From last to first mile: why distribution networks are key to the energy transition
Modernising electricity distribution grids is a prerequisite for a decarbonised, resilient and competitive economy. A new Agora brief shows how better planning, faster deployment, improved operations and comprehensive digitalisation can transform grids into the “first mile” of the power system.
Distribution grids are moving to the centre of the energy transition. Long treated as the “last mile” of the power system, they must now take on a fundamentally different role.
A new Agora Energiewende policy brief provides a practical roadmap for policymakers navigating this transformation. While implementation depends on local context, the policy brief identifies five interconnected policy priorities through a global lens: planning and investment, permitting and connections, flexibility, digitalisation and transmission-distribution coordination.
A system transformation, not just grid expansion
Representing over 90 percent of global grid infrastructure, distribution grids have traditionally delivered electricity from transmission grids to consumers. As renewable energy scales and electricity demand rises from electric vehicles, industrial processes, cooling and heating systems and data centres, this model requires fundamental modernisation. To support the energy transition and ensure resilient and competitive economies, distribution grids must become the “first mile” of the power system: active, digitally enabled systems at the heart of a decentralising power system.
Meeting this challenge requires more than expanding infrastructure. Distribution grids need to evolve from passive, one-way delivery networks into digitally enabled, actively managed systems. The transformation depends on coordinated action across three interconnected policy domains. Grid planning must anticipate future supply and demand, while deployment must streamline administrative processes to integrate new assets at speed and scale. Moreover, grid operations must unlock flexibility from distributed energy resources (DERs). Stronger transmission-distribution coordination is equally essential to enable the operation of a decentralising power system. Across all these areas, digitalisation is the common foundation for reforms to deliver their full potential.
Governance will determine the pace of progress
The technical tools for active grid management are proven and deployable today. Their uptake, however, is not automatic. Grid governance reform is the key to scaling proven modernisation solutions.
Clear utility mandates, appropriate incentives and robust regulatory and investment frameworks are needed to support this shift. Targeted reform can align utility actions with the public interest and channel the required investment in ways that prioritise performance and leverage consumer-owned resources. With solutions already available, such robust enabling conditions can help ensure rapid progress.
An opportunity to leapfrog
Activating consumer-owned flexibility offers a practical pathway to accelerate grid modernisation while managing costs. As DERs scale, countries in early phases of DERs deployment can leapfrog to decentralised, consumer-centric systems.
By putting the right frameworks in place from the outset, countries can actively leverage these resources, avoiding the grid congestion costs and delays seen in frontrunner markets while capturing the full affordability, reliability and sustainability benefits that DERs offer.
Turning a constraint into an enabler
Distribution grids are no longer a peripheral part of the power system. They are becoming a defining factor in whether countries can deliver the energy transition. With the right policies in place, distribution grids can move from bottleneck to enabler – delivering the efficient, resilient and consumer-centric power systems that both people and economies need.
The 39-page policy brief From last mile to first mile: Policy priorities for modernising electricity distribution grids is available for free download below.
