressure
Grid congestion is becoming a major challenge in the US as electricity demand rises from data centers, home electrification, and industrial loads. Utilities, including American Electric Power and Exelon, are significantly expanding investment in transmission and generation to relieve bottlenecks, yet limited grid access remains a primary constraint for new projects.
In regions such as New York, rising loads are testing grid reliability, highlighting the urgent need for modernized infrastructure to accommodate both renewable integration and growing peak demand.
Australia’s transmission limits
Transmission bottlenecks in Australia are forcing large amounts of wind and solar power to be curtailed — meaning clean energy is wasted because the grid can’t transport it to demand centers. In some regions, curtailment could reach as high as 65 % by 2027 due to limited transmission expansion and delays in building new lines to connect renewable resources to the grid.
Can the Philippine grid keep up?
The Philippines presents a microcosm of the broader global challenge. The country aims to increase renewables to 35% of its power generation mix by 2030 and 50% by 2040.
Renewables currently account for 22% of the Philippines’ power mix. Progress is accelerating, with the Department of Energy (DOE) reporting record capacity additions of 794.34 megawatts (MW), surpassing the total installed over the previous three years.
Noel M. Baga, co-convenor of the think tank Center for Energy, Research, and Policy (CERP), notes that the Philippines’ energy security remains constrained by persistent gaps in grid infrastructure and limited transmission capacity. He explained, “The most significant hindrance is grid congestion and lack of transmission infrastructure, which delays plant connections and results in curtailed power production even as the country adds new capacity from solar and wind sources.”
Although grid modernization is gaining traction, including plans to deploy smart grid technologies aimed at managing intermittent generation and mitigating outages, progress has been uneven. Major constraints are high initial investment costs, limited skilled personnel, and regulatory barriers.
In March 2025, the National Grid Corporation of the Philippines (NGCP) laid out an ambitious expansion roadmap in its updated Transmission Development Plan for 2025 to 2050. The revised blueprint aligns grid investments with the government’s renewable energy targets. It sets aside roughly ₱485.2 billion for projects that will add about 2,148 circuit kilometers of transmission lines and 23,325 MVA in substation capacity by 2034.
But the NGCP also sounded a note of caution. Many power plants that were earlier tagged as “committed” or “indicative” have yet to materialize. But even as expansion plans move forward, grid connection remains a significant bottleneck. Before a power plant can connect, it must fall within the grid’s planning horizon and secure a system impact study. This assessment determines the appropriate connection point and whether additional transmission upgrades are required. About 30% of projects scheduled for completion between 2025 and 2027 still lack this study, increasing the likelihood of further delays.
In mid-2025, the DOE announced its plans to finalize a nationwide Smart and Green Grid Plan (SGGP) designed to fundamentally guide how the country will modernize its transmission networks to support large-scale renewable integration. The SGGP is intended to enable the seamless transmission of renewable energy, including up to 50 GW of offshore wind and 4.8 GW of nuclear capacity by 2050.
DOE Undersecretary Rowena Guevara confirmed that the SGGP was scheduled for completion by September 2025. She added that the agency has granted about 1,400 service contracts, many in areas without transmission capacity, creating grid bottlenecks.
“We are in catch-up mode right now on transmission,” she admitted. “But I hope that five years down the road, it will be the reverse.”
However, there have been no reported updates on the status or progress of the SGGP plan.
(Also read: PH Eyes Bigger Role In Global Clean Energy Industry After US Minerals Agreement)
Matching Ambition with Infrastructure
Renewable and low‑carbon generation may be expanding, but this transformation risks outpacing the very networks designed to carry it. If grid investments and modernization do not keep up with renewable expansion, the world could face escalating congestion, project bottlenecks, and reliability issues that undermine energy transition goals.
As a possible solution, the Makati Business Club (MBC) has also advocated for private sector participation in grid expansion to inject capital and reduce dependency on government-only funding. Allowing third-party investors to build and operate transmission infrastructure could accelerate project delivery, improve efficiency, and help close the funding gap that has historically slowed grid upgrades relative to renewable development.
For Baga, the main constraint is grid congestion and inadequate transmission, which delays plant connections and leads to curtailment, even as more solar and wind capacity is added. He added that the Philippines should reset its energy strategy by putting energy security first, followed by affordability and then sustainability. He also stressed that the country will need “all forms of energy” to meet rising demand.
“Any energy transition must follow a measured approach that ensures stable power supply while recognizing that the Philippines contributes minimally to global emissions and must balance environmental goals with immediate development priorities for all Filipinos,” he explained.
Additionally, Guevara clarified that the energy transition does not call for an immediate closure of coal plants. Rather, it requires a carefully planned and gradual move toward greener, more sustainable energy sources.
“Transition has to be calculated and calibrated. We do not want this to impact the economic growth of the country by suddenly turning off our coal-fired power plants,” she stated, adding that although renewable energy has advanced significantly in recent years, “the country can’t rely on it entirely yet.”
A balanced strategy, therefore, focuses on accelerating renewable deployment, storage, transmission upgrades, and flexible gas, while maintaining legacy fuels to safeguard energy security and give the grid time to modernize.
Sources:
https://www.iea.org/reports/electricity-2026/executive-summary
https://univers.com/articles/grids-in-crisis-a-wake-up-call-for-europe/
https://rpa.org/news/lab/the-state-of-the-grid-in-new-york
https://dailyguardian.com.ph/doe-plans-25-gw-renewable-auctions-through-2035
https://bworldonline.com/economy/2025/06/24/681184/grid-plan-expected-by-september
https://powerphilippines.com/mbc-pushes-private-sector-role-in-power-grid-modernization
