Grids key to enabling more renewables – ACER
Image: ACER
Massive investment in local, national and cross-border electricity grids is needed to keep pace with the growth in renewables and power consumption, finds an ACER monitoring report.
In its first monitoring report on electricity infrastructure development, ACER finds that gaps between planned investment and grid needs threaten both timely decarbonisation and affordable energy and that several measures should be introduced to accelerate the investments.
Underlining its finding with the European Environmental Agency (EEA) that flexibility needs will double by 2030 to keep pace with the growth in renewables, ACER points to the increasing costs of managing congestion – reaching €4.2 billion ($4.4 billion) in 2023. It also points to the need for more grid capacity to support cross-zonal electricity trade, reduce congestion, share flexibility and deliver the benefits of a secure and sustainable integrated EU power system.
Upgrading all grids will require massive investment, at twice the current EU pace, ACER notes, highlighting a gap as ENTSO-E’s pan-European grid planning showing that half of total cross-border capacity needs are not paired with a planned investment.
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“Investment efforts should address all grid needs while accelerating project implementation. Otherwise, delays in renewables integration already observed today through congestion or grid connection queues may further accumulate. Missing or delayed investment can lead to lost benefits of an integrated EU power grid,” the report reads.
ACER also comments that with annual grid investment in Europe estimated to double to 2050, reaching up to €100 billion ($105.1 billion), the total grid costs for consumers may rise considerably to over 50% more than the current costs.
As these costs become a main driver of electricity costs, containing their rise is key for competitiveness.
Moreover, targeting investments to realistic future consumption is key to avoiding a cost spiralling effect that could discourage electrification if investment benefits do not materialise. However, electrification could still be encouraged without artificially lowering the grid bill, avoiding aggravating the spiralling effect.
Accelerating grid investment
Among recommendations for accelerating grid investment, ACER calls for integrated, multi-sectoral planning across the local, national and EU levels to be swiftly implemented to prioritise investments that address needs and deliver benefits at lowest costs.
To speed up investment in regional infrastructure, the existing bottom-up planning approach could be complemented with a top-down approach. For example, policymakers could empower energy regulators to request that TSOs address regional infrastructure gaps.
The ‘efficiency first’ principle should be applied consistently to grid investment, which would mean a careful design of network tariffs and other signals to reduce grid needs and incentives to consider innovative grid technologies, such as digitalisation and grid-enhancing technologies.
To better reflect the costs and benefits of electricity network infrastructure arising from cross-border trade, policymakers and regulators should holistically review existing cost-sharing mechanisms.
To handle the acceleration of grid investment, the EU and member states must address upscaling issues.
The EU should ensure secure critical supply chains, including skilled labour and technical experts, while member states must prepare their DSOs to play a larger role, including handling digitalisation, data management, innovative grid technologies and methodical grid planning.
Finally, while the benefits of many grid investments are becoming more uncertain, lack of action can be even costlier, ACER concludes.
Regulators approving uncertain (anticipatory) investments, should have transparency on the associated risks and mitigating measures.
