# Distribution grids, mini-grids and interconnectors: Unit economics

Why the wires cost more than the solar panels

Source page: https://www.materialinsights.org/energy/e_distribution/economics/

What this tab covers What it costs to move a unit of energy this way: capital and operating costs, tariffs, utilisation and how it compares with the alternatives.

Distribution takes more investment than transmission: US utilities spent about USD 50.9 billion on it in 2023. Best-in-class solar mini-grids cost about USD 0.38 per kWh, high but often cheaper than the alternatives in remote areas.

#### Key costs

| Measure | Value | Note |
|---|---|---|
| **US utility capital spending on distribution** | 50.9 USD billion (2023)^[2](https://www.eia.gov/todayinEnergy/detail.php?id=63724) | Up 160% since 2003; transmission was USD 27.7 billion |
| **Solar-hybrid mini-grid electricity cost** | 0.38 (0.20 possible by 2030) USD/kWh^[6](https://www.worldbank.org/en/news/press-release/2022/09/27/solar-mini-grids-could-power-half-a-billion-people-by-2030-if-action-is-taken-now)^[7](https://openknowledge.worldbank.org/bitstreams/dc000258-8524-594f-a2ee-e1ee7a256f6b/download) | Best in class, 2021; down from USD 0.55 in 2018 |
| **Solar-hybrid mini-grid capital cost** | About 3,700 (below 2,500 by 2030) USD per kW of firm capacity^[7](https://openknowledge.worldbank.org/bitstreams/dc000258-8524-594f-a2ee-e1ee7a256f6b/download) | Best in class, 2021, down from about 3,900 in 2018 |
| **Mini-grids to reach 490 million people by 2030** | More than 217,000 sites, USD 127 billion count, USD^[6](https://www.worldbank.org/en/news/press-release/2022/09/27/solar-mini-grids-could-power-half-a-billion-people-by-2030-if-action-is-taken-now) | At the 2022 pace only 44,800 would be built |
| **European interconnection in the 2030s** | At least 150 for 151 GW EUR billion^[10](https://ember-energy.org/latest-insights/money-on-the-line-scaling-electricity-interconnection-for-europes-energy-future/) | About EUR 1 million per MW (calculated); CEF grants cover on average about 31.5% of a cross-border line's cost |
| **Global grid investment (all voltages)** | About 400 per year (2025) USD billion^[18](https://www.iea.org/news/lack-of-ambition-and-attention-risks-making-electricity-grids-the-weak-link-in-clean-energy-transitions)^[20](https://www.iea.org/news/global-energy-investment-set-to-rise-to-33-trillion-in-2025-amid-economic-uncertainty-and-energy-security-concerns) | IEA said in 2023 it must exceed USD 600 billion a year by 2030 |

#### Where the money goes

| Item | Share or amount |
|---|---|
| **US distribution 2023: overhead lines, poles and towers** | USD 17.4 billion^[2](https://www.eia.gov/todayinEnergy/detail.php?id=63724) |
| **US distribution 2023: underground lines** | USD 11.8 billion^[2](https://www.eia.gov/todayinEnergy/detail.php?id=63724) |
| **US distribution 2023: line transformers** | USD 7.5 billion^[2](https://www.eia.gov/todayinEnergy/detail.php?id=63724) |
| **US distribution 2023: substation equipment** | USD 6.1 billion^[2](https://www.eia.gov/todayinEnergy/detail.php?id=63724) |
| **Mini-grid capital cost: distribution (poles and wires) / batteries** | 27% / 15%^[7](https://openknowledge.worldbank.org/bitstreams/dc000258-8524-594f-a2ee-e1ee7a256f6b/download) |
| **Mini-grid capital cost: PV modules / inverters and energy management** | 10% / 9%^[7](https://openknowledge.worldbank.org/bitstreams/dc000258-8524-594f-a2ee-e1ee7a256f6b/download) |

The local wires are the largest single item even in a mini-grid, which is why customer density decides costs. Alternatives to a mini-grid are main-grid extension (cheaper per kWh where density is high, but slow and costly to reach remote villages), solar home systems (cheaper but smaller) and private diesel generators.

#### Sources

1. [Grid infrastructure investments drive increase in utility spending over last two decades (Today in Energy)](https://www.eia.gov/todayinEnergy/detail.php?id=63724) US EIA, 2024
2. [Solar mini grids could power half a billion people by 2030, if action is taken now](https://www.worldbank.org/en/news/press-release/2022/09/27/solar-mini-grids-could-power-half-a-billion-people-by-2030-if-action-is-taken-now) World Bank, 2022
3. [Mini Grids for Half a Billion People: Market Outlook and Handbook for Decision Makers (2022 edition)](https://openknowledge.worldbank.org/bitstreams/dc000258-8524-594f-a2ee-e1ee7a256f6b/download) World Bank ESMAP, 2022
4. [Money on the line: scaling electricity interconnection for Europe's energy future](https://ember-energy.org/latest-insights/money-on-the-line-scaling-electricity-interconnection-for-europes-energy-future/) Ember, 2025
5. [Lack of ambition and attention risks making electricity grids the weak link in clean energy transitions](https://www.iea.org/news/lack-of-ambition-and-attention-risks-making-electricity-grids-the-weak-link-in-clean-energy-transitions) IEA, 2023
6. [Global energy investment set to rise to USD 3.3 trillion in 2025 amid economic uncertainty and energy security concerns](https://www.iea.org/news/global-energy-investment-set-to-rise-to-33-trillion-in-2025-amid-economic-uncertainty-and-energy-security-concerns) IEA, 2025

## Other sections

- [Summary](https://www.materialinsights.org/energy/e_distribution/index.md)
- [Overview](https://www.materialinsights.org/energy/e_distribution/overview/index.md)
- [Correlation](https://www.materialinsights.org/energy/e_distribution/correlation/index.md)
- [How it works](https://www.materialinsights.org/energy/e_distribution/explain/index.md)
- [Efficiency and losses](https://www.materialinsights.org/energy/e_distribution/efficiency/index.md)
- [Technology advances](https://www.materialinsights.org/energy/e_distribution/advances/index.md)
- [Value chain](https://www.materialinsights.org/energy/e_distribution/valuechain/index.md)
- [Geopolitics and regulation](https://www.materialinsights.org/energy/e_distribution/geopolitics/index.md)
- [Impact on the biosphere](https://www.materialinsights.org/energy/e_distribution/biosphere/index.md)
- [Relationships](https://www.materialinsights.org/energy/e_distribution/links/index.md)