The recent nationwide power outage in Sri Lanka, triggered by an unlikely culprit—a monkey—has cast a spotlight on the pressing need for robust and resilient power grids. As the global economy becomes more electrified and digitalized, the vulnerabilities of our power infrastructure are becoming increasingly apparent. This incident underscores the urgent need for significant investments in grid modernization to ensure the security of supply to a growing population.
The International Energy Agency (IEA) has warned that the world is entering the “age of electricity,” with global demand set to grow six times faster than overall energy demand by 2030. This surge, equivalent to the combined electricity consumption of the US and EU, is driven primarily by the increasing use of air conditioning in developing nations and rising temperatures. However, our electricity grids, many of which were designed decades ago, are ill-equipped to handle this demand and the integration of intermittent renewable energy sources.
IEA Executive Director Fatih Birol highlighted the stark reality: last year, 1,600 gigawatts of renewables were queued up, waiting to be connected to the grid—a situation he described as “economically criminal.” To accommodate this growth and facilitate the energy transition, the IEA estimates that investments in grid infrastructure need to double from an average of $330 billion per year to $700 billion annually. This would involve building or refurbishing 80 million kilometers of new grids by 2040, enough to reach the moon 200 times.
The transition to renewable energy sources has exacerbated existing grid issues. Investment in infrastructure has not kept pace with the growth in wind, solar, and other renewable energy sources. Failure to address this imbalance risks delaying the energy transition and causing supply disruptions. With data centers expected to drive a surge in electricity demand, investing in more resilient and smarter grids has become an urgent priority.
In the Gulf Cooperation Council (GCC) countries, which traditionally rely on natural gas and liquid fuels, there is a growing recognition of the need to modernize grids as renewable energy capacity expands. Saudi Arabia, aiming to generate 50% of its electricity from renewables by 2030, is rapidly upgrading its transmission and distribution network. The kingdom plans to expand its transmission network from 95,000 kilometers to 160,000 kilometers, including high voltage interconnections and storage. This modernization is part of a broader investment of over $270 billion in the power sector by 2030.
The United Arab Emirates (UAE), with its mix of nuclear and solar power, is also making significant investments to modernize its grid infrastructure. The Dubai Electricity and Water Authority (DEWA) has allocated nearly $2 billion to its Smart Grid Program. The UAE and Saudi Arabia, members of the GCC Interconnection Authority (GCCIA), are expanding their grid interconnections to supply more electricity to Kuwait and recently completed a link to Iraq.
Kuwait, despite its oil wealth, suffers from frequent power cuts during peak demand periods. Last summer, it contracted to import 500MW of electricity from Qatar and Oman through the GCCIA. Oman, meanwhile, is pursuing additional gas-powered capacity and has signed an agreement to finance a $700 million interconnection project with the GCCIA and the Qatar Fund for Development.
The IEA’s Electricity 2025 report forecasts that electricity consumption will increase at an annual rate of close to 4% through 2027, with 85% of additional demand coming from emerging and developing economies. This rapid electrification and shift to renewables are putting immense strain on outdated and overwhelmed grids worldwide. Without urgent investment in transmission and distribution infrastructure, nations risk supply disruptions, stalled renewable energy projects, and an inability to meet growing energy demand.
The implications for markets are profound. Modern, flexible, and interconnected grids are essential for sustaining the energy transition and ensuring reliable power in an increasingly digital and electrified world. Whether in oil-rich Kuwait, rapidly transitioning Saudi Arabia, or emerging economies like Sri Lanka, the need for grid modernization is clear. This presents significant opportunities for investors, technology providers, and policymakers to shape a more resilient and sustainable energy future.
The power outage in Sri Lanka serves as a wake-up call, highlighting the vulnerabilities of our
