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'Transition at risk' of European power distribution underinvestment: study

Highlights

Aging distribution networks not fit for purpose

Up to 70% investment increase needed

Societal benefits 'outweight costs'

London — Delivery of Europe's energy transition is at risk unless substantial new investment is made in aging electricity distribution networks, power sector associations Eurelectric and E.DSO said Jan. 14.

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Distribution grids need Eur375-Eur425 billion ($456-517 billion) of investment to 2030, a 50% to 70% increase on the previous decade, if they are to integrate renewables and support the electrification of industry, transport and buildings, according to a new study of 10 European countries by the two associations and Monitor Deloitte.

"The single biggest investment driver, however, is modernization 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% by 2030," the associations said.

"Distribution grids are the backbone of the digital and energy transition...but to be fit-for-purpose there is an urgent need to ramp up investments in Europe's distribution grids," they said.

Despite average annual investment needs of Eur34-Eur39 billion, the impact on electricity prices and grid tariffs was likely to be moderate if policy makers and regulators provided the right framework conditions and a smart tariff design, it said.

"We call on policymakers to improve investment frameworks and tariff design, facilitate access to EU funds and accelerate authorization and permit granting processes," said Eurelectric Secretary General Kristian Ruby.

Societal benefits of an effective energy transition, meanwhile, would outweigh the economic impacts, the study argued.

"The EU could save over Eur175 billion in fossil fuel imports annually, and ultimately reduce the average electricity costs by Eur28-Eur37 billion in the long term," it said.

Further, the study showed some 90% of investments could be captured by EU manufacturers and service providers, sustaining up to 620,000 jobs in the EU27 and UK.

The study assumes some 510 GW of new renewable capacity will be installed at EU27 and UK level by 2030, of which 470 GW would be central solar and wind capacities, and 40 GW self-consumption.

It also assumes a cumulated annual growth rate in electricity demand of 1.8%. Industrial and related electrification demand would reach 3,530 TWh by 2030, with 50-70 million electric vehicles (up to 25% of the passenger car fleet) and 40-50 million heat pumps adding to transport and buildings demand.