Fwd: Stressed grids are slowing down growth

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Loretta Lohman

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Dec 15, 2025, 10:24:06 AM (14 days ago) Dec 15

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Electricity drives growth. For decades, that’s held true and load growth hasn’t been a problem. But a confluence of factors is putting a huge amount of stress on grids around the world, and it’s creating a tangible drag on economic growth.

Today’s newsletter brings you an exclusive Bloomberg Economics analysis and a story on what can be done to address the growing strain. Plus, what the fifth La Niña in six years means for supply chains and crops.

Don’t miss our reporters’ deep dive into China’s efforts to move away from coal, and the economic and human toll of winding down the dirtiest fossil fuel.

Did someone forward you this newsletter? Subscribe to Green Daily for free reads on climate and the clean energy transition six days a week.

Power is holding back growth

By Akshat Rathi and Marilen Martin

The chip equipment maker ASML Holding NV is so crucial that a swing in its fortunes can sway the Dutch economy and the global development of artificial intelligence. Now one of the company’s biggest growth plans — building a new campus that will employ as many as 20,000 people in the country’s Eindhoven region — depends on whether or not it can get an electricity connection.

Despite the high stakes, there’s no guarantee ASML will get the electricity it needs. That’s because the company is one among 12,000 businesses in the Netherlands waiting to secure a link to the electric grid. Netbeheer Nederland, the association of Dutch grid operators, estimates that congestion issues are likely to continue for as many as ten years, even with grid operators investing €8 billion ($9.3 billion) annually.

One reason is that electricity consumption has risen far faster than was estimated. “The Netherlands is already using as much electricity as was originally projected for the year 2030,” said Netbeheer Netherland’s Debby Dröge. “The physical grid cannot keep pace with societal ambitions and developments — unless we fundamentally change how we design and use it.”

This type of constraint typically shows up in developing countries and decades of research has shown that reliable electricity supports economic growth. Rich countries hadn’t faced these questions because deindustrialization kept electricity demand flat or falling for the past decades despite economic growth.

Now the rise of AI, rapid sales of electric cars and broader electrification of most economic sectors is causing even rich countries to panic. An exclusive analysis from Bloomberg Economics finds that almost all Group of 20 countries are seeing a rise in grid stress over the last few years. Those stresses include supply not keeping up with demand, volatile price swings, damages from climate impacts and losses in transmission.

Crucially, the analysis finds that increase in grid stress leads to a decline in capital outlay, which is government and business spending to acquire or maintain long-term assets.

“Lower investment means lower economic growth in the long run,” said Maeva Cousin, chief trade and climate economist at Bloomberg Economics. “Countries that fail to meet rising electricity demand risk missing out on defining investments that will shape economic prospects for decades,” she added.

In the early 2000s, most countries experienced rapid rise in electricity demand and sluggish growth in supply that created system stresses. In the 2010s, better grid management and lower power consumption helped grids run largely stress-free.

“That calm is fading,” said Eleonora Mavroeidi, Paris-based economist who led the Bloomberg Economics analysis. Now most rich countries see their electricity system stress growing in the last few years.

Read the full story to find out more about the relationship between clean electricity in growth and where grid stress is worsening the most. Subscribe to Bloomberg.com for unlimited access to all the stories on the Bottlenecks series.

Another bottleneck

400,000

The number of new engineering jobs created in the US annually. The country is already unable to fill a third of them. If the gap widens, it also stands to impact economic growth.

The 21st century grid

“We are now changing the technology that the grid is running on.”

Guy Nicholson

Head of zero-carbon grid solutions, Statkraft

Statkraft operates machines that can stop blackouts by absorbing excess power, if there’s too much, or injecting power into the grid, if there’s too little.

La Niña, part five

By Brian K Sullivan, Srinidhi Ragavendran, and Dayanne Sousa

Deadly flooding in Asia and early snowstorms across the US are signaling the return of a weather-roiling La Niña, a cooling of Pacific waters that can disrupt economies and trigger disasters worldwide.

Flooded Takbai district in Thailand on Dec. 5 Photographer: Madaree Tohlala/AFP/Getty Images

In recent La Niña years, global losses have ranged from $268 billion to $329 billion, according to Aon, a data-analysis and consulting firm. The wide estimate reflects the time-consuming nature of attribution studies, but the overall trajectory is unmistakable: damage is increasing. The La Niña phenomenon is often linked with droughts in California, Argentina and Brazil, and the destructive flooding now sweeping Southeast Asia. These types of catastrophes have become a larger factor in setting terms for insurers, farmers and energy providers.

La Niña can intensify both droughts and downpours, fuel more active storms across the tropical Pacific and strengthen Atlantic hurricanes. During past episodes, the pattern may have helped drive the Los Angeles fires in January and Hurricane Helene, which killed more than 250 people across the southern US in 2024. Not every extreme event can be tied directly to La Niña, but scientists say the fingerprints are familiar.

A snowstorm in Chicago on Nov. 29. Photographer: Jim Vondruska/Bloomberg

The current La Niña marks the fifth in six years, part of a broader tilt toward more La Niñas than El Niños (the warming of Pacific waters) across the past quarter century. Scientists are still studying the shift. Some suggest climate change may be influencing the cycle, while others attribute it to natural variability, said Michelle L’Heureux, a forecaster with the US Climate Prediction Center.

The ripple effects can often reach deep into global markets. La Niña is often associated with lower yields for corn, rice, and wheat, according to research published in the journal Environmental Development. Energy demand usually climbs as colder temperatures settle over northern parts of the US, China and Japan, raising fuel consumption and straining utilities. These outcomes can simultaneously lift prices for some commodities while squeezing others.

Get the full story on this winter’s extreme weather events and subscribe to Weather Watch for free daily updates.

Inside China’s efforts to wind down coal

Conveyor belts transport coal near solar panels at the open-pit coal mine. Photographer: Gilles Sabrie/Bloomberg

On a dusty afternoon in the northern reaches of China, dozens of giant trucks queue to fill up on coal for washing and processing. Others wait to take away tons of waste rocks and dirt. It’s a common sight at any large, open-pit operation — except the juggernauts at the Yimin mine in Inner Mongolia are moving without a human being in sight, part of a rapidly growing, nationwide fleet of autonomous vehicles.

Many of the men who once drove the trucks for state-owned China Huaneng Group Co. now work away from the coalface, often as safety supervisors or control room operators.

It’s a snapshot that encapsulates China’s biggest energy-transition predicament. Solar farms are proliferating, green technology is advancing rapidly and the dirtiest fossil fuel will ultimately be phased out. But that still leaves the government with problem of dismantling a vast economic structure built to dig, distribute and burn coal — and with the question of what it does with the workers who once operated it.

Read the full story on Bloomberg.com

This week’s Zero listen

When Canada elected Mark Carney as prime minister, there was hope that the country would pursue stronger climate policies. That hope was crushed after Carney signed a deal with the oil-producing province of Alberta that will roll back or dilute green regulations. As a result, Steven Guilbeault, Carney’s culture minister, has resigned from cabinet. He was the environment minister under Justin Trudeau and responsible for many of the policies at risk. This week on Zero, Guilbeault tells Akshat Rathi why the Alberta deal was the last straw.

Listen now, and subscribe on Apple, Spotify or YouTube to get new episodes of Zero every Thursday.