As countries accelerate electrification and push deeper into the energy transition, pressure on power grids is becoming one of the most immediate and complex constraints. From data centres and electric vehicles to industrial electrification and renewable integration, demand is rising faster than infrastructure can keep up.
According to BCG, the global energy system faces an $18tn investment gap through 2030, with electricity networks carrying the bulk of that shortfall.
In this interview with Gulf Business, Oxana Dankova, partner and director at Boston Consulting Group, unpacks what can be done now to relieve grid bottlenecks, how governments and the private sector can better align policy and investment timelines, and why digitalisation, flexibility, and cross-sector coordination will define the next phase of energy system resilience.
Beyond new infrastructure, what are the most immediate actions the energy industry must take to relieve current grid bottlenecks and improve flexibility?
The global energy transition faces a daunting reality: an $18tn investment gap through 2030, with nearly 90 per cent of this shortfall concentrated in electricity infrastructure and end-use applications. The need to unlock grid capacity became obvious in the last few years, when many countries started facing multi-year queues to connect new generation and load to their energy systems.
To close the gap, the industry must pivot toward immediate, practical interventions that maximise existing infrastructure while preparing for continued demand growth and renewable generation connections.
The most obvious but underexploited opportunity lies on the customer side. First, we need to deploy comprehensive energy efficiency measures, for example, through improved building standards, advanced thermal insulation, innovative cooling and heating systems. This could reduce the energy needs of residential and commercial buildings by up to 30 per cent.
Second, we need to activate demand flexibility. For example, district cooling networks with integrated thermal storage can enable buildings to pre-cool during off-peak hours, reducing the stress on the grid in peak times. Many industrial processes have embedded potential to shift their energy consumption within the day or even between days. This can fundamentally alter the relationship between energy consumption and grid infrastructure, turning customers into active grid participants rather than passive consumers.
The untapped potential of distribution networks can present a meaningful opportunity in this sense. By fully integrating rooftop and agri-solar, small-scale battery systems, smart EV charging, and district energy systems with active demand flexibility management, networks can improve utilisation of their existing assets. This approach not only helps to reduce the need to invest in distribution and transmission but to create microgrids capable of keeping the lights on in case of broader system disruptions.
Strategic coordination of large load and generation connections is also critical. Rather than reactive grid expansions, energy system planners must orchestrate the placement of new connections to reduce the need to transport the energy over long distances, and therefore minimise backbone upgrades.
Grid operators have some internal levers as well. There is sometimes potential to get more out of existing assets while reducing the risk. It requires monitoring and simulating the assets’ condition and expanding operating limits dynamically. More importantly, a new ‘grid asset’ class is emerging – energy storage, especially BESS with grid-forming capabilities. It can help address both grid congestion and stability challenges, while enabling higher renewable penetration and is faster to deploy than building traditional grid assets.
So you can see there is quite a range of tools in our toolkit. Of course, activating it requires thoughtful planning and coordination, as well as investment in asset management and system operation capabilities, from advanced forecasting to revised grid codes and connection protocols.
How can governments and private players better align policy, regulation, and investment timelines to support the scale of grid upgrades needed by 2050?
The fundamental disconnect between long-term infrastructure needs and short-term regulatory cycles creates a challenge in situations with high energy growth driven by structural changes. It is important that the regulation encourages the solutions that are optimal and least costly for the customers in the long term, rather than focusing on minimal spend on a five-year horizon. If we are not looking beyond the next regulatory cycle, we risk having to replace the same assets again and again in the following cycles.
The global competition for critical grid equipment introduces another temporal complexity. In many regions, grid players need the flexibility to contract for essential components with 5-7 year lead times, extending beyond traditional regulatory periods. This requires innovative financing mechanisms or direct government support to secure long-term supplier commitments while maintaining competitive procurement practices.
Governments in the region also hold the key to long-term visibility into future development plans and coordinated land allocation decisions that can reduce the spending on transmission lines. When grid operators can predict where industrial facilities, data centres, and residential developments will emerge, they can proactively plan and optimally build capacity, rather than scrambling to do it at the last moment, paying a higher price.
Government support is equally important in the context of the global competition for a skilled workforce. As every region simultaneously pursues grid build out, the specialised expertise required for modern grid design, construction and operations becomes increasingly scarce. Successful regions will be those that develop comprehensive talent strategies encompassing attraction, retention, and continuous upskilling of both internal workforce and contractor networks.
Digitalisation is often cited as key to grid optimisation. What practical examples show its real impact, and where are we still falling short?
While digitalisation itself is not a panacea for solving grid challenges, it definitely unlocks new opportunities for grids to focus on the right work and improve their productivity. For instance, advanced future network planning capabilities – optimising future grid build-up with non-wire alternatives like storage and demand flexibility under multiple future scenarios – would not be possible without digitalisation and modern computing power. In many cases, it can reduce the need to build traditional grid assets by 20-30 per cent.
Many utilities are leveraging data from their assets, drones, LiDAR, and satellite imagery integrated with AI to revolutionise their operations. This enables automated detection of infrastructure defects, facilitates risk-based maintenance strategies, helps activate dynamic management of operational limits, and frees up substantial resources — reducing asset-related capital and operational expenditure by 15-20 per cent while managing risk better, and giving better information to the field crews.
Smart meter and grid IoT devices deployment, coupled with digital twin technology, is another great example of digitalisation’s compounding benefits. Beyond improved billing accuracy and reduced commercial losses, it creates visibility into power flows at a very granular distribution level. This insight enables utilities to reduce technical losses, accelerate fault identification, speed up new connection assessments, and activate demand flexibility. Some utilities have leveraged these capabilities to reduce augmentation requirements for new connections by two-thirds, transforming both customer experience and capital efficiency.
Self-healing grid capability through fault location, isolation, and service restoration (FLISR) technology represents another mature digital application. These systems automatically detect faults and reconfigure network topology to minimise the impacts of power outages on customers.
Microgrid management systems demonstrate digitalisation’s potential to fundamentally redesign grid architecture. These platforms can seamlessly transition distribution network segments to island operation in case of broader system disturbances while optimising local renewable resources and storage assets.
The key to achieving the real impact from digitalisation is, as always, not in the technology itself, but in being able to integrate the data and digital tools in the way people work and make decisions – so the ‘business as usual’ starts looking differently. This is where many utilities are still catching up. Moving beyond pilots and proofs of concept is often the most difficult step.
With data centres, EVs, and industrial electrification surging, how can grid operators and technology providers manage demand growth without compromising reliability?
The convergence of data centres, electric vehicles, and industrial electrification creates unprecedented demand growth patterns that challenge traditional grid planning assumptions. Data centres can present particularly complex challenges, with large inverter-based loads that can fluctuate by hundreds of megawatts within milliseconds, potentially triggering system-wide instability if not properly managed.
Connection policies and grid codes often need to be redesigned to keep our future energy systems thriving and resilient. We need to address both the grid congestion and challenges to grid stability.
To avoid the risk for grid stability, new types of load need to be treated as “grid actors” rather than passive consumers. Data centres’ connection requirements, in particular, need to address load ramp rates, predictability protocols, and grid support obligations. For example, rather than unpredictably disconnecting from the grid to test their backup power, these facilities could provide frequency and voltage support services, transforming potential grid liabilities into stability assets.
To manage grid congestion, flexible connection policies emerge as an important solution in many energy systems. They offer large customers an option to shift consumption (or curtail generation) from peak to off-peak periods in exchange for faster, lower-cost connections. Many industrial processes possess inherent flexibility that remains untapped: for example, logistics facilities can pre-cool warehouses to create thermal buffers, data centres can schedule AI training during off-peak hours, and EV charging can align with local solar generation patterns when vehicles remain parked during daylight hours.
Cross-sector collaboration is repeatedly highlighted as essential, but what does successful collaboration look like in practice between oil and gas, utilities, and emerging tech players?
Successful energy transition requires unprecedented coordination across traditionally siloed sectors. Transport electrification reduces oil product consumption, but requires having the grid capacity to power charging stations in the right locations. Renewable energy generation helps to free up gas volumes but requires grid infrastructure upgrades, and so does industry electrification and data centre connections.
Effective collaboration manifests through alignment of connection timing, location, sizing, and demand profiles. When industrial facilities, commercial developments, and infrastructure providers coordinate their deployment schedules, grids and generators can build capacity proactively rather than reactively.
When transmission grids direct customers and generators to areas with available capacity, this helps speed up connections and improve project economics for both consumers and renewable developers. This often requires collaboration not just across industry sectors, but also multiple government organisations. At the energy distribution level, the next generation network planning capability requires ecosystem-wide orchestration across municipal planners, real estate developers, EV charging networks, technology companies, and infrastructure players.
Such coordination is particularly critical to activate non-network solutions – including energy efficiency, demand-side flexibility, co-located distributed solar and battery systems, smart EV charging and vehicle-to-grid capabilities – which in turn minimise new grid infrastructure requirements, reducing customer costs and connection delays.
The integration of EV charging infrastructure exemplifies this collaborative potential. Joint planning between utilities, charging operators, fuel retailers, real estate developers and public transport companies can accelerate EV adoption while leveraging local renewable generation and potentially activating vehicle-to-grid capabilities in congested areas. This coordination simultaneously reduces oil and gas companies’ reliance on the domestic market while creating new revenue opportunities across the energy ecosystem.
The path forward requires rethinking traditional sector boundaries in favour of an integrated ecosystem view. Success will be measured not by individual sector outcomes but by the system’s collective ability to deliver reliable, affordable, and sustainable energy at unprecedented scale and speed.
Read: ‘When somebody says no, sales start’, says Dietmar Siersdorfer
