The transition to a more electrified global economy could create investment opportunities across infrastructure, power networks and enabling technologies, according to a new report from the International Energy Agency.
The shift towards an increasingly electrified global economy could have significant implications for investors, according to a new report from the International Energy Agency (IEA).
In its latest report on electrification, the IEA argues that electricity is playing an ever-greater role in meeting global energy needs and supporting economic activity, with demand being driven by areas including electric vehicles, heat pumps, data centres and digital infrastructure.
The agency says the world is now entering an “Age of Electricity”, with electricity accounting for a growing share of the energy services used by consumers and businesses.
The report suggests electrification will become increasingly important in efforts to improve energy security and reduce emissions. It also highlights the role electricity can play in supporting economic development and improving access to modern energy services.
For investors, however, the story extends beyond the energy transition itself. Delivering a more electrified economy will require substantial investment across power generation, grid infrastructure, energy storage and technologies that support the management of rising electricity demand.
According to the IEA, today’s cost-effective electrification potential could bring the world close to a target of electricity accounting for 35% of global energy consumption by 2035, provided investment and policy support continue to develop.
A key theme running through the report is the need for continued investment in electricity networks.
As demand increases, power grids, storage capacity and system flexibility will need to expand to ensure electricity systems can continue to operate efficiently and reliably.
For sustainable investors, this points to opportunities that extend beyond renewable energy generation alone.
Companies involved in grid development, electrical equipment, energy storage and related infrastructure may all benefit from increased investment as countries seek to modernise their energy systems.
The IEA notes that electrification could support growth across sectors ranging from grid equipment manufacturing to power generation and end-use technologies.
The agency also highlights the potential economic benefits of electrification. According to the report, greater electrification could reduce global energy import bills by more than US$500 billion a year by 2035, helping to improve energy security while supporting efforts to lower emissions.
For those supporting clients invested in ESG and sustainability-focused portfolios, the report highlights how the investment case around the energy transition continues to evolve.
While renewable energy remains a central theme, the infrastructure and technologies needed to support a more electrified economy may become an increasingly important area of focus for fund managers and investors over the coming decade.
Further reading: Electrification – Special Report
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