Understanding the importance of Gridtech technologies for the electricity grid of tomorrow

When discussing the climate crisis and energy transition, public debate often focuses solely on the final production of clean energy. Less visible and less widely recognized, however, is the fundamental role played across the entire value chain by Gridtech, a business segment that encompasses innovations and technologies focused on electricity transmission. This sector can support the work of Transmission System Operators, the national operators responsible for electricity transmission networks. These technical operators ensure the transfer of electricity from generation sites to local distribution networks, guaranteeing the proper functioning of the entire power system. In Europe, TSOs operate within a highly coordinated system at the continental level. There are 39 TSOs across 36 countries—including Terna in Italy and RTE in France—which together manage more than 522,000 kilometers of high-voltage transmission lines. This structure enables integrated management of electricity grids and facilitates energy exchange among different countries.

As highlighted in the report Innovating the Grid – Mapping Opportunities and Challenges Ahead, developed by Terna in collaboration with the global open-innovation platform Mind the Bridge, the electricity sector is organized differently in the United States. Unlike Europe, there is no single national model for grid management, with implications that should not be underestimated. The entire electricity value chain is controlled by private companies (utilities) that generate electricity, own and operate transmission and distribution lines, and supply energy to consumers. The grid is then coordinated and balanced by separate entities—Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs)—nonprofit organizations that manage grid operations and electricity markets within limited geographic areas, ensuring system balance. This structure, tied to the federal organization of the United States, results in more fragmented grid governance compared with the European model.

In Europe, TSOs represent a strong example of how the coordinated management of electricity networks can effectively support the energy transition. These operators play a strategic role in the path toward Net-Zero, the goal of eliminating net greenhouse gas emissions through the use of renewable energy and improvements in energy system efficiency. In this context, their role is crucial in several respects. First, TSOs enable the integration of large volumes of renewable energy: many solar plants and wind farms, for instance, are located far from urban centers and industrial areas, and without a robust and well-managed transmission network, this clean energy could not be transported to where it is actually needed. TSOs also support electrification, meaning the replacement of fossil fuels with electricity as the main energy source, a key lever for reducing emissions and accelerating the transition toward a low-carbon system. At the same time, these operators help modernize electrical infrastructure in order to manage steadily increasing loads, for example those generated by the growing use of heat pumps or data centers. Finally, TSOs contribute to grid efficiency, reducing transmission losses and optimizing the use of existing infrastructure—something that not only enables significant economic savings but also has a direct impact on emissions reduction.

TSOs are essential to ensure that the energy produced reaches consumers safely and continuously, but the growing complexity of the grid requires increasingly sophisticated tools and approaches to properly manage variable loads and prevent failures. To respond to these challenges, TSOs need to innovate, either by developing solutions internally or by relying on a network of external enablers—including institutions, investors, and associations that provide the resources, expertise, technologies, and frameworks needed to modernize the transmission infrastructure. These “disruptors” offer solutions that traditional infrastructure operators can integrate through open innovation. TSOs, as the primary—almost exclusive—users of Gridtech technologies, therefore drive the development of this sector.

The strategic role of TSOs in the European energy transition.

Despite a significantly lower investment volume compared with the United States, the Gridtech sector holds a more prominent position in Europe, accounting for 2.8% of all scaleups compared with 1.6% in the United States. Between 2020 and 2024, European Gridtech investments nearly quadrupled, growing more steadily and resiliently than the volatility seen in the American market. This momentum has been driven by strong regulatory frameworks and targeted funding instruments, such as the European Green Deal and Horizon Europe. The effectiveness of these policies is critical in a scenario where global electricity demand increased by 4.3% in 2024, far exceeding both global GDP growth (3.2%) and total energy demand growth (2.2%). This highlights the unprecedented pressure placed on transmission infrastructure and the urgency of integrating advanced technological solutions to manage variable loads. With regard to investments in startups and scaleups within the venture capital ecosystem—meaning the network of investors, funds, and actors that support innovation through risk capital financing—Gridtech startups in the United States have raised a total of $20.8 billion, representing 2.0% of total investments in the country. In Europe, by contrast, investments amount to $5.9 billion, corresponding to 1.7% of the total European venture capital flow.

Within the TSO context, eight domains have been identified where Gridtech solutions can be integrated to address the challenges of the energy transition. These include grid operations management and market flexibility, which involve real-time balancing between demand and generation, congestion and frequency management, and the integration of flexible resources such as electric vehicles, storage, and demand response. The domains also include long-term planning and grid development, with the objective of anticipating future demand, integrating renewable energy sources, and strengthening resilience against extreme weather events. Another area concerns infrastructure project delivery, including the construction and commissioning of new networks supported by advanced digital tools such as Building Information Modeling (BIM) and robotics.

Gridtech, collaborative innovation and the European coordination of TSOs

The monitoring and management of existing assets represent another important domain, involving the use of sensors and predictive analytics to prevent failures and extend the useful life of infrastructure. With the expansion of offshore energy generation, the scope of Gridtech now also includes the design and management of subsea systems, such as HVDC or HVAC cables, together with seabed and underwater asset monitoring. At the center of grid evolution are the so-called Digital Backbone and cybersecurity, which together involve the creation of complex digital ecosystems for automation and remote control of the grid. Finally, Gridtech also covers the integration of advanced components, such as superconductors and smart transformers, which increase grid capacity and reliability, as well as strategic and complementary technologies that, while not directly related to electricity transmission, influence overall system stability.

Mitigating the climate crisis requires technological innovation, capital, and targeted public policies, as well as the ability to connect infrastructures within an integrated and collaborative system. It is clear that the success of the energy transition and the achievement of Net-Zero targets depend on a fundamental awareness: no single player can tackle these challenges alone. Without adequate coordination, the different actors in the energy system risk moving forward with different approaches and timelines, creating fragmentation and slowing overall progress.

The experience of Terna through its Terna Innovation Zone demonstrates that innovation cannot develop in isolation. These outposts, active in strategic hubs such as Turin and San Francisco, are based on the belief that continuous dialogue between companies, startups, research centers, and institutions is essential to accelerate the development and adoption of new technologies. With the aim of overcoming fragmentation and transforming local initiatives into coordinated programs at the continental level, the TSO Innovation Alliance was launched in 2025, promoted by Terna together with seven other major operators—including RTE, Swissgrid, and Elia Group. This initiative introduces shared experimentation pathways designed to make the testing of Gridtech solutions faster and more coordinated across multiple operators. It allows the pooling of expertise, data, and experience, reducing risks and accelerating the development and adoption of strategic Gridtech technologies for the grid of the future, while maximizing their impact across the entire European network.