How to unlock the potential of Europe’s grids in the energy transition

Investment, regulation, procurement and collaboration are four key areas to enable the potential of Europe’s electricity grids in the energy transition.

With the importance of the grids fast rising on the energy transition agenda, more and more effort is being put towards policies and actions for their future development.

As part of this effort ENTSO.E’s high-level forum focussed on the four key areas of investment, regulation, procurement and collaboration to give input to the ongoing EU-level policy discussions on unlocking the potential of the grids to support the region’s net zero ambitions.

Investment in future-proof grid infrastructure

The need to significantly ramp up investment in the transmission and distribution grids is an often repeated theme, as is the need for grid extension to be timely.

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Participants acknowledged the need to mitigate the higher risk profile of grid developers driven by the need for higher investment rates and they confirmed that anticipatory investments become the norm in grid development, but also in the supply chain.

There is, however, a need for a balance in accelerating investments in grid expansion/reinforcement whilst ensuring affordability for consumers.

Needs identified include exploring the availability of further public funding at EU and national levels and considering having specific funds and programmes for smaller and medium-sized DSOs.

Knowledge sharing also is key and continued engagement in the Copenhagen Forum on Energy Infrastructure and the Investors’ Dialogue on Energy was recommended.

Regulation to incentivise the efficient deployment of grid capacity

Regulatory tools are available today which are fit for purpose but regulatory frameworks must be predictable and applied in a balanced way to avoid unfairly benefitting one type of investment.

Regulatory approaches also must be adapted to the new challenges for capital and operational costs, as well as to ensure returns are in line with the financial environment. Policy targets and regulatory frameworks must be aligned under a strong European political project.

A comprehensive, clear, and certain framework for investment is needed which would be open for, among others, anticipatory investments, with a clear understanding required of what is meant by this.

Other needs highlighted included improvement in the permitting procedures, holistic long-term planning beyond 10 years ahead, sector integration and industrialisation and replication of smart, innovative and digital solutions.

People and procurement

The key challenges in this area are increasing the manufacturing base and shortages in a skilled workforce.

The long-term holistic planning could help to overcome manufacturing capacity bottlenecks but it needs to be incentivised.

Collaborations among all participants are encouraged, including the establishment of long-term partnerships between manufacturers and grid operators and frameworks to support network operators and manufacturers to enter into balanced financial agreements while sharing risks.

Grid operators and technology providers also should work towards standard specifications to drive efficiencies down the supply chain and there should be streamlining and harmonising of protocols, for example for grid connections and for permitting.

The energy industry and public and private institutions and governments should support and develop skills initiatives to develop training and reskilling programmes and to promote technical careers.

Working together

The energy transition represents a significant change for those impacted and therefore it is essential to build trust.

Cooperation between TSOs and DSOs should be extended to the engagement of local stakeholders and citizens. Political leadership is needed and TSOs, DSOs, regulators, industry and other stakeholders should be working together.

In particular, a change in the cultural approach to public engagement is needed and should be rooted in the objective of developing respectful long-term relationships based on trustful relationships.

A fair and just balance, given the perceived asymmetry of benefits and costs, also needs to be addressed.

Ultimately, stakeholder public engagement is paramount in all aspects of planning, deployment and during operation to keep a trusting long-term relationship with the communities, understanding and respecting their needs.