Electricity grids are critical to achieving climate neutrality by 2050. In the coming decade, the European Union (EU) will require significant investment to expand and modernise interconnectors, transmission, and distribution.
Electricity grids are financed with a combination of private funds and public sources at European and national level. The EU has a policy framework to enable the development of electricity infrastructure between Member States. In addition, the EU has launched specific investment programmes to fund network development. Electricity network tariffs cover a large part of the costs and are managed at Member State level.
The efforts to modernise, expand, and improve the efficiency of electricity grids face significant challenges:
- The grid requires increased investment to support the energy transition: Available estimates indicate that an unprecedented level of investment will be required.
- Skills and material shortages: The energy transition is threatened by skills shortages, supply chain bottlenecks, and difficulties in sourcing raw materials, which could lead to energy price increases.
- Building or upgrading the grid is a lengthy process: Complex permitting, financing challenges and technical barriers can delay grid deployment.
The following are Bellona Europa’s recommendations:
- Improve resources for the grid: restructure and expand the EU’s multiannual budget (MFF) to prioritise the clean energy transition, and channel ETS revenues towards climate action through grid support.
- Improve efficiency: Prioritise efficiency in grid operation and planning by including the energy efficiency first principle in energy planning while using redispatch monitoring to direct investment to areas with the greatest need for grid expansion.
- Improve the governance framework by advancing the harmonisation of energy planning exercises and improving data transparency and quality.
- Leverage existing policies: improve grid tariffs, simplify permitting and address skills and supply chain shortages to ensure efficient integration of renewables and sustainable energy costs.
