Why grid infrastructure is of high-voltage interest for investors
The expansion of renewable energies and electrification is accelerating. However, this trend is being hindered by inadequate and outdated grid infrastructure. Significant investment is planned to address this issue. In turn, this could generate high-voltage opportunities from a sustainable investment perspective, as Dr Daniel Zimmerer and Dr Gerhard Wagner explain.
Authors: Dr Gerhard Wagner and Dr Daniel Zimmerer
The key points on the investment potential of grid infrastructure:
- Energy transition, technological progress (for example data centres and electric vehicles) and security of supply are driving forces behind the expansion of grid infrastructure. At present, both the supply of and demand for electricity are encountering inadequate grid infrastructure in many places.
- Renewable energies and electrification are regarded as some of the most cost-effective and energy-efficient ways to decarbonise the economy. Both technology trends also enhance security of supply, but they depend on a robust grid infrastructure.
- Our investment focus in the area of grid infrastructure is on high-voltage infrastructure, power transformers, power cables and distribution grids. Alongside the long-term opportunities, potential risks must also be borne in mind: for example, changes in the geopolitical and technological environment and market volatility.
Secure access to energy is electrifying. In the US, high petrol and diesel prices have become a decisive factor in the midterm elections. In Europe, the EU is rapidly driving forward the "Electrification Action Plan". And here in Switzerland, the Federal Parliament adopted two laws within just a few months to accelerate the authorisation of new power generation plants and grid networks (see info box below).
“Electro-continent” planning billions in investment in grid infrastructure
The conflict in the Middle East has acted as a definitive wake-up call for policymakers and authorities. According to experts, its consequences have led to the greatest supply shock ever seen in oil and liquefied gas. Europe is also feeling the impact. As Commission President Ursula von der Leyen explained in her State of the Union address last September, the EU paid an additional EUR 90 billion for the import of fossil fuels as a result of price increases. Overall, imports have already cost well over EUR 200 billion since the beginning of the year.
This reinforces the EU’s plan to halve spending on fossil fuels by 2040 and replace them with clean electricity from domestic production. Europe would thus become the world’s first “electro-continent”.
Grid infrastructure today: outdated, fragmented and poorly aligned with renewables
However, there is a major obstacle to this vision in the EU: the planned capacity expansion of around 480 gigawatts (GW) in renewable energies is up against grid infrastructure that is outdated, shaped by national interests and poorly aligned with increasingly decentralised power generation and the rising electricity demand of the future. It is clear that this is also a global issue: in many parts of the world, rising demand for electricity is encountering inadequate grid infrastructure.
As the International Energy Agency (IEA) has calculated, global demand for electricity is expected to increase by an average of 3.6% per year up to 2030, driven by rising consumption in industry and by electric vehicles, climate-control technologies and data centres for artificial intelligence (AI). Even taking efficiency gains into account, that would be more than the expected global economic growth of 2 to 3 per cent and 50 per cent higher than the growth in electricity demand over the past decade.
Clear track for the Swiss “Grid Express”
Ensuring security of electricity supply is also a high political priority in Switzerland. A federal decree adopted by the Federal Assembly back in September 2025, aimed at the domestic market, is intended to accelerate approval procedures for new power-generation plants. The law focuses primarily on renewable energies such as solar and wind power.
Last October, the Federal Assembly passed the law on “accelerating the expansion and conversion of the electricity grids”, the so-called “Grid Express” (Netzexpress). As with generation plants, approvals for the replacement and expansion of high-voltage and distribution grids in Switzerland are to be improved. This is also intended to take account of the more decentralised electricity production of the future. The law also introduces simplifications for the construction of transformers and battery storage stations.
The the Federal Assembly is not expected to present the draft amendments to the laws required for the implementation of the electricity agreement with the EU before the end of 2026 at the earliest. The focus here is on better and more efficient integration of Switzerland into the European grid, with the emphasis again on security of supply – particularly on electricity imports in winter. Likely, and at the earliest in 2027, the proposal will then be put before the Swiss electorate.
A potential bottleneck is also emerging on the supply side. Worldwide, renewable energy projects with a planned total capacity of around 2,300 GW are waiting to be connected to the grid. This is also significant from a sustainability perspective: without expanding the power grid, even a fully built-out fleet of renewable energy generation plants cannot exploit its decarbonisation potential.
Energy transition, technology and security of supply as drivers of grid infrastructure
In short, grid infrastructure is proving to be a real bottleneck for the trend towards electrification (see chart below). Insufficient expansion could have adverse effects at several levels: on security of supply, on technological development and on the energy transition, which is so vital for climate protection. The combination of renewables and electrification is therefore often seen as a key, cost-efficient decarbonisation strategy. This is because electrical technologies are more energy-efficient than their combustion-based counterparts and reduce dependence on expensive imported fossil fuels.
It is easy to see that this will give rise to an enormous need for investment in grid infrastructure over the coming years. In the EU alone, Commission President von der Leyen called emphatically last September for EUR 3.2 trillion to be invested in power generation, power grids and storage capacity.
Rapid increase in power demand and supply puts the spotlight on grid infrastructure
Where we are focusing in grid infrastructure
While governments are able to spend with a broad brush, we are taking a clearly selective approach in our active investments in grid infrastructure: as part of our sustainable global equity strategy and our thematic fund focused on climate protection and the energy transition, we concentrate on companies that, in our view, offer above-average growth prospects and attractive opportunities for returns on capital.
We are focusing on the following areas:
- Power lines: We consider equipment for high-voltage transmission grids particularly interesting from an investment perspective. High-voltage infrastructure is likely to benefit directly from the EU’s ambitious electrification agenda; the plans for European transmission grids alone include 141 projects and more than 4,000 kilometres of additional infrastructure, with many of these assets benefiting from regulated returns and government-supported investment. In both Europe and the US, there is also an urgent need to renew existing grid infrastructure in order to maintain security of supply.
- Power transformers and switchgear: This is potentially where the biggest delivery bottlenecks exist across the entire grid expansion. Prices for transformers have risen by around 75% since 2020 and those for switchgear by around 60%. Lead times for critical components such as power transformers are still up to three years. Supply and demand are unlikely to return to balance before the end of the decade at the earliest.
- Distribution grid infrastructure: In our view, equipment for low- and medium-voltage grids is another important investment area. This mainly includes transformers, switchgear and circuit breakers, whose widespread use is becoming ever more important as distribution grids grow in complexity. Both the demand side (for example electromobility, heat pumps, data centres) and the supply side (rooftop solar panels and large-scale solar and wind farms) are becoming increasingly dynamic and complex. This requires more flexible grid control and sufficient grid capacity.
Our conclusion:
At present, power supply and demand are encountering inadequate grid infrastructure in many places. Governments have now recognised the problem; with a view to security of supply and in close cooperation with the private sector, they are planning massive investment in expanding the grid. Together with the trend towards electrification, this is creating exciting potential for sustainable investments: within the framework of our sustainable Swisscanto equity and thematic strategies, we favour the area of grid infrastructure, which includes high-voltage power lines, power transformers and switchgear, as well as distribution grids.
Funds in focus:
Funds in focus:
Investment theme «Climate»: Insights
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