The structure and form of modern power grids are becoming more and more complex, and there are many indicators and factors that need to be considered to evaluate the development status of the power grid. In order to diagnose the development level of power grid, the index system is reconstructed, which includes seven dimensions: the coordination of power grid development speed, the coordination of power grid development scale, the coordination of power grid structure, the security and reliability of power grid, the level of equipment, the utilization efficiency of power grid and the development benefit of power grid, the construction principle and index selection basis are given. When dealing with contradictory problems in reality, methods combining quantitative and qualitative can be applied to study. The matter element analysis method is applied to power grid development diagnosis, and a model of power grid development diagnosis based on matter element analysis is established, the model can not only diagnose the development level of power grid, but also determine the key factors that affect the diagnosis results, and give suggestions for improvement. The practical example verifies the feasibility and rationality of the method, which has good evaluation accuracy and prediction effect.