EU Official: Power Grids Need Annual Investments of EUR 50bn to Support Transition
Date: April 1st 2021
Author: Tanja Srnovršnik
Investments in electricity grids need to double in the EU compared to the previous decade, to reach more than EUR 50 billion per year, due to increasing reliance on electricity and a ramp up in solar and wind, said Kadri Simson, European Commissioner for Energy, on Tuesday.“Today, renewables taken together are the second largest source of power generation after coal. However, in our latest update, the International Energy Agency (IEA) already expects a landmark shift by 2025,” noted Mechthild Wörsdörfer, Director of Sustainability, Technology and Outlooks at the IEA.
By 2025, the IEA foresees “a key role for renewables globally, surpassing coal in electricity, while hydropower will still be the largest source of renewable power.”
“However, we also foresee rapid growth elsewhere, primarily in wind – onshore and offshore – as well as in solar PV. This is even more true for Europe,” said Wörsdörfer during the annual conference of the Council of European Energy Regulators (CEER).
Clean energy investments in Europe up 67%
Meanwhile, Simson noted that the past (pandemic) year “has given us a snapshot of a renewables-dominated energy system. As expected, it has lowered energy prices, but it has also remained resilient.”
While last year some projects based on clean technologies faced delays in the energy sector, it did not result in any major impacts to total investments. At USD 82 billion, which is up 52%, investment in renewable energy capacities in Europe was its highest since 2012 according to Bloomberg, mentioned Simson.
“In terms of overall clean energy investment – including not only renewable capacity but also electric vehicles, heat pumps, storage and carbon capture and storage (CCS) – Europe accounted for the biggest slice of global investment with USD 166 billion (up 67%), while China accounted for USD 135 billion (down 12%) and the U.S. USD 85 billion (down 11%),” stressed the commissioner.
“We need to build on this momentum and use the unique opportunity offered by the EU recovery plan and NextGenerationEU to ensure a green and resilient recovery,” assessed Simson.
More focus needed on grids
Meanwhile, “as the world increasingly relies on electricity, and solar and wind become more important and cheaper, the rest of the electricity system cannot stand still,” stressed Wörsdörfer, noting that one of the lessons learnt should be that “we need to also look at grids.”
“There is a need for major investment in grids – in smart grids – but also in other sources of flexibility to accommodate the rise in wind and solar,” said Wörsdörfer.
Simson agreed, mentioning that the Commission estimates that from now up to 2030, investments in electricity grids need to double compared to the last decade, to reach more than EUR 50 billion per year.
“More than EUR 530 billion of investments will be needed in offshore grids alone by 2050. Our hydrogen strategy estimates that investments of around EUR 65 billion would be needed by 2030,” added Simson.
The revised TEN-E regulation will have to trigger these further investments, said Simson.
EVs could provide 20% of required flexibility
“Energy system integration stands out as the blueprint for planning and operating the energy system “as a whole”, across multiple energy carriers, infrastructure, and consumption sectors. It will create stronger links between them with the objective of delivering low-carbon, reliable and resource-efficient energy services, at the least possible cost for society,” explained the Commissioner.
According to Simson, better integration “will provide additional flexibility for the overall management of the energy system, thus helping to integrate the increased shares of variable renewable energy production. It will also boost storage technologies: pumped hydropower, grid-scale batteries and electrolysers providing flexibility in the electricity sector.”
“By 2050, electric vehicles could provide up to 20% of the flexibility required on a daily basis,” said Simson.
“Through the closer integration of the power and heat sector, electric heat appliances could already make use of real-time electricity prices to smarten demand response,” she mentioned.
“Finally, by linking up the different energy carriers and through localised production, self-production and smart use of distributed energy supply, system integration can also contribute to greater consumer empowerment, improved resilience and security of supply,” she concluded.
Under the ‘Fit for 55’ package the Commission is preparing detailed legislative proposals on how to achieve the 55% greenhouse gas reduction target by 2030. A revision of the energy efficiency and renewable energy directives will form part of this package.
This article is available also in Slovene.