Gridlock or Go? Why Grid Resilience Is the New Bottom Line

Electricity networks are quickly becoming the defining constraint of the energy ecosystem. The network was not built for today’s demand profile, and it shows. Surging electrification and industrial load growth, coupled with unprecedented data center expansion, are stretching grids that were already under pressure from aging assets and unpredictable weather.

The result is a structural mismatch. Demand is accelerating faster than grid reinforcement can keep pace, and utilities are now reorienting capital programs in an attempt to respond. L.E.K.’s 2025 Global Energy Study reveals a sector moving urgently to protect the backbone of modern energy systems, with grid readiness becoming as important as generation itself.

About the survey

Our 2025 Global Energy Study — the firm’s seventh annual survey — captures perspectives from more than 300 senior executives across oil and gas, utilities, and renewables, complemented by over 25 in-depth interviews with industry leaders.

Respondents represent companies with revenues above $50 million and at least five years of industry experience, spanning North America, Europe, the Middle East, Asia-Pacific, Australia/New Zealand, Latin America and Africa.

This year’s study continues to explore capital investment expectations and drivers while introducing two new focus areas: the evolving role of natural gas and the adoption of artificial intelligence in the energy sector.

A demand surge the grid cannot ignore

Executives across the power sector describe a common challenge: Growth is arriving faster than the network can respond. U.S. utilities report multiyear load increases driven by hyperscale data centers and industrial expansion. Dominion Energy, for example, expects 6%-7% annual growth in Northern Virginia in contrast to a historically flatter demand profile.

In Europe, demand growth is less concentrated but still rising, driven by electrification and data-intensive infrastructure, placing sustained pressure on networks even where year-on-year increases are more modest. In the UK, the National Energy System Operator (NESO) expects electricity demand to rise steadily through the 2030s, reversing decades of flat consumption.

This surge in consumption requires large-scale reinforcement. Duke Energy allocates roughly half of its five-year plan to modernization, grid hardening and substation upgrades. European utilities are prioritizing digitalization and network intelligence to integrate renewables, electric vehicles and battery projects efficiently.

The message is consistent across regions: Demand growth is structural, and grid strength is now a prerequisite for system reliability.

Grid modernization is the priority

L.E.K.’s survey data reinforces this direction. Most utilities are investing in grid modernization, alongside backup or dispatchable power, reflecting a recognition that capacity constraints and intermittent generation cannot be resolved through new supply alone.

Transmission and distribution (T&D) dominate near-term investment priorities. Utilities rank T&D network upgrades as their most likely area of investment, well ahead of new generation technologies (see Figure 1). Modernization efforts include the reinforcement of substations and lines, storm hardening, the use of smart devices, cybersecurity improvements and the integration of battery storage.

This represents a decisive turn from a generation-led transition to a grid-first approach. Executives are making clear that system flexibility and resilience must underpin any credible decarbonization pathway.

Figure 1 represents utilities’ top investment priorities for the next five years

The data center effect: A new reliability stress test

The exponential rise in data center demand is intensifying pressure on already-constrained grids. Utilities report multigigawatt clusters requiring near-continuous power and full redundancy. Survey responses confirm a growing dependence on temporary behind-the-meter (BTM) solutions as interconnection queues and equipment bottlenecks slow grid access (see Figure 2).

This is consistent with our recent client engagements, which indicate that BTM use for data centers is set to more than double between 2026 and 2030 as operators seek reliable, controllable power sources. The trend is also mirrored in our study, with 63% of oil and gas respondents that lack confidence in the grid now adopting BTM solutions to maintain project certainty.

Figure 2 represents expected share of data center/ large-load megawatts to be powered by BTM solutions

This creates a two-speed system: Grid upgrades take years; data centers scale in months. BTM generation provides a bridge for operators, but companies consider it a short-term workaround of less than two years rather than a structural solution. The long-term answer remains the same across the board: grid capacity, reinforced and modernized to handle both daily load and future growth.

A new reliability equation for renewables and gas

The growing share of renewables has brought valuable generation diversity, but it has also raised concerns about firm capacity. Our survey reveals that 59% of utilities believe renewable intermittency poses a risk to power reliability. In response, storage integration is becoming central to resilience planning. Battery systems are ranked in the top tier of five-year investment priorities, reflecting a shift from seeing storage as a supplementary asset to recognizing it as integral to network stability.

Utilities are also turning to flexible gas capacity to stabilize the system. When asked about expected baseload generation composition, respondents forecast natural gas to remain the largest share through 2030. However, only 22% are confident that new gas plants can meet near-term demand. This reflects a practical need for dispatchable power during a period of intense load growth and infrastructure strain. In a recent discussion, a leading U.S. investor-owned utility cited a major “shift of the center of gravity from what has been solar to natural gas-focused generation priorities.”

Regional dynamics: Different pressures, similar priorities

The pressures on grids vary by region, even as investment priorities converge.

The U.S. faces the steepest load increases, propelled by AI-driven data centers and industrial reshoring. Companies such as Duke Energy, Dominion Energy and Southern Co. have increased capital plans to expand and reinforce transmission and distribution networks, citing the need to connect large new loads while strengthening resilience against extreme weather.

European utilities face a different set of challenges. Demand growth is more moderate, but high renewable penetration and increasingly interconnected markets place a sustained strain on networks. Companies such as E.ON are directing the majority of capital toward network expansion and digitalisation to manage congestion, integrate renewables and maintain system stability.

Across regions, the objective is consistent. Whether driven by load growth or system complexity, utilities are investing to modernise networks, improve resilience and unlock additional capacity, reinforcing the grid’s role as a critical enabler of reliable power systems.

From bottleneck to enabler

Grid modernization is now the foundation of the energy transition. Investment logic has shifted from supply-side expansion to system-level resilience. Utilities are directing capital to the assets and technologies that guarantee reliability, create capacity for large-load customers and integrate renewables without compromising stability.

The pace of the transition will be determined by the strength and readiness of the networks that support it — and utilities are acting to ensure those networks are ready.

This article is part of our Powering Forward series:

How L.E.K. can help

Our teams advise energy leaders on where to invest, how to build resilient infrastructure and when to accelerate transition bets. Our 2025 Global Energy Study provides the data and insight; our consulting expertise helps clients translate these findings into decisions that create value today and secure a position for tomorrow.

For more details on the full study or to learn how these insights apply to your business, please contact our global energy team.