reach $140 billion, this figure would need to exceed $200 billion annually by the mid-2030s to meet rising electricity demand.


Timely investment in the supply chain requires confidence among manufacturers as to the level of future demand for networks and components, says the IEA.


To this end, it recommends enhancing the visibility of future infrastructure needs via transparent and credible advance planning, encouraging proactive grid investment, designing effective procurement frameworks, and ensuring a skilled workforce across the sector. Additional recommendations include streamlining permitting processes, optimising the use of existing grid infrastructure through digital technologies, and measures by policymakers to encourage greater diversity and resilience in supply chains.


The report, which was developed under the Regulatory Energy Transition Accelerator (RETA) initiative, which aims to enhance the capacity of regulators to increase the speed of clean energy transitions, emphasises that co-ordinated efforts across the entire supply chain will be essential to overcome bottlenecks and enable reliable power system development for the future. Building on analysis described in a previous IEA report, Electricity grids and secure energy transitions, the new report identifies “actionable strategies” to address challenges related to the supply chain for grid infrastructure, with a focus on transmission lines with voltages that exceed 66 kV. These can be summarised as follows: Enhance visibility on future demand: Integrated, credible visions for electricity sector development at country and regional level, including transparent project pipelines and long-term transmission investment plans, provide essential guidance for manufacturers on the required quantity and types of transmission components. Clear timelines and structured master plans, incorporating technical and regulatory requirements, enhance confidence across the supply chain.


Strengthen the industry dialogue: System planning is becoming more complex as renewable and distributed generation grows. This underscores the importance of improved co-ordination among governments, transmission system operators, regulators, developers and manufacturers to underpin well-grounded assessments of demand for transmission projects and components, and their timely delivery.


Encourage proactive grid investment: In a world where electricity demand is rising fast and some new sources of generation can be built within a few years, the pace of grid investment needs to step up to prevent bottlenecks, including a regulatory framework that supports anticipatory expansion and modernisation.


Design effective procurement frameworks: Long-term agreements provide certainty on prices and supply volumes, encouraging manufacturers to expand capacity and enabling buyers to secure essential components. Standardising procurement procedures across markets enhances transparency and simplifies bidding processes. Aligning procurement policies to national Streamline permitting: Transmission expansion projects are complex and prone to delays, with permitting remaining a key uncertainty. Maintenance of essential safeguards needs to be combined with removal of unnecessary administrative barriers and prioritisation of key infrastructure projects. Maximise existing grid infrastructure: Optimising the use of existing grid infrastructure through digital technologies enhances efficiency and maximises the use of existing assets, providing a safety valve for networks and supply chains. Solutions such as real-time monitoring and operational performance improvements allow transmission lines to function more effectively, alleviating the pressure on some new infrastructure investments. Additionally,


Prysmian Nexans


Furukawa Electric Hengtong


Sumitomo Electric


ZTT Fujikura


LS Cable & System NKT


Hellenic Cables IEA. CC BY 4.0


Market share by revenue for the top ten cable manufacturers, 2023. Top ten cable manufacturers account for around 50% of the global market. IEA analysis based on S&P Capital 1Q. Source: IEA report, Building the future transmission grid: strategies to navigate supply chain challenges


performance-based regulation drives the development and adoption of digital technologies, fostering innovation and operational efficiency.


Promote diverse, resilient and sustainable supply chains: The supply of certain grid components is concentrated among a few top-tier suppliers, hindering diversification, particularly in emerging and developing economies. Governments can support this by pooling procurement needs and collaborating with local or second-tier suppliers. Ensure a skilled workforce: The demand for skilled workers is increasing across the supply chain. Building a strong talent pipeline and integrating digital skills into training are essential. Skilled labour is key to development of infrastructure projects.


Hitachi Energy invests to address escalating transformer shortage


In March 2025, Hitachi Energy announced additional investments of more than $250 million by 2027 to expand global production of critical components for transformers. This rapid follow-up to the recently announced $6 billion USD investment across the company portfolio reflects the escalating transformer shortage, which continues to increase, says Hitachi Energy. As the electrification of industries, particularly data centres, and AI, drives unprecedented demand for electricity, the need for transformers has surged beyond initial projections, notes Hitachi Energy. To keep pace with this accelerating demand, Hitachi Energy says it is expanding its commitment to scale up production and strengthen supply chains in the USA and worldwide. These investments aim to bolster Hitachi Energy’s manufacturing capabilities across the US, enhancing production capacity at the company’s transformer factories in Virginia, Missouri, and Mississippi. It includes transformer components such as bushings and insulation as Hitachi Energy says it is a critical supplier to other transformer manufacturers.


The investments will also help alleviate the broader, ongoing


transformer supply shortage, says Hitachi Energy, ensuring increased production capacity and supply-chain resilience. The company’s global investment programme will also strengthens Hitachi Energy’s manufacturing capabilities in Asia, South America, and Europe.


Hitachi Energy HV components at the company’s Ludvika location, Sweden (Photo: Hitachi Energy)


www.modernpowersystems.com | April 2025 | 13


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