Delivering an energy-resilient future
Focused investments in infrastructure and clear policies are vital to ensure energy resilience and security amid rapidly growing global energy demand and diverse energy alternatives
Josh Sawislak
Kate Hardin
Stanley Porter
Mahesh Kelkar
Akash Keyal
The global energy landscape, from production to consumption, is experiencing a profound transformation. The world’s demand for energy continues to skyrocket driven by shifts in transportation and manufacturing and technological advancements like artificial intelligence. Meanwhile, the integration of diverse sources—clean energy and low-carbon options such as solar, wind, hydrogen, hydroelectric, geothermal, and nuclear—into existing infrastructure not originally designed for such variability intensifies the strain on critical systems.1 This dual challenge of rising demand and evolving energy systems offers an opportunity to build energy resilience and security, all the way from the national level down to local communities.
Overall demand for nonconventional energy sources has risen substantially over the past decade, yet these sources still account for less than one-fifth of total global primary energy consumption (figure 1).2 Some analysts expect the transition to accelerate globally further in the years and decades ahead.3
The urgent need to generate more energy, including by diversifying sources, can create an opportunity for governments to support investments and efforts toward building a more varied energy portfolio. A diversified energy mix does not just bolster generation capacity—it also strengthens resilience against supply disruptions. Additionally, some emerging energy systems come with unique requirements, such as the need to develop and scale up energy storage solutions, which are resilience enhancing. Energy storage systems, for example, provide greater flexibility to balance energy demand and supply.
The challenge is monumental: transforming a highly complex and interconnected energy infrastructure built incrementally over decades to power well-established industries. Grids, which transmit electricity from producers to end users, will require substantial upgrades to support a more diverse energy mix, meet rapidly rising energy demands, and remain online in the face of disruptions, both familiar and unanticipated.
Incorporating new energy sources could necessitate entirely new infrastructure and the adoption of cutting-edge technologies in some regions; in others, retrofitting and modernizing existing systems may suffice. Regardless of the approach, making it happen will demand significant capital investments, time, and the development of innovative technologies, processes, and management systems.
Some governments are seeking to leverage diverse energy sources available to bolster energy security by investing in future-ready energy infrastructure, strengthening energy resilience at the community level, and aligning their energy strategies, policies, and regulations.
Key challenges
- Exponential growth in electricity demand: Some nations may be struggling to keep pace with accelerating power demand, driven by the surging needs of data centers, new factories, electric vehicles, and air-conditioners. In October 2024, the International Energy Agency revised its 2035 demand forecast to be 6% higher than its estimate only a year earlier.4
- Fragile grid infrastructure: Existing grid infrastructure is ill-equipped to manage rising electricity demands or accommodate the influx of diverse new energy sources connecting simultaneously.5 Modernization efforts can be further complicated by the current knowledge gap in managing volatile and evolving energy demands across the network as new energy sources vary their contributions to the grid.
- Persistent funding gaps: Despite global energy investment rising sharply to exceed US$3 trillion in 2024, it remains short of what’s needed. Few developing nations have energy infrastructure capable of handling future demand, and even developed nations will need substantial capital outlay to scale novel technologies and revamp infrastructure to fully support increased energy demand.6
Trend in action
Some governments are rethinking national and regional energy strategies and regulatory and policy approaches, as well as attracting new financial investments to help spur innovation in various sectors. They are prioritizing the strengthening of energy infrastructure, including by establishing new systems needed for clean energy alternatives and low-carbon sources and by retrofitting and modernizing existing systems.
With extensive public and private efforts and investments set to transform energy systems in the coming decades, leading governments are taking steps to ensure that these resources and efforts enhance long-term energy resilience and security.
Building national- and regional-level strategies for future energy mix
When it comes to energy mix, one size does not fit all. Each country or region has distinct needs and demands that shape their respective energy-mix strategies. Different regions and countries are exploring varied strategies to become more energy resilient. These strategies have decades-long time frames and aim at diversification and distribution, with implications for regional planning and how energy portfolios intersect with economic development strategies.
Economic security and resilience to external shocks
With fossil fuels highly concentrated regionally,10 most nations have long relied on imports to meet their energy needs, so diversifying their energy mix is increasingly imperative as energy demand rise.
Research shows that renewable energy is more evenly distributed,11 which can help mitigate some countries’ concerns related to high import costs or disruptions in critical supply. As such, many nations are accelerating investments in new energy sources. China, the world’s largest oil importer,12 has made significant strides in clean energy development. Currently, non-fossil energy accounts for more than 21% of China's primary energy production mix, nearly doubling its share within a decade.13 Even nations rich in fossil fuels, such as the United States, are progressively incorporating low-carbon sources into their energy portfolios. In 2023, non-fossil sources contributed over 16% of the US primary energy production mix.14
Balancing sustainability and economic realities
Some governments worldwide are increasingly prioritizing sustainable growth and reducing carbon emissions.15 Governments are balancing sustainability goals with practical realities. The result: The transition to a low-carbon future will be gradual. Many countries will continue to use fossil fuels even as they increasingly prioritize clean energy and low-carbon sources. Consider India, whose energy supply remains heavily reliant on coal (46%) and crude oil (24%), much of which is imported.16 As the world’s most populous nation, India faces the challenge of balancing sustainability with economic stability. While it is actively diversifying its energy mix by expanding clean energy sources, particularly solar power, fossil fuels will likely remain a critical component of its energy strategy for the foreseeable future to avoid hindering economic growth.
Playing to strengths
Beyond economic and sustainability drivers, countries continue to explore particularly suitable energy sources. It’s no surprise, for example, that India and China—with massive territory and abundant sun—have turned to solar power.17 By contrast, when Denmark sought to diversify its energy base during the 1970s oil crisis, it zeroed in on wind energy due to its coastal geography and consistent strong winds.18 Denmark has developed a comprehensive energy policy; it has introduced certain taxes and incentives, removed specific legislative barriers, built innovation ecosystems, and carried out permitting and regulatory reforms—all focused on developing wind energy infrastructure.19 In 2023, wind energy supplied half of the country’s electricity demand, with the goal of reaching 60% by 2030.20
Catalyzing energy-mix strategic choices
Governments can make the strategic choice to develop a road map for a future energy mix. To help diversify an energy base by increasing the share of low-carbon energy alternatives in the energy mix, countries may need actions on both the supply and demand side to enhance both the generation and end use of clean energy.
On the supply side, governments can consider streamlining regulations, upgrading grid infrastructure, supporting domestic manufacturing of clean energy equipment and components, and funding research and development. On the demand side, they can incentivize industries to decarbonize, promote broader electrification in transportation, and simplify the permitting process for energy connections to local grids.
Government leaders should combine industrial policies, regulatory approaches, incentive structures, and other policy nudges to help build long-term energy resiliency and security.
Strategic investments catalyzing clean energy growth
Governments often play a crucial role, both directly and indirectly, in shaping energy resilience efforts, marshaling private sector investment, and ensuring that systems work together.
In the United States, data indicates that recent industrial policies have served as force multipliers for advancing new energy sources and related technologies, such as biofuels, clean hydrogen, and nuclear energy.21
The European Green Deal aims to make the European Union climate-neutral by 2050 and has set a 2030 target of reducing emissions by 55% compared to 1990 levels. Clean energy deployment is a key goal, intensified by a regional gas crisis created in the aftermath of Russia’s invasion of Ukraine.22 In 2023, EU countries invested US$110 billion in clean energy generation, an increase of 6% from the previous year.23 The European Union aims to guide its energy transition via clear sectoral and economywide standards.24 China is focusing on investment, putting US$676 billion toward energy transition projects in 2023.25
Regulatory sandboxes to accelerate innovations in new energy solutions
Testing innovative technologies in real-life settings with fewer restrictions can help shape regulatory frameworks while developing breakthrough solutions.26 Singapore’s Energy Market Authority sandbox allows temporary regulatory waivers to test new products and services in a safe space27—for instance, setting up and exploring virtual power plants: digital platforms that bundle distributed energy systems to operate as a single power generator.28 Similarly, the Northern German Living Lab tests innovations in clean energy sources, including testing hydrogen energy in the industrial and mobility sectors.29
The Intermountain Power Agency’s Intermountain Power Project, currently reliant on coal to power parts of Utah and southern California,30 aims to phase out coal in favor of natural gas and, eventually, hydrogen. The project looks to use clean energy sources to split water into oxygen and hydrogen, storing the latter in underground salt caverns to be used as fuel for electricity-generating turbines. The project aims to begin with 30% hydrogen fuel and transition to 100% by 2045 as technology improves.31
Supporting industry-led efforts to manage new energy demands
Few technologies have had such a rapid and profound impact on energy systems as artificial intelligence. Initial estimates put the energy demand of Al-driven data centers worldwide to be as high as Japan’s annual energy usage by as early as 2026.32
While continuous innovation within the industry is enhancing the energy efficiency of Al solutions—a trend expected to accelerate in the coming years33—government support can further catalyze innovation in critical areas. For instance, the US Department of Energy has allocated US$68 million to fund 43 projects across national labs, universities, and businesses to develop more energy-efficient Al hardware and algorithms.34
Just as governments are addressing the demand side of Al’s energy needs, they are also managing the supply side by supporting industry-led efforts. Take, for example, Project Stargate in the United States, a joint venture involving leading American tech firms and SoftBank Group (a global investment holding company).35 The partnership plans to invest US$100 billion of entirely private sector funding, with the potential to scale up to US$500 billion, to create computing infrastructure designed to support AI. To ensure this infrastructure has the energy required to function effectively, the venture will support both the construction of data centers and the development of the electricity generation capacity needed to power them.36 In January 2025, the US federal government pledged its support for the venture, committing to intervene when necessary to accelerate progress.37
Regulators in some jurisdictions are putting guardrails around Al’s energy consumption. The European Parliament has introduced requirements for Al systems to log their energy consumption throughout their life cycle; such regulations enhance transparency and accountability, encouraging technology companies to prioritize energy efficiency.38
At the same time, there is a growing realization within the public sector that, despite AI’s strain on energy resources, it could also help enhance energy resilience. Hyperscalers and data centers are increasingly securing long-term purchase agreements with clean energy producers.39 These agreements not only guarantee a consistent energy supply for technology companies but also provide critical funding for new clean and low-carbon energy projects. Furthermore, they enable electricity providers and innovators to test and scale advanced energy technologies by offering a dependable source of capital.40
Moreover, AI itself can make energy systems more efficient. It can help utilities make electric grids more cost-effective, reliable, and efficient by enhancing weather and load forecasting, optimizing grid management and clean energy asset performance, accelerating storm recovery, improving wildfire risk assessment, and more.41
Expanding energy infrastructure for the future
Infrastructure and ecosystem build-up around a new energy source
To diversify their energy base, countries likely need a parallel development of infrastructure and ecosystems that enable both the generation and use of new energy. Governments can consider a range of actions, such as financial incentives, regulatory changes, and building manufacturing and talent capacity.
With projections indicating that the hydrogen market could show strong growth and meet up to 24% of global energy demand by 2050, several countries are ramping up investments in hydrogen production. In Canada, the Government of Alberta has launched the Alberta Hydrogen Roadmap, a CA$30 billion initiative designed to accelerate hydrogen production in the province.42 “Our goal is to develop a thriving commercial hydrogen market—one that powers homes, fuels transportation, and supports industrial processes,” said Larry Kaumeyer, Deputy Minister of Energy and Minerals for the Government of Alberta.43 The plan focuses on supporting manufacturing, building supporting infrastructure, and driving innovation through a combination of incentives, regulatory adjustments, and public-private partnerships.44
Green hydrogen ecosystem build-up in India
In 2023, the government of India initiated a US$2.3 billion program to boost domestic green hydrogen production. The National Green Hydrogen Mission, which aims to boost the country’s annual green hydrogen output to 5 million metric tons by 2030, is fostering the development and commercialization of production technologies such as water electrolysis, steam methane reforming, and biomass gasification.45
The project provides financial incentives and technical support to Indian companies and research institutions engaged in green hydrogen development. Approximately 90% of the budget is designated for financial incentives for the manufacturing of electrolyzers and the production of green hydrogen. One goal is to enhance hydrogen’s utilization as a fuel across various sectors, including transportation, industrial processes, and power generation, with budgets allocated for pilot projects in priority areas.46
Alongside financial incentives, the mission is designed to support hydrogen production and utilization by fostering a favorable policy and regulatory environment, establishing production and distribution infrastructure nationwide, and developing a skilled workforce.47
In 2025, supported by the mission, construction began on India’s first Green Hydrogen Hub. Once completed, the US$21.4 billion hub, spanning 1,600 acres, will have the daily capacity to produce 1,500 tons of green hydrogen and 7,500 tons of derivatives, including green methanol, green urea, and sustainable aviation fuel.48
Catalyze private sector funding to expand and modernize the grid infrastructure
Two intersecting forces are contributing to the pressing need to expand and modernize grid infrastructure. First, global energy demand is projected to rise by 150% by 2050, with the potential for even greater growth fueled by rising consumption from data centers, artificial intelligence, and the cryptocurrency sector.49 Second, the rapid adoption of new generation sources, including clean energy and distributed energy sources, is transforming electricity demand profiles. These sources are altering electricity flows and introducing supply intermittency, making grid operations increasingly complex.
A significant financing shortfall is hindering progress. By 2050, a US$14.3 trillion gap in global grid investment is projected, alongside an annual infrastructure (transmission and distribution lines) expansion deficit exceeding 2 million kilometers (1.24 million miles).50
While some governments have committed significant funding to grid upgrades, private sector involvement is crucial to bridge the global funding gap.51 Many governments worldwide are deploying a range of financial incentives to attract private capital and accelerate investment in grid modernization (see “Partnering to upgrade and expand Australia’s electricity grid”).
Partnering to upgrade and expand Australia’s electricity grid
Like many countries, Australia designed its electricity grid around centralized power plants and urban centers, with little consideration for clean energy sources such as solar and wind.52 Many of these legacy energy assets, such as coal-fired power stations, have become increasingly unreliable and are slated for closure in the coming years.53
As the nation continues to grow its clean energy portfolio, expanding and modernizing Australia’s grid infrastructure is important. The proposed capacity for clean energy already exceeds what the existing grid can handle. Upgrading and expanding grid infrastructure is a costly, time-intensive endeavor that often struggles to attract adequate private sector investment.54
To address this challenge, the Australian Department of Climate Change, Energy, the Environment, and Water launched the Rewiring the Nation program in 2024. With an AU$20 billion budget, Rewiring the Nation aims to make grid modernization more attractive to private developers by providing concessional financing.55 The initiative seeks to create a modern grid capable of transmitting clean electricity safely, reliably, and affordably by driving private sector investment in critical areas such as transmission lines, long-duration energy storage, electricity distribution networks, and distributed energy resources.56
Rewiring the Nation demonstrates a collaborative, whole-of-government approach: The Clean Energy Finance Corp. manages the program’s financing, the Australian Energy Market Operator provides technical guidance, and the Australian Energy Infrastructure Commissioner offers support and advice to communities concerned about energy infrastructure projects.57
Curating policies aimed at enhancing energy storage system installations
The International Energy Agency predicts that renewables’ share in electricity production will rise from 30% in 2023 to 46% by 2030.58 Integrating low-carbon sources into the electricity mix requires a parallel expansion of energy storage systems. Unlike traditional power sources, clean energy such as wind and solar are unpredictable, fluctuating with weather and seasons. These systems can store excess energy generated during favorable conditions and release it later based on demand.59
Furthermore, introducing storage systems facilitates the development of microgrids that can function independently during grid failures, enhance power quality through frequency regulation and voltage support, reduce transmission losses by storing energy closer to use, and support decentralized energy systems, thus reducing outage risks.60
In the United States, about a third of states have adopted policies promoting energy storage, broadly categorized into five areas: procurement targets, regulatory adaptation, demonstration programs, financial incentives, and consumer protections.61
- Procurement targets: These policies mandate utilities to procure a specified amount of energy storage by a set deadline.62
- Regulatory adaptation: States are revising regulations to create opportunities for energy storage, including updating resource planning requirements or enabling storage projects through rate proceedings. Many states now require utilities to include storage in integrated resource plans, which outline strategies to meet long-term energy demand.63
- Demonstration programs: These initiatives authorize and sometimes fund energy storage projects to test operations and gather data.64
- Financial incentives: Policies such as tax credits and subsidies have been shown to encourage energy storage adoption.65
- Consumer protections: These policies are meant to ensure rights for customers installing storage systems.66
Building energy-resilient communities
The energy infrastructure built and scaled at the national level should percolate to the community level to help meet needs and guarantee access to uninterrupted, reliable, and affordable energy. In 2022, 91% of the world’s population had access to electricity, compared to 73% just two decades earlier. But 2022 was also the year when COVID-19 pandemic supply shocks, geopolitical tensions, and extreme weather events halted decades of progress, leaving 10 million more people without electricity access than in 2021.67
While many governments are developing strategies to improve national energy security and resilience, an equally important task is embedding energy resiliency in communities.
Empowering communities to build energy emergency preparedness
Agencies should have robust energy emergency preparedness and resiliency plans in place to help communities—urban, suburban, or rural—be prepared for energy disruptions and recover efficiently. Enhancing these plans often involves reinforcing energy systems and ensuring infrastructure can withstand and quickly recover from disruptions.
Rural electric cooperatives—member-owned, nonprofit utilities that serve rural communities in nearly every US state68—operate under a model that emphasizes local control and member engagement. This enables them to address their communities’ specific needs. By investing in resilient infrastructure and coordinating with state energy officials, rural electric cooperatives can also help ensure a reliable power supply during emergencies and natural disasters.69
Regional governments can help bolster energy resiliency in communities. The Missouri Department of Natural Resources collaborated with the cities of Stockton, Rolla, and St. James to craft a Roadmap to Resilience, aimed at equipping communities with essential resources, leading practices, and tools to fortify critical infrastructure. One component of this initiative focused on enhancing energy efficiency in buildings and homes, aiming to mitigate the impacts of natural disasters.70
Multilateral agencies also have a significant role to play. The World Bank and the International Finance Corporation, through their US$220 million Ghana Energy and Development Access Project, are working to improve energy access for isolated communities in Ghana. Five mini-grids are helping convert solar power into continuous electricity for these remote areas, impacting approximately 10,000 people.71
Mitigate risks to energy infrastructure from extreme weather events
Changing weather patterns and more frequent extreme weather events can affect all types of power generation sources.72 In May 2022, a thunderstorm shut off electricity to 1.1 million Canadians73; in 2024, a Melbourne windstorm knocked out power for more than half a million customers74; the January 2025 Los Angeles wildfires knocked out power to hundreds of thousands of customers.75
With extreme weather becoming more common globally, enhancing electric grid resilience will be critical. The European Union, as part of its efforts to modernize the energy sector, has funded various smart grid projects through its research and innovation program, Horizon 2020, and its funding program for energy infrastructure, Connecting Europe Facility.76 In 2021, the US Virgin Islands used federal emergency management funds to bury electric lines underground and build wind-resistant composite poles. Along the same lines, Connecticut’s Climate Resilience Plan Grants funded walls protecting power substations from flooding.77
Build and deploy microgrids in communities
When storms or power outages shut down the main electricity grid in an area, microgrids can switch away from the main grid and continue to power homes, businesses, and critical services.78 Planned effectively, microgrids can power entire communities or single sites such as hospitals, bus stations, and military bases. In India, Chhattisgarh State Renewable Energy Development Agency has installed and operates more than 500 solar microgrids.79
Microgrids also empower smaller communities to achieve self-reliance. In Japan, the town of Mutsuzawa has established a decentralized microgrid system that uses locally produced natural gas and solar energy. Partnering with a private company, Mutsuzawa manages an energy business through a self-sustaining power system, with any energy shortfall supplemented by purchasing electricity from external sources.80
Placing energy resilience at the heart of disaster preparedness in Odisha, India
Odisha, a state in eastern India, is in one of the world’s most cyclone-prone regions—the Bay of Bengal. Cyclones disrupt life en masse, displacing communities and damaging critical infrastructure, including energy systems. In response to these challenges, Odisha established the Odisha State Disaster Management Authority, the country’s first dedicated disaster management authority, to adopt a proactive and systematic approach to disaster preparedness and response.81
Mitigating risks to energy infrastructure is one of the Odisha State Disaster Management Authority’s priorities. Dividing different areas along the state’s 480 kilometers (298 miles) coastline into four different risk zones, the agency developed specific plans to fortify energy infrastructure in the highest risk zone by undertaking multiple proactive efforts, including installing underground cabling for critical infrastructures such as water supply, hospitals, railways, airports, bus stations, and telecommunication infrastructure. Power substations were raised above the maximum recorded flood levels; power transmission poles were fortified to withstand high wind pressures.82
Tools and strategies to deliver energy resilience
Energy is the foundation of modern society, powering everything from basic lighting to advanced semiconductor manufacturing. Reliable access to energy is essential for sustaining human civilization and driving economic growth. As global energy demand rises and supply dynamics shift, governments are seizing this evolving landscape as an opportunity to build broad energy resilience. The following portfolio of tools and strategies can help maximize the impact of their efforts and investments.
- National and regional energy strategies: These strategies can act as a North Star to help guide investment, regulatory, and policy decisions toward long-term energy resilience.
- Strategic alliances and partnerships: Forming energy-focused alliances with like-minded peers can provide multiple alternative paths to energy, especially during times of heightened geopolitical tensions.
- Federal and regional financial instruments: Financial tools—including direct funding, tax credits, subsidies, and R&D funding to test new technologies—can enhance private sector participation, establish new energy markets, and catalyze radical innovation.
- Market-making strategies: In addition to financial tools, governments can employ a mix of nonfinancial programs—such as establishing support systems, promoting data-sharing, offering upskilling initiatives, and instituting favorable energy policies—to create and develop infrastructure, research, supply chains, manufacturing, and talent capacity around new energy sources.
- Regulatory sandboxes for energy innovation: Allowing for the testing of new technologies in real-life settings can encourage innovation.
- Community-driven energy resiliency: Initiatives can empower regional, local, and hyperlocal communities to build robust energy resiliency plans, including disaster response, development of microgrids, and fortifying energy infrastructure.
Building a resilient grid for a brighter future in Alberta
David James, deputy minister of Affordability and Utilities, Government of Alberta83
Alberta’s electricity market is a for-profit, deregulated system. Unlike other provinces, the Government of Alberta does not own a public utility. Instead, electricity supply is driven by a competitive, market-based system that encourages private investment from independent power producers, who have the freedom to choose their generation sources. This approach fosters private sector innovation and allows the system to rapidly adapt to technological advancements, shifting demand, and policy signals. As a result, Alberta’s electricity mix has diversified significantly over the past decade, with the end of coal-fired generation and a notable shift to natural gas, wind, and solar.84
Yet, as clean energy’s share in the mix has grown, it has exposed the province’s grid to new risks. Unlike conventional power plants, wind and solar are weather-dependent and fluctuate with the seasons and time of day. The consequence of the rapid rise in intermittent energy sources within a loosely interconnected jurisdiction was risks to the reliability of the system.
To restore the balance between reliability and sustainability, Alberta has been focused on strengthening the grid through a series of market and policy reforms that will also ensure energy remains affordable for both industry and everyday consumers. These changes are being designed to ensure the grid’s long-term resilience while providing efficient investment signals for dispatchable energy resources and clear policies to allow clean energy projects to continue to develop and operate within the system.
Additionally, the province is advancing regulatory changes to support further industrial-scale demand response and energy storage technologies. Energy storage solutions help balance supply and demand by storing excess power generated during peak conditions and releasing it when needed. Alberta currently has 260 megawatts (MW) of battery storage online, with another 378 MW worth of projects that have met the necessary regulatory requirements and can proceed to construction.85 In Alberta’s deregulated market, battery developers have an opportunity to leverage the ability to provide reliable, dispatchable power to meet the rising demand for electricity.
Finally, the Alberta Electricity System Operator is working to deploy “dynamic line rating” technology. This system allows transmission operators to adjust the capacity of power lines based on real-time weather conditions, such as wind speed and temperature. By optimizing transmission capacity when conditions allow, this innovation enhances grid efficiency without compromising safety.86
BY
Josh Sawislak
Kate Hardin
Stanley Porter
Mahesh Kelkar
Akash Keyal
The authors would like to thank Jacqueline London, Josh Schoop, Allan Mills, and Jamie Sawchuk for providing feedback and suggestions at critical junctures. They would also like to thank Apurba Ghosal from the Deloitte Center for Government Insights for research support. In addition, they would also like to extend their gratitude to David James (deputy minister of Affordability and Utilities, Government of Alberta) for his valuable input.
Cover art by:Sofia Sergi; Getty Images; Adobe Stock