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Massive grid and power investment needed according to BNEF research

• Posted by Dejan Pekic BCom DipFP CFP GAICD

Recent research published by BloombergNEF indicates global grid investment could top $470 billion in 2025, an increase of 16% this year on top of last year’s 15% growth. A portion of this growth is due to stalled infrastructure projects from equipment costs and rising inflation, but it also reflects the massive grid and power investment needed moving forward.

The grid is central to delivering renewable energy connections, reaching electrification targets and connecting data centres to power, driving this year’s 16% increase in grid investment.

A significant part of this power demand is generated from the rising adoption of artificial intelligence, with data centre projects already reshaping electricity demand in the United States. This huge growth reflects both a surge in data centres and the increasing size of those centres.

Projection figures from EEI Industry Capital Expenditures also indicate accelerated grid requirements, pointing to US$1.1 trillion in US investor-owned electric utilities between 2025 and 2029. This far exceeds the US$1.3 trillion in actual capital expenditures over the previous ten years.

Locally, it was reported this week that AI companies could be required to invest in renewable energy, amid a forecast the technology could use 12% of the Australian power network.

Key takeaways from BNEF

• Status quo will lead to US$600bn of annual investment by 2050, with US$13.5tn of total spend.
• Maintenance investment (reinforcement and replacement) accounts for approximately 80% of spend.
• This is most pronounced in the US, with structural tailwinds of investment in resiliency, electrification, replacement and AI.
• Grid spend in the US over the next 5 years likely to equate to spend from last 10 years.
• Huge electricity demands of data centres are driving a significant portion of grid investment growth.

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The information in this blog is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider whether the information is appropriate for you and seek professional advice before making any financial decisions.
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