The traditional power grid consists of large generation facilities (such as natural gas power plants or wind or solar farms), high-voltage transmission lines that bring the power to cities and towns, and a network of distribution lines that deliver the electricity to millions of homes and businesses. The last step, local distribution systems, include step down transformers that reduce the high voltage power from transmission lines, above ground and underground transmission lines that move power around the area, and a final network of lower voltage lines that connect each end user to the grid. The U.S. electric grid currently contains approximately 6.3 million miles of local distribution lines.1
The future distribution system will have new demands as we integrate distributed energy resources (such as roof top solar, energy storage, automated demand management) into our energy system and add EV charging. The distribution grid of tomorrow must manage two way flows of electricity (to accept power from solar or batteries on the customer’s side of the meter), integrate automated demand response capabilities to reduce peak electricity demand, and manage EV charging, while maintaining power qualify 24 hours a day, 365 days a year. Upgrading and increasing the capacity of distribution systems is essential for the energy transition.

Key Technologies

  • Substations with Step Down Transformers (and supporting hardware such as circuit breakers) change high voltage electricity from transmission cables to a lower voltage. The path from high voltage transmission lines to the home will include several junctures where voltage is reduced.
  • Distribution lines deliver electricity to the end-user. These local lines cover shorter distances than transmission lines at a much lower voltage. While high-voltage transmission lines carry electrical currents over hundreds of miles, distribution lines are short run above ground (or increasingly underground), and deliver electricity directly to every customer in the distribution network.
  • Distribution automation (DA) technologies improve the efficiency of the distribution network by automating measuring, monitoring, and control of electrical loads, reducing costs, and increasing the speed and accuracy of distribution system processes.
    • DA technologies include remote sensors, processors, information and communication networks, and switches.
    • Advanced Distribution Management Systems collect, organize, display and analyze- real time distribution system data and inputs to enhance efficiency of the system, improve reliability, and prevent overloads.
  • Low voltage distribution equipment (LVDE) carries electricity to consumers in lower voltage, typically less than 600 volts.
    • LVDE technologies include arc-fault circuit interrupters, molder case circuit breakers, panelboards, and distribution boards, switches, and busways.
  • Smart meters and smart controls digitally monitor and report electricity used by end-users and provide remote, automated management of loads.
  • Inverters convert electrical currents from AC to DC, or vice versa.
  • Distributed Energy Resources (small solar systems, battery storage including EV batteries, and microgrids) are customer resources that when integrated into the distribution grid support supply and demand balancing and grid stability. Technologies to enable DER capabilities include digital, grid connected controls on the DER components, including smart chargers, smart inverters for solar generation, and smart HVAC, heat pump and water heater controls that enable automated demand reduction.

Potential Market Size & Timing

The distribution grid must be upgraded to respond to increased incidents of extreme weather, the ramp up of EV charging, and continued deployment of distributed energy resources. These new challenges sit on top of the reality that the system is aging with 70 percent of the lines and transformers more than 25 years old. Current investment is substantial but it must be expanded:

  • In 2019, U.S. Utilities invested a total of $51 billion to replace, modernize and expand the electricity distribution system, according to EIA,2 a 6% increase over 2018 and a 64% increase over the annual spend in 2000 (inflation adjusted).
  • According to a study by the American Society of Civil Engineers, the U.S. needs to invest an additional $208 billion by 2029 to just maintain the U.S. grid with 23% ($48 billion) of that sum needed specifically for the distribution system.3
  • Estimates of the cost of fully modernizing the U.S. grid, including replacing aging infrastructure, expanding it to reflect new needs, and preparing for extreme weather, could require $1 trillion or more by 2050.4
  • An estimated $36 trillion in global transmission and distribution investments is needed between 2020-2050 to reach net-zero across the energy sector.5
  • A report from the Energy Transitions Commission estimated that to achieve overall electrification goals for transportation and other sectors while decarbonizing the global electricity supply will require a cumulative investment of $36 trillion or an average of $1.1 trillion per year in the global grid. (Figure 1)


  • Scale of the challenge: Reconfiguring an aging distribution grid to manage new intermittent renewable resources, new power needs such as EV charging, and integrating and optimizing the addition of distributed energy resources – a massive shift for a system that is already under pressure due to aging equipment, extreme weather and the fundamental challenge of providing reliable power to 150 million customers.
  • Balkanization: There are over 3000 distribution utilities providing distribution services, regulated by 50 state PUC’s making consistent implementation of technology upgrades difficult and slow. Responsibility for maintenance of the grid and inter-regional connections is shared by the utility, its regulator, and regional grid operators, leading to confusion and conflict over needed modernization and cost sharing.
  • Local peak load estimates could far surpass national averages as different regions adopt EVs at varying rates.7 Distribution system upgrades must take into consideration how their locality will differ from national EV uptake projections and demand.
  • Siting and permitting challenges constricting the growth of transmission and distribution assets need to be addressed to meet the Biden Administration’s goal of net-zero electricity by 2035.
  • Increased frequency and intensity of weather events from climate change pose a threat to the physical elements of transmission and distribution systems, particularly in certain vulnerable geographies where cables could be significantly damaged imposing high costs and blackouts.8


  • Full and rapid implementation of the grid support provisions of the Infrastructure Investment and Jobs Act which provides:
    • $5 billion in funding through 2026 to support grid hardening activities to protect grid from extreme weather, wildfires and other natural hazards.
    • $5 billion in funding through 2026 for demonstration of grid resiliency technologies such as energy storage and microgrids.
    • S3 billion in matching grants to accelerate integration of smart grid technology into transmission and distribution systems.
    • Funding for energy improvements in Rural or Remote Areas provides funds eligible for tools and projects which improve the cost-effectiveness of transmission and distribution systems or addressing siting and upgrading transmission and distribution lines.9
  • Full and rapid implementation of the Inflation Reduction Act which provides over $270 billion in new tax credits for clean energy including distributed solar, energy storage and microgrids. It also provides $9.7 billion to improve the reliability and resilience of rural electric systems.
  • Additional federal and new state programs to support smart, two-way local distribution system that can integrate both centralized and distributed intermittent resources.
  • Robust demand reduction markets and other demand management incentives, coupled with full integration of demand reduction into grid management, to reduce peak demand and ease the burden on the distribution system as EV charging increases.
  • Federal leadership including legislation to create incentives and mandates for minimum grid modernization capabilities to support integration of intermittent renewables and full deployment of microgrids, storage, demand reduction, distributed generation, and other components of an optimized, reliable decarbonized grid.

NEMA Technologies

  • Distribution Automation Technologies
    • Sensors
    • Processors
    • Information and Communication Networks
    • Switches
  • Low Voltage Distribution Equipment (LVDE)
    • Molded case circuit breakers
    • Panelboards
    • Distribution boards
    • Switches
    • Busways


  1. 1 Advanced Transmission Technologies Report – final as of 12.3 – FOR PUBLIC_0.pdf (energy.gov)
  2. See DOE, 2020 Smart Grid System Report (January 2022) p. 48
  3. https://infrastructurereportcard.org/wp-content/uploads/2021/03/Failure-to-Act-Energy-2020-Final.pdf
  4. See reports refenced in: https://www.reuters.com/investigates/special-report/usa-renewables-electric-grid/
  5. IEA (2020), World Energy Outlook; ETC-Global-Power-Report-.pdf (energy-transitions.org)
  6. ETC-Global-Power-Report-.pdf (energy-transitions.org); BloomgerbNEF (2020), New Energy Outlook, Industry interviews, SYSTEMIQ analysis for the Energy Transitions Commission (2021)
  7. BloombergNEF (2020), Sector Coupling in Europe: Powering Decarbonization
  8.  Climate Resilience – Analysis – IEA
  9. BIL Provision: Energy Improvement in Rural and Remote Areas – Energy Communities