{"id":638237,"date":"2025-12-17T14:00:45","date_gmt":"2025-12-17T14:00:45","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/638237\/"},"modified":"2025-12-17T14:00:45","modified_gmt":"2025-12-17T14:00:45","slug":"electricity-is-now-holding-back-growth-across-the-global-economy","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/638237\/","title":{"rendered":"Electricity is now holding back growth across the global economy"},"content":{"rendered":"

The chip equipment maker ASML<\/a> Holding NV is so crucial that a swing in its fortunes can sway the Dutch economy and the global development of artificial intelligence. Now one of the company\u2019s biggest growth plans \u2014 building a new campus that will employ as many as 20,000 people in the country\u2019s Eindhoven region \u2014 depends on whether or not it can get an electricity<\/a> connection.<\/p>\n

Despite the high stakes, there\u2019s no guarantee ASML will get the electricity it needs. That\u2019s because the company is one among 12,000 businesses in the Netherlands waiting to secure a link to the electric grid. Netbeheer Nederland, the association of Dutch grid operators, estimates that congestion issues are likely to continue for as many as ten years, even with grid operators investing \u20ac8 billion ($9.3 billion) annually.<\/p>\n

One reason is that electricity consumption has risen far faster than was estimated. \u201cThe Netherlands is already using as much electricity as was originally projected for the year 2030,\u201d said Netbeheer Netherland\u2019s Debby Dr\u00f6ge. \u201cThe physical grid cannot keep pace with societal ambitions and developments \u2014 unless we fundamentally change how we design and use it.\u201d
\"445293168\"BloombergThis type of constraint typically shows up in developing countries and decades of research has shown that reliable electricity supports economic growth. Rich countries hadn\u2019t faced these questions because deindustrialization kept electricity demand flat or falling for the past decades despite economic growth.<\/p>\n

Now the rise of AI<\/a>, rapid sales of electric cars and broader electrification of most economic sectors is causing even rich countries to panic. An exclusive analysis from Bloomberg Economics finds that almost all Group of 20 countries are seeing a rise in grid stress over the last few years. Those stresses include supply not keeping up with demand, volatile price swings, damages from climate impacts and losses in transmission.<\/p>\n

\"ETLive EventsCrucially, the analysis finds that increase in grid stress leads to a decline in capital outlay, which is government and business spending to acquire or maintain long-term assets.
\u201cLower investment means lower economic growth in the long run,\u201d said Maeva Cousin, chief trade and climate economist at Bloomberg Economics.
The positive effects of electrification on growth holds true across geographies \u2014 from India and China to most countries in Africa \u2014 and across time, from the late 19th century to today. Typically, the richer you are, the more electricity you consume.
\"445449592\"BloombergThat may not seem surprising, but this kind of tight correlation doesn\u2019t exist for other forms of energy. Coal consumption for example increases with a country\u2019s income and then falls as the country goes from middle income to high income. <\/p>\n

If you take total fossil fuel consumption per capita, the correlation exists for different regional groups but not simply with the country\u2019s per capita income. High-income European countries consume only a fraction of fossil fuels per capita when compared with high-income Asian countries or North American countries. Swiss citizens earn on average about 50% more than Canadians, but consume one-fourth the amount of fossil fuels.<\/p>\n

\"ImageDeploying electricity can be transformative. Take a recent example from Nigeria. When Manoj Sinha first arrived in the village of Rukubi, the first thing he noticed was the smell of diesel from the dozens of generators across a village of just a thousand rooftops. Rukubi is a fishing village where 40C heat spoils the daily catch before sunset, and the generators were keeping the fish cold.
Sinha is the chief executive officer of Husk Power<\/a> Systems, which builds small grids in rural areas of developing countries. After Husk installed a solar-powered minigrid in Rukubi, more fishermen were able to install refrigerators and ditch the use of expensive diesel generators. <\/p>\n

University of Nigeria<\/a> researchers found that for every 1% increase in clean power, the country sees an increase of 2.74% in its gross domestic product over time. <\/p>\n

\u201cMany businesses spend huge capital on things like diesel,\u201d said Nigeria-born Rita Okoroafor, assistant professor at Texas A&M University. \u201cElectricity access is the main hindrance for economic growth in Nigeria.\u201d<\/p>\n

A growing number of businesses in many rich countries are now also seeing electricity as their biggest obstacle. <\/p>\n

\"ImageTo understand the challenges, Bloomberg Economics designed an index that accounts for stress in each G-20 country\u2019s electricity system. It measured that stress as an aggregate covering five factors: adequacy, demand, cost, grid losses and climate impacts.
In the early 2000s, most countries experienced rapid rise in electricity demand and sluggish growth in supply that created system stresses. In the 2010s, better grid management and lower power consumption helped grids run largely stress-free.<\/p>\n

\u201cThat calm is fading,\u201d said Eleonora Mavroeidi, Paris-based economist who led the Bloomberg Economics analysis. Now most rich countries see their electricity system stress growing in the last few years.<\/p>\n

\"ImageIn Europe and the US, electricity demand has been virtually flat or falling over the last two decades, but BloombergNEF\u2019s economic transition scenario sees it rising by more than 40% over the next two decades.A study found that unless the Dutch grid is strengthened more quickly, it could cost the country between \u20ac8 billion and \u20ac30 billion in lost economic activity and missed sustainability benefits annually\u2014or as much as \u20ac1,800 per person per year. In Germany, local business associations warn that the lack of secure and fast electricity supply is a threat to Germany\u2019s industrial economy. In the UK, grid operators paid \u00a31.4 billion ($1.9 billion) so far this year for higher-cost gas plants to run and switched off cheaper wind turbines in the north that weren\u2019t connected to the consumption centers with enough grid capacity.<\/p>\n

The demand in these regions will primarily be driven by AI data centers and electric cars. Big tech companies are already warning that, if a country\u2019s grid is not ready, they will have to redirect investments to the countries where they are.<\/p>\n

The lack of access to power was one of the reasons why Google canceled plans for a data center near Berlin earlier this year. A Frankfurt data center isn\u2019t able to expand because utilities cannot provide sufficient power until 2033. Electricity shortages have led Microsoft to move data center investments away from Ireland and the UK toward the Nordics.<\/p>\n

Even in the heart of Silicon Valley, data centers cannot start operating because the local utility in Santa Clara is not able to provide enough power. A data center that Digital Reality Trust Inc. applied to build in 2019 may continue sitting empty for years.<\/p>\n

\u201cFailure to expand electricity supply quickly could make it impossible to realize the full potential of cutting-edge tech,\u201d said Mavroeidi.<\/p>\n

Industry surveys echo this. Around 72% of executives in Deloitte\u2019s 2025 AI Infrastructure Survey cite grid capacity as a \u201cvery\u201d or \u201cextremely\u201d challenging constraint. Another major survey finds more than 90% of developers view grid limits as the biggest obstacle to data centre projects. <\/p>\n

Constraints may also be hitting businesses beyond AI. Sweden\u2019s SSAB AB has delayed the start of a Swedish steel mill due to grid delays.<\/p>\n

The most worrying part in the Bloomberg Economics analysis is the long-term impact of electricity shortages:<\/p>\n

\u201cA one-standard-deviation rise in the Electricity System Stress Index for a given country relative to its historical average is estimated to lower the investment share of GDP by around 0.33%. With investment accounting for around 20% of GDP on average across rich countries in 2024 \u2013 that points to a 1.5% to 2% hit to capital outlays.\u201d<\/p>\n

The analysis warns that the stress index understates the downside risks of electricity shortages. That\u2019s because one of the factors in the index is demand. When the system is stressed, electricity demand falls as a result. That in turn, would lead to lower stress on the system but also lower economic growth as a result.<\/p>\n

\u201cCountries that fail to meet rising electricity demand risk missing out on defining investments that will shape economic prospects for decades,\u201d Cousin said.<\/p>\n

Add \"ET as a Reliable and Trusted News Source<\/p>\n","protected":false},"excerpt":{"rendered":"The chip equipment maker ASML Holding NV is so crucial that a swing in its fortunes can sway…\n","protected":false},"author":2,"featured_media":638238,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3090],"tags":[323,166324,51,1700,1312,3433,196701,16,15,196700],"class_list":{"0":"post-638237","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-ai","9":"tag-asml","10":"tag-business","11":"tag-economy","12":"tag-electricity","13":"tag-power","14":"tag-tranmission","15":"tag-uk","16":"tag-united-kingdom","17":"tag-university-of-nigeria"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115735274684223143","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/638237","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=638237"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/638237\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/638238"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=638237"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=638237"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=638237"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}