Sep17
Electrification is reshaping the global economy. From long-haul trucking to steelmaking, from heating systems to the data centres that underpin AI, energy demand is being steadily pulled away from fossil fuels and into electricity. And critically, more of that electricity is being generated from renewable sources every year.
But the transition is not simple. It demands vast new infrastructure, smarter grids, trillions in investment, and political will. The Financial Times recently ran a Special Report - The Electrification of Everything, which captures both the magnitude of the opportunity and the obstacles. From “supercables” that stitch together continents, to blackouts exposing the fragility of underinvested grids, to the shift in how energy is consumed, the message is clear: this is the defining industrial challenge of our time.
Let’s explore the core themes, and why business and policy leaders cannot afford delay.
In Lincolnshire, England, the Viking Link now connects the UK to Denmark across 765 kilometres of seabed and land. On windy days, Britain exports its surplus power; when the North Sea is calm, it imports Danish electrons. It’s a glimpse of the future: a world of high-voltage direct current (HVDC) “supercables,” balancing weather patterns and time zones to make the most of renewables .
Projects now planned stretch even further. A $26 billion venture aims to send Australian solar power 4,300km to Singapore. Another proposal would link Canada to Ireland and the UK with a 6GW line, allowing hydropower from Quebec to power Irish mornings and North Sea wind to cook New Yorkers’ dinners.
These projects are audacious, and fragile. Supply chains for cables and transformers are stretched thin, installation requires specialist ships and narrow weather windows, and politics often intrudes. Norway has seen public backlash to interconnectors blamed for higher domestic prices, while the UK recently pulled support for the Morocco-UK cable, citing cost and security concerns .
And yet, the logic is undeniable. The sun doesn’t shine everywhere at once, but it does shine somewhere. Interconnection balances geography. Storage, as we’ll see later, balances time. Together, they allow us to avoid overbuilding, reduce curtailment, and replace geopolitical dependence on fossil fuels with interdependence built on clean energy.
If cables are the frontier of progress, blackouts are the symptoms of neglect. In April 2025, Spain experienced a day-long outage that shut down railways, businesses, telecoms, and internet networks, with Portugal also hit . It was a stark reminder that modern economies are only as strong as their grids.
The International Energy Agency (IEA) estimates that annual transmission investment must more than double, from $140bn in 2023 to $300bn by the mid-2030s, to meet electrification and climate targets . That means millions of kilometres of new lines, upgraded substations, and software to orchestrate power across increasingly decentralised grids.
Geopolitics complicates this further. Western suppliers can’t meet demand for transformers, turbines, and cables. China can, and is poised to dominate. UBS analysts warn that demand for distribution transformers alone will exceed what European and US manufacturers can deliver, leaving countries reliant on Chinese firms like Sieyuan and Sanxing.
This reliance creates a security paradox: grids need Chinese kit to function, yet dependence carries obvious risks.
Storage is one way to mitigate fragility. Batteries can act as shock absorbers, keeping critical systems alive when transmission falters. But unless grids are modernised, even the best storage systems cannot prevent systemic failure. Spain’s blackout was not an anomaly, it was an alarm bell.
Electrification isn’t just about swapping fossil fuels for renewables. It’s about transforming demand so that energy use itself becomes far more efficient.
Consider transport. Volvo will launch a long-haul electric truck in 2026 with a 600km range and 40-minute recharge. Heavy trucks were once thought impossible to electrify; now they are entering the market. EVs overall are 2–4 times more energy-efficient than combustion cars, avoiding waste heat and capturing braking energy.
Heating shows a similar leap. Heat pumps deliver three or more units of heat for every unit of electricity consumed, an efficiency gas boilers cannot match.
The IEA estimates that thanks to electrification and efficiency, global final energy demand could fall 15% by 2035 compared with today, even as GDP grows. That’s the holy grail of decoupling.
But progress is uneven. Heat pump sales in Europe fell 22% between 2023 and 2024 when subsidies were withdrawn and gas prices dropped. EV sales have flatlined in parts of Europe and the US due to high power costs and policy reversals. Meanwhile, China sold 12.5 million EVs in 2024, and is on track to hit over 16m this year. And China is investing $800bn in its grids.
Efficiency is the quiet engine of the transition. But without consistent policy and infrastructure support, the gains risk stalling.
If interconnectors balance geography and efficiency trims demand, energy storage balances time, and time is everything in a system dominated by wind and solar.
BloombergNEF projects 2025 will see 94GW / 247GWh of new storage deployed globally, a 35% jump from last year. By 2035, annual additions could reach 220GW / 972GWh, with utility-scale batteries leading the charge. Precedence Research estimates the stationary storage market will grow from $66.6bn in 2025 to $450.5bn by 2034, a staggering 23.7% CAGR.
China again dominates, mandating storage alongside renewables in many provinces, though policies are shifting toward more market-based approaches. Europe, the Middle East, and Africa are also scaling quickly, while the US risks slowing progress due to tariffs on imported batteries.
Lithium iron phosphate (LFP) batteries are the chemistry of choice for stationary storage, driven by Chinese manufacturers, while alternatives like sodium-sulphur and metal-hydrogen are emerging. AI is now being integrated to optimise battery performance, predict failures, and orchestrate dispatch.
Why does this matter? Because without storage, renewables are clipped, wasted, or curtailed. With storage, solar captured at noon keeps the lights on at midnight. Storage reduces price volatility, provides backup during blackouts, and makes grids more resilient to shocks.
The world is building cables and turbines at record pace. But without storage, the system will remain brittle. Think of it as the difference between a house with plumbing but no tank: plenty of water when the tap is on, nothing when it’s off.
BloombergNEF’s EV Outlook 2025 shows that one in four cars sold worldwide this year is electric. Two- and three-wheelers are electrifying at astonishing rates in Asia. Lithium-ion demand for vehicles alone is set to hit 3.8TWh by 2029.
China leads across the board. Its electrification share of final energy is already 30% (up from 12% in 2000). It dominates EV production, charging, batteries, and increasingly, storage. Europe is pushing forward with strong policy frameworks such as CBAM and the Green Deal, though progress is uneven and industry competitiveness is strained by higher electricity prices.
The US, meanwhile, is faltering. In the first quarter of 2025, $8bn worth of clean energy and EV projects were cancelled; by May, that figure had grown to $15.5bn and 12,000 lost jobs. Policy reversals and new tariffs have chilled investment. Companies like Bosch, AESC, and Kore Power have paused or abandoned battery projects.
As I argued recently, the US is handing the 2030s to China and Europe. Industrial leadership will follow where the supply chains are built. Those who lead in clean energy hardware will shape the global economy of the next decades.
The economic case for electrification is clear. But its broader benefits are equally decisive.
None of this is easy. Supercables cost billions and require political trust. Grids need rebuilding at unprecedented scale. Consumers must be persuaded to switch cars, boilers, and behaviours. Supply chains must be scaled responsibly, without creating new dependencies.
Storage itself faces hurdles: raw material constraints, tariffs, recycling challenges. But the alternative - clinging to fossil systems, is costlier still. The IMF estimates climate inaction could wipe 7–18% off global GDP by 2100. Meanwhile, 91% of new renewable projects are already cheaper than fossil alternatives.
The transition is not optional. It is the foundation of competitiveness, stability, and survival.
The FT’s Electrification of Everything series captures the scale of the challenge and the scope of the prize. Supercables that redraw energy maps. Blackouts that expose fragility. Electrified trucks and heat pumps that prove efficiency gains are real. Storage rising as the backbone of resilience.
For senior business and policy leaders, the message is straightforward: invest, adapt, accelerate. Those who lead will own the supply chains, industries, and standards of the 21st century. Those who delay will cede sovereignty and competitiveness.
To dig deeper, I recommend reading the FT Special Report here. And if you want ongoing insights, listen to my Climate Confident podcast, where I speak with the innovators and leaders driving this transformation.
Electrification isn’t a trend - it’s the operating system of the 21st-century economy. The real question is not if it will happen, but who will write the rules and capture the value.
Photo Credit Richard Stebbing on Flickr.
Article originally published on TomRaftery.com
By Tom Raftery
Keywords: Energy, Renewable Energy, Supply Chain
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