According to the International Energy Agency, this will involve adding or renewing more than 80 million kilometres of grids by 2040, the equivalent of the entire existing global infrastructure, and doubling the rate of investment in electricity grids, which should exceed $600 billion per year, with an emphasis on digitisation and modernisation of distribution networks.
-Wind and solar PV must account for more than 80% of the total increase in energy capacity in the next two decades, compared to less than 40% in the last two decades. This will also require a doubling of system flexibility by 2030 so that this does not affect supply stability.
The pace of implementation of new investments and penetration of green technologies is, however, lagging behind all these projections. The current market reality is far from these targets.
Technologies aimed at improving the grid are not always included in the energy planning process of national regulatory authorities, despite the fact that their integration into the system can potentially increase total grid capacity by between 20% and 40%. Without upgrades, the risk of outages rises, already costing around USD 100 billion per year.
New infrastructure typically takes five to 15 years to implement due to permitting challenges, which often involve multiple authorities and jurisdictions along the entire route. This is five times longer than new renewable energy projects and up to seven times longer than new electric vehicle charging infrastructure.
Fragmentation of actors is another key constraint for the modernisation of the European electricity grid. Just over two thirds of new investments must be made in the distribution network, where operators must provide the equipment, including smart meters and local storage systems. There are 30 transmission system operators (TTOs) in the EU, with Germany having four and Austria two, but thousands of distribution system operators (DSOs).
Interconnectivity is key to ensuring energy security and reliability: the integration of European electricity markets could bring an estimated benefit of up to ¤34 billion per year to citizens.
The slow pace of digitisation of distribution networks is in fact already limiting the availability of real-time data, and this slows down the whole modernisation process, as it is precisely this real-time data that reduces the cost of upgrading the existing network infrastructure.
In the EU, fifteen countries, one of them Spain, have a smart meter roll-out rate of more than 80%, but Germany, with just over 50 million points, has one of the lowest adoption rates, with less than 10%.