Grids for Speed report from Eurelectric – how quickly do we need to modernize grids in Europe?
According to a report by Eurelectric, Europe’s energy distribution networks urgently need modernization to facilitate the integration of renewable energy sources, the electrification of transportation, heating, and industry, and to withstand extreme weather conditions and cyber threats. This organization, representing over 3,500 European energy companies and institutions, emphasizes the necessity for these updates.
The “Grids for Speed” report reveals that investments in the distribution network must rise from an average of EUR 33 billion to EUR 67 billion annually between 2025 and 2050. Remarkably, this amount is only about 20% of the EU’s expenditure on fossil fuel imports in 2023. Experts behind the report argue that this rapid modernization of the network will significantly diminish the need for such fuel imports. Additionally, they anticipate it will generate over 2 million jobs, lead to greater energy efficiency, ensure reliable energy supplies, and hasten the decarbonization of the European economy.
The energy market is changing at a rapid pace
By 2050, it’s anticipated that electricity will account for 60% of final energy consumption, a significant rise from the current 23%. Moreover, power sourced from renewable energy is projected to surge sixfold compared to 2020 levels. However, the influx of connection applications is growing at a disproportionately faster rate than network modernization efforts, a trend expected to persist with ongoing electrification across various economic sectors. This places considerable strain on European networks.
To alleviate this strain and optimize network functionality, annual investments in new and upgraded infrastructure, including digitalization, should total EUR 67 billion between 2025 and 2050, roughly 0.4% of EU GDP. Nonetheless, the report indicates that with appropriate forward-thinking network strategies, optimal asset management, and network flexibility, this figure could potentially be reduced to EUR 55 billion per year.
Failure to make these investments could jeopardize up to 74% of potential connections in critical decarbonization technologies like electric vehicles and heat pumps. Furthermore, the report underscores that network security relies on stable supply chains. Even if the necessary investments are made, current shortages of raw materials, workforce, and extended production times may impede infrastructure development. Addressing these bottlenecks requires strategic planning, enhanced collaboration between decision-makers and industry stakeholders, and training initiatives for future personnel.