Around the world, electric power providers are accelerating their efforts in mitigating climate change. Many have plans to decarbonize, and to substitute renewable power for fossil generation. But what does that mean for the power grid: the transmission and distribution network that brings electricity to consumers? How will decarbonization influence the topology of the grid, the technology that underlies it, and the management of the companies that provide it?
Digital cables: The key to grid modernization and smart grids
Growth opportunities for smart solution providers
With the energy transition placing tough new demands on power grids, grid modernization is urgently needed. Smart grids based on digital cables offer a solution. Our report outlines what these new networks might look like, the challenges they pose and, crucially, the opportunities they present for equipment manufacturers.
Renewable energy sources have changed the face of power grids. Whereas once grids were based around a few large power plants and their associated transmission and distribution networks, today grids must accommodate a multitude of small, decentralized, inverter-based sources such as solar panels. This has created a dynamic ecosystem where the requirements and behavior of one inter-connected region rarely match those of another.
But the transition has also created a headache for industry players, who must now deal with far greater complexity and unpredictability in the system, as well as higher potential for damage. This was dramatically highlighted in April 2025 when a grid malfunction resulted in a total blackout in the Iberian Peninsula. To address these challenges, grid operators are increasingly looking to smart grids based on digital cables. These meet grid modernization needs by offering real-time monitoring, better fault detection and full performance transparency. This means significant opportunities for providers of smart solutions.
But the transition to smart grids cannot be done at the flick of a switch – grid operators face several challenges and market players need to know which areas to prioritize. Our report on digital cables assesses the difficulties involved in grid modernization, highlighting how sensor-integrated digital cables can help to overcome them. It also outlines the growth opportunities for equipment manufacturers, with a focus on priority areas.
The need for grid modernization
The switch to inverter-based generating sources, such as wind and solar power, is one of the key challenges facing future grids. Traditional coal, gas or nuclear generators provide system inertia to buffer changes in grid frequency, for example, those caused by harmonics (big frequency fluctuations). But inverter-dominated grids are far more susceptible to frequency changes. The result is increased instability and potential damage to grid infrastructure. This was one of the key factors behind the Iberian blackout, as outlined in a case study in the report.
Feeding renewable energy into grids is another major challenge. It places additional stress on cables due to the intermittent nature of sources such as wind power, which cause fluctuating power outputs. Financial losses due to this can be significant – more than 50% of the total financial losses incurred from offshore wind power, for example. Transparency in the grid and cables is key to identifying and managing these problems.
"Tomorrow’s grids need to be more resilient and flexible to accommodate the requirements of the energy transition, increased harmonics and cybersecurity."
To accommodate the requirements of the energy transition, tomorrow’s grids therefore need to be more resilient, flexible and transparent, and better able to manage the increased potential for frequency differences and harmonic effects. In addition, as grid interconnectivity grows, heightened cybersecurity measures are needed to protect privacy and data.
Smart grids – power networks that use digital technologies, sensors and software to efficiently match supply and demand – meet these modernization needs. They offer real-time control through adaptive grid management and smart sensors, integration with IT systems to enable better fault detection and full performance transparency thanks to the huge amount of data collected.
Digital cables: The key connection
Digital cables are the backbone of smart grids. Their integrated smart sensors and network analyzers maximize transparency and enable real-time visibility of power quality issues, high-speed data transmission and support for harmonic mitigation strategies. They also protect against cybersecurity threats.
"The roll out of digital cables is still at a very early stage – presenting clear opportunities for smart solution players."
With the roll out of digital cables still at a very early stage, the market presents clear opportunities for smart solution players. In particular, the low global level of implementation and regional disparities indicate that there is a need for accelerated adoption of sensor-based technologies and smart grid capabilities. Our report highlights where these opportunities lie. It outlines areas that manufacturers should prioritize, such as sensors, as well as strategies to develop operating models and accelerate growth. The latter includes an analysis of the potential value of M&As.
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