Global grid spending is on track for roughly $550 billion in 2026, up nearly 20% year on year, with the IEA's World Energy Investment 2026 placing networks inside a $1.6 trillion electricity-supply envelope that now absorbs close to 60% of total global energy investment [S3].
In the United States, investor-owned utilities are planning a record $240 billion in 2026 capital expenditures, with Fitch Ratings expecting the sector to grow at a low- to mid-teens percentage rate annually through 2030 [S4]. CoBank puts the broader U.S. electric utility run-rate above $200 billion, up 42% since 2020, and S&P Global, EEI and Deloitte are each projecting cumulative spend above $1 trillion over the next five years [S5].
How fast is the spend actually growing
Across 2014-2024, U.S. transmission and distribution outlays grew at an 8.9% CAGR, while electricity demand itself crawled at a 0.5% CAGR over the same window, an unusually wide gap that reflects replacement of aging assets rather than new load [S2]. The near-term slope is steeper: the IEA's 2026 networks figure is up nearly 20% in a single year [S3], and Fitch expects 2026-2030 to run at a low- to mid-teens annual pace [S4]. On a multi-year view, JP Morgan frames global grid spending as having moved from $300 billion in 2020 to $480 billion in 2025, an effective ~9.9% CAGR, with $5.8 trillion of cumulative investment forecast globally for 2026-2035 [S1].
Inside the United States, S&P Global Market Intelligence projects 2026 utility capex at $227.8 billion, rising 30% to $259.1 billion in 2027 and another 6% to $275.6 billion in 2028, levels that are roughly 15% higher in nominal terms than the prior five-year norm for a 44-utility peer set [S7]. CoBank flags that distribution spending has nearly doubled since 2020, with $104 billion spent on distribution in 2025 alone, 87% of it concentrated in four categories: poles and fixtures, conductors, transformers and station equipment [S5].
What is driving the step-up
Four demand vectors are colliding on the same set of wires. BofA Global Research estimates U.S. electrical demand will grow at a 2.5% CAGR through 2035, compared with 0.5% over 2014-2024, with data centers, building electrification, industrial demand and EV adoption as the four named drivers [S2]. JP Morgan projects global power demand at a 3.6% CAGR for 2026-2030, a pace 50% higher than the prior decade, with data centers adding 465 TWh over the next five years, or about 9% of total demand growth [S1].
Replacement pressure is just as heavy: BofA notes 31% of U.S. transmission and 46% of distribution infrastructure is within five years of, or past, its useful life, and 67% of 2024 utility spend, $63 billion, went to replacements versus $32 billion for new lines and substations [S2]. Axis Intelligence Research places 2,061 GW of generation and storage in U.S. interconnection queues at the end of 2025, a queue-to-fleet ratio of 1.56 against the 1,323,895 MW installed fleet, with global queues above 2,500 GW [S3]. The transmission build that data centers and replacement cycles imply is the reason the IEA expects networks to outpace generation capex in 2026 for the first time [S3].
Where the money is split: T, D, and digital
Distribution dominates the U.S. mix. The U.S. expects about $1 trillion in grid investment over the next decade [S1], and data cited by CoBank show distribution spending nearly doubling since 2020, reaching $104 billion in 2025 [S5]. Globally, JP Morgan sees $700 billion, or 12% of the $5.8 trillion 2026-2035 forecast, going to digital grid capex, the "soft" side of the same envelope that funds hardware hardening [S1].
Regional distribution is uneven. JP Morgan sizes Europe at $1.1 trillion cumulative for 2026-2035, with Germany alone at 28% of 2024 investment, and Asia Pacific at $2.6 trillion, with China at more than two-thirds of the regional total [S1]. For a related read on where U.S. dollars are landing, the U.S. grid capex breakdown for 2026, with distribution as the share leader and transformers as the binding supply-chain constraint, is laid out in US Grid Capex 2026: Distribution Drives the Spend, Transformers Tighten the Supply Chain.
Supply chain is now the rate-limiter
Money is no longer the bottleneck; physical kit and labour are. Large power transformer lead times now average about 30 months, and the U.S. producer price index for power and distribution transformers stood 91.4% above January 2020 as of July 2026, including a 4.6% month-on-month jump from June to July 2026 [S3]. CoBank reports transformer, breaker and switchgear lead times stretched from the historical sub-12-month norm to three and four years, with cost inflation in key utility components running ahead of both PPI and CPI since 2020 [S5]. The May 2026 headline PPI rose 6.5% year on year, the largest since the post-2022 Russia-invasion surge, driven mainly by energy, while core PPI still added 0.8% month on month [S5].
The demand side is also outrunning the queue model. Axis Intelligence Research puts its U.S. Grid Friction Multiple at 2.39 as of September 2026, meaning a grid connection carries more than double the queue, lead-time and price friction of the pre-shortage baseline [S3]. IEA-derived figures cited by the same analysis suggest grid-enhancing technologies and non-firm connections could unlock hosting capacity equal to 48% to 64% of the 2,500 GW global queue without waiting on new high-voltage lines, a software-and-controls route that sits inside JP Morgan's $700 billion digital grid envelope [S3][S1].
Affordability is the political constraint
Spending can climb only as fast as regulators allow cost recovery, and that window is narrowing. Fitch downgraded the U.S. utility and power sector outlook from neutral in December 2025, warning that affordability concerns are turning rate cases into a political risk ahead of the November 2026 gubernatorial elections in 36 states, with New Jersey and Virginia already flashpoints inside PJM [S4]. State-level pushback is materialising: Indiana, Maine and Maryland passed 2026 bills aimed at cutting electric bills, while PECO Energy in Pennsylvania withdrew a combined $510 million in rate requests [S4].
The credit implication is straightforward. Fitch's base case is that timely cost recovery becomes harder even as the 2026-2030 capex run-rate climbs into the low- to mid-teens, and that this pressure, not a drop in spend, is what threatens the sector outlook [S4]. The same dynamic is why PJM capacity prices have surged on the back of forecast data-center load against flat supply, an affordability accelerant embedded in retail bills rather than a separate capital line [S4].
Signals to track into 2027
Three datapoints will mark whether 2026's 20% step-up is a one-off or the start of a multi-year plateau. First, whether the IEA's $550 billion 2026 print confirms in final data and whether 2027 sustains a double-digit year-on-year gain [S3]. Second, transformer PPI and lead time: a continued climb past the 91.4% January-2020 baseline and the 30-month average will confirm supply, not demand, is the binding curve [S3][S5]. Third, state rate-case outcomes in Indiana, Maine, Maryland and PJM after the November 2026 elections, where the Fitch outlook downgrade will be tested against actual cost-recovery rulings [S4]. If those three move together, expect the S&P Global 2027 print of $259.1 billion and the 2028 figure of $275.6 billion to hold; if affordability pushback hardens, the curve flattens first, not the spend [S7].