19 March 2026
Has the electrotech age arrived?
Nations are racing to gain energy autonomy and economic growth in the electrotech age.
This is a thought leadership report issued by S&P Global. This report does not constitute a rating action, neither was it discussed by a rating committee.
Highlights
The electrotech age marks a new strategic era for the US, China and Europe to compete in providing abundant and affordable electrons backed by resilient grids and local supply chains to fuel economic growth.
The AI race between the US and China has intensified reliance on electricity supply and industrial infrastructure, which are now central to economic growth and national security.
The nations’ interests and strategic goals are intertwined as they strive to reduce dependence and perceived vulnerabilities to compete in and win the AI race.
In the electrotech age, the US, China and Europe will likely face real competition for energy autonomy, striving to reduce reliance on rivals and decouple strategic sectors. This push for resilient grids and electrotech supply chains is intensified by the ongoing AI race and looming national security concerns. Yet, over time, the landscape may shift toward competitive interdependency, as nations remain interconnected through technology, supply chains and global markets. Lasting success will belong to those balancing energy autonomy with industrial adaptability, forging ecosystems that thrive amid rivalry and pragmatic collaboration in an electrified, innovation-driven economy.
In the electrotech age, power sector investment underpins economic growth and national security
While the US aims for energy dominance by growing domestic hydrocarbon production and restoring supply chain sovereignty through Donald Trump’s 2025 “big, beautiful” budget bill and National Security Strategy, China’s rapid renewables deployment, grid expansion and centralized industrial strategy give it a clear competitive edge in the near term. For Europe, this escalating rivalry means navigating between two giants while ensuring its own grid and industrial upgrades keep pace.
Renewables and nuclear offer the promise of reliable, low-carbon power. At the same time, modernized grids are critical to integrating them and ensuring supply stability amid increasing electrification, which can directly impact a nation’s digital and industrial capacity.
Electrotech supply chains for critical minerals, batteries and advanced manufacturing components are becoming arenas of strategic competition. The ability to secure, scale and adapt these supply chains will influence energy security and the speed at which new technologies can be deployed and commercialized. As cleantech supply chains are increasingly leveraged as a geopolitical tool, resilience and flexibility become as important as cost and efficiency.
The AI race between the US and China has intensified reliance on electricity and industrial infrastructure, which are now central to economic growth and national security. Emerging high-value sectors such as AI computing centers and advanced manufacturing have higher power intensity than traditional industries, driving power demand growth to outpace GDP growth amid industrial upgrading. Yet a mismatched pace of power supply expansion or grid infrastructure development creates critical constraints that limit the capacity release and large-scale layout of these emerging industries. A persistent gap between power sector investment growth and actual demand growth further worsens this mismatch. Only the dynamic alignment of power supply, grid development and sector investment with emerging industry demand can unlock power’s full supporting role for sustainable economic expansion and industrial chain upgrading.
Supply chain resilience, grid modernization and cybersecurity have become the core pillars for competition
The interplay among electrotech supply chain resilience, grid modernization and cybersecurity will be decisive in shaping which nation can power and propel its digital ambitions.
Is supply chain localization or alliance the way to go?
The large-scale build-out of renewables, nuclear or even gas is viewed as challenging in the US and Europe, owing to hard-coded supply chain bottlenecks, trade restrictions on imported components or added costs due to local requirements. Growing restrictions on Chinese suppliers in several Western markets have exposed the significant variability in the cost of solar and battery deployment across China, the US and Europe. Supply chain localization is the low-hanging fruit of industrial policies to reduce dependence; however, setting up supply chains takes time and requires power.
The electrotech supply chain is also highly reliant on critical minerals, where China currently holds clear dominance, influencing supply security. As these minerals are not only vital to the electrotech sector but also underpin a wide array of industries and national security considerations, the US aims to establish a new alliance from excavation, mining and refining to reduce dependence on China.
Investment in the grid is critical in the electrotech age
The grid is no longer passive enabling infrastructure; it has become critical. The large-scale energy expansion needed to meet AI-driven demand can only progress as fast as the grid allows. Yet grid investment has trailed both decarbonization and energy innovation for decades, creating a structural bottleneck. As electrification, decarbonization and digitalization accelerate, power systems risk instability unless grids evolve in parallel.
According to S&P Global Energy, global transmission and distribution (T&D) spending will keep rising through 2030, but at a slower pace than investment in power generation, much of which flows into clean technologies that require fundamentally different grid designs. Underinvestment, combined with rapid clean energy deployment, is tightening constraints. From hyperscalers to utilities and policymakers, calls are growing to remove permitting, tax and manufacturing barriers, signaling broad recognition that grid modernization is now a national competitiveness issue.
Regional challenges vary. In Europe, 40% of grid assets are more than 40 years old and built for a fossil fuel system, demanding accelerated investment and greater resilience. In the US, explosive data center growth driven by AI and cloud computing is straining aging local grids, raising risks of capacity shortages. In Asia-Pacific, the central priority is financing and constructing new transmission infrastructure to keep pace with rapid demand growth.
Because building new lines faces long lead times, new technologies such as grid-forming inverters, AI-driven forecasting and solid-state transformers are emerging to unleash capacity and optimize existing assets. Nations that scale these grid technology solutions will quickly gain a strategic competitive advantage in the electrotech age. Rapid growth in stand-alone and colocated storage tenders (e.g., Spain, China and India) will also play a larger role.
Cybersecurity concerns loom as the energy system digitalizes
Digitalization also introduces new vulnerabilities. Cybersecurity-related incidents worldwide have heightened concerns and pushed cybersecurity higher on policy agendas.
Since 2022, the US has constructed a multilayered legislative and regulatory framework to reduce reliance on foreign suppliers considered high risk. This effort began with tax credit exclusion rules targeting batteries and critical minerals and has since expanded into restrictions on software, electronics and vehicle control systems linked to certain jurisdictions, triggering changes in procurement strategies.
Europe is moving in a broadly similar direction. In January 2026, the EU introduced the Cybersecurity Act 2 (CSA2), which significantly expanded the EU’s cybersecurity framework by adding new oversight mechanisms and nontechnical criteria for critical sectors, including the electricity sector. Echoing the logic of the EU’s 5G Toolbox, CSA2 heightens scrutiny of suppliers from countries without EU data-adequacy agreements. If fully implemented, the framework could significantly exacerbate supply chain imbalances, given the concentration of manufacturing capacity in a few key countries.
Looking forward: Are nations drifting apart and intensifying competition in the electrotech age?
Europe, China and the US each offer unique strengths in the electrotech age. Europe leads sustainable industry transformation through renewable integration and grid modernization but faces slow demand and supply chain issues. China excels in large-scale manufacturing and cleantech, rapidly deploying solar and batteries, although its expansion has led to overcapacity and grid challenges. The US stands out for advanced innovation and a vibrant tech ecosystem; sustaining leadership will require increased alignment of power, grid investment and industrial capacity with evolving industry needs.
There is no clear winner.
The race is not about decoupling from each other, but about building a foundation of energy abundance, affordability and technological autonomy that secures a nation’s place at the forefront of global competition. Although near-term action plans seem to drift nations apart and aim to establish or enhance their own autonomy, some level of interdependence with global partners remains inevitable. Nations’ interests and strategic goals are intertwined as they strive to reduce dependence and perceived vulnerabilities.
What emerges is a new industrial logic: competitive interdependence. Neither a clean split into blocs nor a return to globalized ease, but a complicated middle where nations try to insulate strategic sectors even as technological and market ties remain too embedded to unwind. The result will not be a winner-takes-all. The electrotech age is, ultimately, a test of coherence between energy policy and industrial strategy, and between digital ambition and physical capacity.