Europe’s distribution grids need to be urgently modernised to enable massive electrification of transport, heating and industry, integrate renewables and withstand more frequent extreme weather and cyber threats. Eurelectric’s Grids for Speed study shows that distribution grid investments should increase from an average €33 billion to €67 billion per year from 2025 to 2050, roughly 20% of what the EU spent on fossil fuel imports in 2023.
Societal shifts are changing Europe’s energy system at a disruptive speed. By 2050, electricity will make up 60% of final energy use compared to 23% today, renewable capacity will have increased six-fold from 2020 with 70% of renewable generation and storage connecting at distribution level. Connection requests are increasing faster than grid modernisation and will continue to grow as electrification of end-use sectors progresses. These developments put a strain on the grid.
To relieve the strain and enable the energy transition, annual investments into new and modernised infrastructure, as well as digitalisation should reach €67 billion from 2025 to 2050, around 0.4% of EU GDP.
“For a successful energy transition the EU needs massive amounts of additional grid capacity. Investment volumes for distribution system operators needs to double. Whilst this will require a significant ramp up, the cost of not investing is even higher. To succeed we need attractive returns for investors to be able to finance it, technology and fast electrification to manage the distribution fees.” – says Eurelectric’s President and E.ON CEO Leonhard Birnbaum.
“Modern distribution networks are necessary for the transition to emission-free energy throughout Europe, including Czechia. In order to build and modernize the network, we need a clear legal framework and a predictable investment environment. It is key to understand that lack of investment into the grid leads to higher cost in the whole energy sector in the long run“.“ – says Claudia Viohl, CEO of the E.ON Group in the Czech Republic.
„The European energy sector is in the middle of the biggest transition in decades. Europe dedicates significant resources towards the investment and decarbonisation of power plants and energy sources, as well as towards measures supporting active consumers. However, the need to invest in power grids has been slightly overlooked and it is precisely the modern digitalized power grids that are needed for the connection and reliable functioning of the whole decarbonised energy system. We should therefore focus on creating the environment to stimulate investments in power grids modernization that will be the cornerstone of the whole energy transition,“ said Pavel Cyrani, the vice-chairman of the board of the biggest Czech energy supplier ČEZ.
“In the previous years, we have increased investment into distribution networks and their further increase is still necessary. The priority is to have a reliable and safe operation of the electricity system, which leads to many other benefits within the wider economy. Without modern energy infrastructure, the successful electrification of the Czech economy is unthinkable“ – said.“ – says Marian Rusko, Chairman of the ČSRES Council and CEO of EG.D, a member of the E.ON group.
Emerging forward-looking grid strategies such as anticipatory investments, optimal asset management and grid-friendly flexibility could lower this figure to €55 billion per year if properly implemented. In addition, existing technologies can further lower this investment figure by optimising the grid and facilitating renewables’ integration. These include for instance dynamic line rating, on load tap changer transformers and high-temperature low sag conductors as shown in Eurelectric’s report on Technologies supporting Grids for Speed.
Failure to achieve such investments would jeopardise 74% of prospective connections in key decarbonisation technologies such as electric vehicles (EVs), heat pumps and renewables. National authorities should implement the agreed legislation – such as anticipatory investments – while adapting the regulatory regime to support the investment surge.
Eurelectric calls on all Czech energy stakeholders to enable the necessary grid investments to unleash the societal benefits of Grids for Speed.
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Source: eurelectric
