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Making the 2020s the decade of distribution grids

Distribution grids are the backbone of the digital and energy transition, as they ensure a continuous and reliable electricity flow, integrate the majority of renewable energy sources and enable the creation of new services for consumers, underlined the Polish Electricity Association (PKEE). But to be fit-for-purpose in an increasingly decarbonised, decentralised and digitalised power system, there is an urgent need to ramp up investments in Europe’s distribution grids.

European distribution grids will need investments of 375-425 billion euros until 2030. That is the main conclusion of a landmark study conducted by the industry bodies Eurelectric and E.DSO, which reveals a need to ramp up grid investments by 50-70 per cent in the 2020s compared to the previous decade.

A significant part of the investment needs is driven by the ongoing energy transition: expansions and replacements related to the integration of variable renewables such as solar and wind, 70 per cent of which will be connected at the distribution level, as well as to the progressive electrification of industry, transport and buildings.

“Grid investments are urgently needed for the energy transition and they hold a huge potential for job creation,” said Kristian Ruby, Secretary General of Eurelectric. “With the right framework conditions, we can make the 2020s the decade of distribution grids. We call on policymakers to improve investment frameworks and tariff design, facilitate access to EU funds and accelerate authorisation and permit granting processes”. 

The single biggest investment driver, however, is the modernisation of the infrastructure due to ageing. The study finds that approximately one-third of the EU’s grids is already over 40 years old. This share is likely to surpass 50 per cent by 2030. 

Moreover, the societal benefits in relation to sustainability, economy and competitiveness, brought about by this transformation will outweigh the economic impacts. The EU could save over 175 billion euros in fossil fuel imports annually, and ultimately reduce the average electricity costs by 28-37 billion euros in the long term.
Additionally, the study shows some 90 per cent of investments could be captured by EU manufacturers and service providers, contributing to the post-pandemic economic recovery.

“We own know-how and the technologies, IT and IA, to enhance the transition of the energy system,” added Christian Buchel, Chairman of E.DSO. “Nevertheless, we need decision makers, political bodies, citizens, regulators, financial institutions and NGOs to understand how essential it is to reach the requested high level of quality investments that we can assure”.

The report takes into account also two countries from Central and Eastern Europe: Poland and Hungary. The first would need approximately 25 billion euros of investments in power distributions grids by 2030, while Hungary could reach 3.5 billion euros. The highest expenditure for Poland will concern the electrification of buildings and industry (7 billion euros) as a result of higher growth in new customers and lower current electrification share. Hungary will focus on modernisation as the renewal of the grid will ensure the quality of service in an increased demand for electrification and renewables. On the other hand, the country will spend less for the e-mobility sector as major EV penetration is expected only after 2030.

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