We are in what the International Energy Agency calls the Age of Electricity. Global electricity demand is forecast to continue growing nearly 4% per year over the next decade, about 20% faster than the world’s economy in the same period. This means doubling the current global electricity system in roughly the next twenty years. 

Every power plant, every dam, every reactor, every mile of wire built since Thomas Edison’s first station lit lower Manhattan in 1882 must be matched again. That is seven times faster than humanity has ever built electricity before. 

Electricity — not chips, capital, or ideas — is becoming the binding constraint on economic growth globally. How countries respond to the energy demands will determine who wins and who loses the race for economic growth over the next decade.

What’s Behind the Electricity Sector Growth?

Meeting global electricity needs is not just about building the new infrastructure. We also must maintain and fix the existing infrastructure. In the U.S. alone, 70% of transmission lines are more than 25 years old, approaching the end of their design lives. As a result, the inputs needed to expand electricity infrastructure — from transformers to rare earth minerals — will come under doubled demand as countries grapple with replacement and expansion at once. 

Electricity demand is doubling, and the world must build faster than it ever has.

As the inputs to expand the global electricity system come under high demand, who controls access to inputs to build their energy infrastructure  will profit. The countries that obtain access to more energy will have the most economic growth. 

There is not one mega-source behind this surge in electricity demand. Data centers — for all the attention they get — account for less than a tenth of forecasted global electricity demand growth through 2030. Urbanization is a major driver of electricity demands. The electrification of industry and transportation is also another demand. Finally, as rising incomes proliferate, so does  this need for new electricity, with roughly 80% of marginal demand coming from emerging economies.

Who Profits and Who Pays?

Demand anywhere tightens supply everywhere because commodity markets, capital, and even supply of electrical components are shared globally. . Electricity needs are therefore global problems as opposed to national ones. No single country, the U.S. included, can meet its future electricity needs alone.

Expanding the manufacturing capacity of inputs for electricity networks will take years to catch up to this increased demand. As a result, prices will rise across the supply chain, driving higher profit margins for those that have manufacturing capacity today. 

The economies that build new electricity infrastructure fastest will grow fastest, and only abundance of electricity will  spread the gains widely across society. 

Capital, too, is limited. The world spends roughly $400 billion a year on its grids today, and that figure must rise to some $600 billion a year by 2030 to keep pace with forecasted energy demand. While some of this expanded investment will be paid for by the government, much of it will come from private investors. Private capital will flow to where returns are highest, rewarding those who have the greatest capacity to pay with abundant energy, and thus economic growth.

Others will certainly benefit. Investing in electricity infrastructure will create more blue-collar jobs, better infrastructure, and eventually more abundant power. But the profits will be concentrated among those who manufacture and invest in the infrastructure. And the costs will be borne by everyone, collected from people who pay for electricity in every power bill.

Electricity Policy Is Now Competitiveness Policy

Governments that treat electricity abundance as a priority will set the pace of economic growth for the coming decade. Electricity demand is doubling, and the world must build faster than it ever has. The materials, money, and skilled hands needed to build are scarce, so the buildout will be rationed to those who can access the resources for building energy infrastructure. 

That scarcity makes electricity the limiting factor on economic growth. As a result,  it hands outsized returns to the few who own the bottlenecks, while the costs land on every power bill. 

None of this is destiny. Grid investment is expensive — some $2.5 trillion need to be invested in grids around the world between now and 2030, before a single power plant is counted — and the temptation to defer it is real. 

But abundance is the policy that pays twice. The economies that build new electricity infrastructure fastest will grow fastest, and only abundance of electricity will  spread the gains widely across society.