The Action Plan for Modernizing Energy Grids: Characteristics and Challenges

November 28, 2023, marked a significant turning point for European energy policy with the introduction of the Action Plan for the Networks by the European Commission. Outlined in 14 essential points, this plan aims to renew and modernize the European Union's electricity grid, preparing it to support a transition to a fully electrified and renewable energy-based system.

According to WindEurope, the ambitious vision presented requires massive investments, estimated at 584 billion euros by 2030, to address and overcome existing infrastructural challenges.

Modernizing Energy Grids: The Plan Leaves Some Gaps in Specific Details

The current context highlights a series of critical limitations in the existing grid, which is unable to effectively integrate new renewable-based generative capacities. Faced with a projected 60% increase in electricity demand over the next ten years, the urgency for updates and improvements becomes increasingly pressing.

These issues were central to significant events such as the Clean Transition Dialogue on February 26, led by Executive Vice President Maroš Šefčovič, and the Grid Roundtables on March 25, hosted by ENTSO-E, demonstrating that grid infrastructures remain a high-profile political priority within the EU.

Currently, delays in integrating grid connections represent one of the most significant obstacles to the spread of wind energy, a key sector for the EU's sustainability goals. The new Action Plan aims to address many of these structural issues but faces the need to accelerate the management of the long waiting queues for grid connections.

While robust in many areas, the plan leaves some gaps in specific details on how member states should prioritize reserving grid capacity for net-zero emission energy technologies.

Despite this, the plan offers numerous reasons for optimism, thanks to the inclusion of measures aimed at strengthening long-term grid planning.

The mandate given to ENTSO-E to identify terrestrial and maritime infrastructure needs, including optimizing storage and hydrogen infrastructure, is a move that promises to bring tangible benefits. Additionally, the ongoing electricity market reform and new principles for early investments—including cross-border cost-sharing for offshore projects—offer system operators opportunities to achieve returns on investments within reasonable times, despite the long duration of infrastructural projects.

Modernizing Electric Grids: Supply for Grids, Production of Substations and Transformers

The announcement that the European Investment Bank will identify suitable financial instruments to support grid investments is equally reassuring. This is essential to provide counter-guarantees for large infrastructural projects that would otherwise exceed the exposure capacity of private banks.

The focus on standardization in the supply chain for grids, including the production of substations, transformers, cables, and switchgear, is essential to massively expand the capacities needed to meet future energy needs.

Finally, the plan acknowledges the critical need to improve the visibility and availability of grid capacity for renewable energy developers, who need more capacity and more quickly.