UNSUSTAINABLE: Grid Bottlenecks
Sharing our insights into the biggest sustainability challenges facing our built environment. In this post, we explore our UNSUSTAINABLE approach to electricity grid management, and the potential of distribution grid orchestration to mitigate grid bottlenecks. Our previous issues of the UNSUSTAINABLE series have explored cooling, windows, concrete & cement, steel, water scarcity, industrial heat, biodiversity data, and urban adaptation.
The Problem: Old Grid, New Pressures
Electricity grids underpin every aspect of modern life, but the system we rely on was built for a different era. Originally designed for predictable, one-way power flows from large, fossil-fuelled plants to passive consumers, today’s grid faces pressures its architects never imagined:
- Explosive growth in renewables: In 2024, electricity generation from wind and solar overtook coal in the US (17% vs. 15%), and matched all fossil generation in the EU at 30%. Renewables now make up over 90% of new global capacity additions.
- Decentralisation: With renewable adoption, the size of a typical power plant is shrinking from 560 MW in 2020 to an expected 30 MW by 2050, and new generation is increasingly connected at the distribution level, not the transmission backbone, leading to bidirectional flow of electrons.
- Soaring demand: After decades of flatlining, electricity demand in the US and EU is now growing 2–3% per year, driven by electrification (EVs, heat pumps), manufacturing onshoring, and AI/data centres. Utilities that once processed 50 grid interconnection requests a year now face 1,500.
The result is a grid under unprecedented strain, with more volatile, less predictable flows, and a growing risk of blackouts. Recent events — from Heathrow’s substation fire to blackouts in Spain, Portugal, and Chile — are no longer outliers, but warning signs.
Why Capex Alone Can’t Save Us
The traditional response — build more physical infrastructure — is hitting its limits:
- Cost: US annual distribution grid capex has soared from $20B in 2003 to over $50B today while annual transmission capex has risen from <$10B in 2003 to >$25B today. Yet, 1 in 6 US households are behind on their utility bills, and electricity prices are up nearly 30% since 2021.
- Speed: Lead times for key equipment like transformers have ballooned from 50 weeks in 2021 to 75+ weeks in 2024, and planning and permitting new lines can take 5–10 years. But grid stability is failing today, and we need solutions now.
- Regulatory pushback: Regulators are increasingly blocking expensive upgrades that would be passed onto consumers, demanding more efficient solutions.
The Case for Grid Orchestration
Grid orchestration uses software, data, and devices to provide greater distribution grid visibility and actively manage power flows, squeezing more capacity out of the existing wires. Real-time visibility on the distribution grid is essential for stabilizing the grid cheaply and quickly, and combining the valuable but siloed data sources held by Distribution System Operators could generate a breakthrough in grid visibility and management.
Instead of blindly overbuilding, orchestration aims to:
- Forecast and manage load: Real-time, meter-level forecasts enable operators to anticipate surges and bottlenecks, accelerating power flow calculations.
- Unlock distributed energy resources (DERs): With better visibility, DERs (like batteries, EVs, and rooftop solar) can be flexibly dispatched to support the grid, not just add stress. Real-time grid visibility could also enable flexible interconnection rather than rejecting new loads or generation entirely.
- Target upgrades: AI can detect, for example, where clusters of EV chargers are straining specific transformers, pinpointing where upgrades are truly needed.
Why Now?
Several factors are converging to support large-scale grid orchestration:
- Smart meter rollout is reaching critical mass, with penetration at 73% in the US and over >50% in Europe, providing the granular data orchestration software needs.
- Utilities are facing a step change in load growth, with industry leaders noting that the “US electric utility sector has been caught flat-footed” with respect to demand increases not seen since the 1990s. Compounding the challenge, an affordability crisis means many US households struggle to pay their bills, leaving little room for costly new infrastructure.
- Regulatory pressure is also mounting, pushing utilities to seek smarter, more efficient solutions rather than simply expanding capacity.
However, significant hurdles remain in turning this interest into action:
- Sales cycles are lengthy — often 12 to 24 months — due to regulated procurement processes.
- Utilities remain risk-averse, hesitant to adopt unproven technologies given the critical nature of grid infrastructure.
- The prevailing cost-plus regulatory model incentivizes capex investment over software, as increasing the regulatory asset base (RAB) boosts fixed returns, discouraging investment in operational improvements.
Despite these challenges, the market opportunity for grid orchestration software is large–likely in the range of $4–8 billion per year in the US and Europe alone–and as grid failures become increasingly frequent, the industry is being forced into action.
The Distribution Grid Orchestration Landscape
We’ve been exploring both software and hardware innovations to make distribution grids smarter, more flexible, and better equipped to handle the challenges of modern electricity demand.
Software
Instead of relying solely on expensive hardware upgrades, these platforms integrate data from sources like SCADA, AMI, GIS, ADMS, and DERMS to deliver real-time insights and forecasts. For example, machine learning can combine weather, GIS, and smart meter data to generate highly granular, meter-level load forecasts, which utilities can use to improve operational decisions and speed up power flow calculations. This enhanced visibility also allows DERs to be managed more effectively within existing grid constraints, supporting grid stability and flexible interconnection — such as dynamically controlling EV charging to avoid congestion. Additionally, advanced analytics help utilities assess the impact of new loads, like EV charging, on critical equipment, enabling better planning for upgrades and higher utilization of existing assets.
Hardware
Traditional systems like ADMS and SCADA provide limited real-time data, mostly at substations, and many smart meters capture data infrequently. To close these visibility gaps, some startups are deploying new hardware, such as advanced sensors and smart chips, to collect more granular data throughout the grid. For instance, Utilidata’s AI-powered chip upgrades existing meters for real-time insights, while Eneida’s EdgeSense sensors and Future Grid’s DSO box enhance monitoring and control at the grid edge. Zaphiro’s grid monitoring modules further improve situational awareness and automate fault detection and response.
2150 Take
The way we manage our electricity grid is unsustainable. Physical upgrades alone are too slow and expensive to keep up with the pace of change. Grid orchestration — integrating data, AI, and automation — is critical to unlock flexibility, resilience, and affordability.
But change will not come easily. Utilities are conservative, regulation rewards capex, and the sales cycle is glacial. The winners will be those who can break through inertia — whether startups with a UX edge, or incumbents who can move faster than their legacy would suggest.
The need for grid orchestration is immediate and large, essentially providing the nervous system for the decarbonised, electrified economy of the future. If you want to learn with us or if you’re creating new solutions in grid orchestration, please do reach out!
2150 is a venture capital firm investing in technology companies that seek to sustainably reimagine and reshape the urban environment. 2150’s investment thesis focuses on major unsolved problems across what it calls the ‘Urban Stack’, which comprises every element of the built environment, from the way our cities are designed, constructed and powered, to the way people live, work and are cared for. Find out more at www.2150.vc
