Brussels, December 1, 2023 — The European Union (EU) is set to unveil an ambitious plan involving a staggering €584 billion (approximately ¥4.55 trillion) investment to comprehensively overhaul and upgrade its power grids, as revealed in a leaked draft document reported by foreign media. The move comes in response to the escalating demand for electricity driven by the continuous growth of the renewable energy sector.
The EU Commission is expected to announce the grid investment plan later this week, with a primary focus on upgrading power grids, especially cross-border networks, to better integrate renewable energy sources from different member states.
The plan also promises to expedite approval processes and calls on institutions such as the European Investment Bank to provide new financing tools.
"The power networks in Europe are facing new significant challenges," states the draft document. "They will need to meet the growing demand associated with the increased adoption of clean transportation, heating and cooling, industrial electrification, and the initiation of green hydrogen production."
In recent years, the pressure on Europe's transmission networks has intensified with the rising production of renewable energy in EU member countries. The intermittent nature of wind and solar energy supply, concentrated during daytime or seasonal peaks, has posed substantial challenges to the power grids.
Against this backdrop, the demand for smart grids in Europe has been on the rise. The draft document underscores that 40% of the distribution grids on the European continent have been in use for over 40 years. Additionally, amid heightened geopolitical risks due to the Russia-Ukraine conflict, the significance of strengthening power grid security has become more pronounced.
Power grids have become a bottleneck for renewable energy
Indeed, in the past few months, the European power industry has repeatedly emphasized the urgency of upgrading power grids. Earlier this month, lobbying groups in the European electricity sector warned that the continent's grids are struggling to keep up with the rapid expansion of renewable energy and are becoming a major bottleneck for integrating more clean energy into the grids.
"While we have expanded the market share of renewable energy in the past by utilizing reserves in our existing infrastructure," said Leonhard Birnbaum, head of the European power industry institution Euelectric, "now, in many European regions, we have exhausted those reserves. The grid is gradually becoming a bottleneck."
The result of this bottleneck is that an increasing amount of renewable energy is left waiting in queues to be connected to the grid. Bloomberg NEF data indicates that Spain and Italy each have over 150 GW of wind and solar capacity waiting to be connected.
Birnbaum, who is also the CEO of E.ON, Europe's largest grid operator, revealed that many grid companies like E.ON are overwhelmed with numerous connection requests from power plants.
Last month, the International Energy Agency (IEA) released a report stating that global grid investments must double to over $600 billion annually for countries to achieve their climate goals and maintain energy security.
Felicia Aminoff, an analyst at Bloomberg NEF, commented that Europe's spending on grids lags far behind its investments in renewable energy. To achieve net-zero emissions by 2050, she emphasized that European grid investments must double from their current levels.
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