Rightsizing the grid to prevent decarbonisation bottlenecks

Kristian Ruby, secretary general of Eurelectric, and Serge Colle, Global Energy & Resources Industry Market Leader at EY, discussed the critical need to invest in future-proofing our grids to ensure they don’t become a stumbling block in meeting our future decarbonisation targets.

“The grids in some cases have become a bottleneck for the energy transition…it has to do with the fact that the transition has assumed a pace now which in many ways is quite overwhelming,” said Ruby.

“The good news is the energy transition has accelerated immensely, the bad news is that this provides us with challenges in the short term… and we need to significantly ramp up the investment in grids in order to overcome this bottleneck…”

According to Colle, the global connection queue is approximately 3000GW, demonstrating the magnitude of the challenge that lies ahead of us.

And while DSOs have done well to add elements such as heat pumps, EVs and chargers, there is an acceleration coming that they are not prepared for.

Said Colle: “The problem is… we are now at the point where the environment will change quicker than we ever can change the grids…”

Distributed infrastructure is changing fundamentally and at pace, explained Colle, and a fresh approach will be needed to ensure we are prepared.

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A new approach

Colle and Ruby called for a new and pragmatic approach to grid investment to ensure we ‘win time’ and minimise risk.

Said Ruby: “What lies ahead of us is so different, if we are to reach these targets, we need to think differently about it. We need to scale for the demand in 20 years time.”

Colle called for investing with a mind to the future, taking into account how the network will look in 2050, and how customer assets can be used to stabilise the grid.

And of course, that means rethinking the accompanying business models.

Ruby explained that business models need to be adjusted now, even though the demand we are preparing for will only materialise in the future.

This means that for some time, a particular connection will be underutilised, he said.

“In order for the grid operator to make this decision to invest in the copper, to dig up the street and to build something for a future with much more electricity, there needs to be some de-risking mechanisms and incentives that make sure he is not punished for oversizing the grids for tomorrow, but rightsizing them for 20 years from now,” said Ruby.

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Ensuring grid modernisation accelerates ultimately lies with policymakers concerned about the bill associated with this transformation.

Ruby explained that after the recent rise in electricity prices, the “dilemma between the end of the world and end of the month” is still lingering in the minds of policymakers.

“So regulators on the one hand understand the massive need to ramp up investments in distribution grids, but on the other [hand] they are reluctant to accept the bill for the ramp up and pass that bill onto customers”.

Both Colle and Ruby emphasised that without a business case, investment simply won’t happen.

Time to close the regulatory loop

Both Ruby and Colle emphasised the message to the European Commission that there must be a closing of the loop between the climate targets and grid plans.

While the focus has been on renewable deployment as the main solution to decarbonise, policymakers need to focus on building a robust grid and flexibility moving forward.

And timing is critical, emphasised Colle. Countries need to revise regulatory landscapes now, because lengthy regulatory cycles could cause delays.

The challenge is big and should indicate to policymakers how and when to prioritise.

Said Ruby: “If the Commission means business with competitiveness, decarbonisation and energy security, we need to see a much more bold and a much more serious bet on infrastructure in the next mandate…[and] much better access for distribution grid projects to European funds.”

A systems perspective

Future-proofing grids needs to be considered from a whole system perspective, emphasised Colle.

With more intermittency being introduced, as well as more offshore generation being deployed, flexibility needs will triple by 2030, he added.

The good news, said Colle, is that there will be an abundance of flexibility to tap into. “We predict around 70 million electric vehicles on the road by 2030, if we give them the smallest possible battery like a hybrid style… that’s 2100GWh of battery capacity on wheels.”

Just tapping into a fraction of that could help balance the system.

Ruby added that, together with this focus on flexibility, massive reinforcement for both TSOs and DSOs will be required to ensure everything is connected with transmission.

More local balancing will see new EDMS and DERMS systems deployed, as well as smart meter deployments sped up and assets digitised.

And all this needs to happen without creating a huge bill for the customer, said Ruby, as this would ultimately disincentivize electrification and prevent us from progressing towards decarbonisation.

Kristian Ruby and Serge Colle will be discussing the future of grids at the Eurelectric Power Summit taking place in Lagonissi, Greece, 22 – 23 May 2024. The summit will address in detail the challenges and opportunities we face to keep the lights on.

Listen to the full conversation with Kristian Ruby and Serge Colle in this episode of the Energy Transitions podcast.