Europäischer Rechnungshof - European Court of Auditors
Energetic efforts needed to level up the EU electricity grid
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Energetic efforts needed to level up the EU electricity grid
- Current pace of planned grid investments insufficient for future electricity demand and the energy transition
- Smarter technology, more flexible grids and an increased role for consumers can reduce investment needs
- Striking a balance between investment and affordable bills is a challenge
Enhancing the EU’s energy independence and combating climate change require a modernised electricity grid, capable of integrating more renewable energy and adapting to increasing electrification. For this to succeed, the EU will have to step up its efforts, according to a new review of the EU’s electricity grids by the European Court of Auditors.
“A large part of the EU electricity grid dates from the last century: almost half of distribution lines are over 40 years old. To ensure the EU’s competitiveness and autonomy, we need modern infrastructure that can support our industry and keep prices affordable,” said Keit Pentus-Rosimannus, the ECA Member responsible for this review. “The EU’s electricity demand is expected to more than double by 2050, so significant grid investment is inevitable. But we must use every tool available to minimise investment needs: new technology, storage solutions, and more flexible grids can all help to bring costs down.”
Large-scale grid investments are crucial to modernise the EU’s ageing electricity network and to support the transition from carbon-based to green energy. Grid operators’ investment plans – if the current pace continues – will total €1 871 billion between 2024 and 2050. This is below the European Commission estimate of investment needs, which ranges between €1994 and €2294 billion. Modernisation should accelerate, but is hampered by poor grid planning, lengthy permit procedures, and limited public acceptance, as well as shortages of equipment, materials, and skilled labour. The auditors point to mitigation measures, such as better coordination and integration of grid planning practices, streamlining permits, and the use of modern technology.
Optimising the electricity system can help to reduce investment needs, the auditors note. Pressure on the grid can be eased by adapting more flexibly to daily, weekly, and seasonal fluctuations in energy consumption and generation, thereby reducing the need for large-scale grid expansion. Technology offers many opportunities here (e.g. by developing and scaling up new storage solutions), even though some options can still be too expensive. Strengthening interconnections between the different EU countries would also help considerably. Tools such as smart meters can be effective at smoothing out demand peaks, but their roll-out is still slow in some member states. In addition, consumers who produce electricity locally and energy communities which produce and consume electricity collectively can play an important role.
Regulatory frameworks are crucial for investment decisions. Funding arrangements are particularly important in a situation where some operators face increased credit risks and struggle to access the necessary upfront investments. Regulation also determines how much operators earn, and how they are remunerated. Users are typically charged through network tariffs, which generally allow operators to earn a return on their grid investments, while also covering asset depreciation and operating expenses. However, striking a balance between investment needs and ensuring that electricity bills remain affordable for consumers – particularly households and energy-intensive industries – is a challenge. It is difficult to predict the long-term impact on electricity bills of grid investments and of integrating renewable energy sources (in addition to grid tariffs, bills include taxes and the cost of electricity itself).
Background information
In recent years, several initiatives and legislative packages have been developed to reach the EU’s climate and energy goals. Russia’s war of aggression against Ukraine increased the need for alternatives to gas, including the electrification of the EU economy. During the 2014-2020 budgetary period, roughly €5.3 billion in EU funding was available for grid investments. From 2021 to 2027, the amount increased to approximately €29.1 billion, mainly due to the Recovery and Resilience Facility (RRF), which is the largest funding source.
For this review, the auditors used publicly available information and material that was collected specially. They reviewed grid development plans, and analysed grid operators’ financial capacity data. The auditors also conducted information visits in Germany and Italy, and met with the Commission, national regulatory authorities, and other key stakeholders, their aim being to analyse the state of play, best practices and challenges. Review 01/2025 “Making the EU electricity grid fit for net-zero emissions” is available on the ECA website.
Contact:
ECA press office: press@eca.europa.eu