Energy Transition: EU to Invest €584 Billion in Electricity Grids

The European Commission unveiled a plan on Tuesday aimed at modernizing its electricity grids in preparation for the expansion of renewable energies and exploring means to finance these initiatives.

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The EU is set to require a staggering €584 billion in investments to modernize its electricity grids by 2030, and efforts are currently underway to secure funding.

The action plan revealed by the European Commission aims to ready the transmission and distribution networks for the increasing share of renewable energies (wind, solar, hydropower, etc.). The EU has set a target of raising this share to 42.5% of its overall energy consumption by 2030, up from approximately 22% today.

Clean mobility, heating, air conditioning, industrial electrification, green hydrogen production—all these factors will generate a substantial influx of electricity, necessitating a doubling of network capacity. However, 40% of these infrastructures are over forty years old.

Vital to the energy transition, these European electron highways must incorporate more capacity, become more "intelligent," and be safeguarded against potential cyberattacks.

"The networks will need to adapt to a more digitized, decentralized, and flexible system with millions of solar panels on rooftops, heat pumps, and local energy communities sharing resources, as well as increased offshore renewable energy, electric vehicles to recharge, and growing hydrogen production," summarizes the Commission.

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Nevertheless, the creation of a dedicated fund for networks is not envisaged. The focus is primarily on accelerating projects of common interest, benefiting from European funds and expedited procedures.

In particular, cross-border networks must be capable of transporting large quantities of renewable energy. For these, the EU aims to introduce regulatory incentives, particularly regarding cost-sharing among member states for offshore projects.

On the same day, the Brussels executive published its first list of two types of 166 cross-border projects: those of common interest and those of mutual interest, dedicated to the Green Deal, which aims for EU carbon neutrality by 2050. They are expected to contribute to doubling the capacity of the EU network, one of the most interconnected globally, by 2030.

Brussels also advocates improving long-term network planning to accommodate renewable energies, as well as encouraging their better utilization through increased transparency and improved tariffs for smarter networks.

"Investments in networks will yield significant benefits, including reducing energy costs and greenhouse gas emissions," notes the EU, estimating that cross-border projects "can reduce production costs by €9 billion annually until 2040."

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The Commission promises to engage in dialogue with investors, credit agencies, financial institutions, regulatory authorities, etc., "to eliminate financing obstacles, including through loans, equity, and guarantees." It also plans to leverage new financing instruments, particularly from the European Investment Bank.

This initiative comes as the EU revised its regulatory framework for trans-European energy networks in 2021, aiming to modernize, decarbonize, and interconnect the cross-border energy infrastructures of member states.

A reform of the electricity market is also underway, along with a law aimed at boosting the manufacture of green technologies in Europe, widely subsidized.

"Without these investments, the energy transition will not go very far. To accelerate it, the establishment of adequate infrastructure is the missing piece of the puzzle," said Kadri Simson, European Commissioner for Energy.