GRIDS

FOR SPEED

#Grids4Speed

Europe is on an ambitious path of decarbonisation. As we hurtle towards 2030 reductions in emissions will need to drop by 55% compared to 1990 levels, spurred on by more than 1,200 new gigawatts (GWs) of renewable energy sources (RES) and at least a 35% electrification rate of final energy use. The delivery system for this electricity needs to be in place. With less than six years to go, there is a need for speed. That’s what this study – Grids for Speed – is all about. 

The need for speed

There is no doubt that Europe’s future is electric. Electrification is at the heart of the European Green Deal and this is making waves across the Continent. Transport, heating and even industrial processes are using more and more power in final use processes. Meanwhile, we are adding staggering amounts of renewable energy – specifically wind and solar –  to the energy mix every year. 

While electrification ramps up at unprecedented rates, the system supporting them needs to do so in lock step to keep the pace of the transition high. 

From 1990 to today, electricity demand has grown by 500 terawatt-hours (TWh) to 2,500 TWh. But in the next 30-year period, this will increase four times faster, increasing 2,000 TWh to over 4,500 TWh by 2050. 

Electric vehicles (EVs) and their chargers, heat pumps and solar photovoltaics (PV) will lead this charge. Electric vehicles and heat pumps will each number approximately 250 million by 2050 – a roughly twenty-fold increase from today. Meanwhile there will be over 7 million public EV chargers, a near sixty-fold increase from today and a seven-fold increase in distribution-connected renewables projects to around 2,300 GW. 

20x

EV & heat pump

8.1x

Distribution-connected RES capacity

60x

Installed EV chargers

Connecting all these electric elements to our already constrained grid will be the challenge to overcome in the next decades.  Eurelectric’s President and CEO of German utility, Leonhard Birnbaum, put the scale into perspective: 

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“…We will probably get to the point that up to 2030, we need to make one connection every seven seconds of a working day” – this means E.ON will need to make approximately 5.7 million connections from 2024 until 2030.

Every 7 seconds a connection
1

cyber
attacks

extreme
weather

customer
expectations

ageing
grids

While electrification is underway, there are other challenges we cannot ignore. Cyber attacks in today’s more tumultuous world are increasingly likely to take our lines offline, as are extreme weather events with the intensification of climate change. At the same time, customer expectations are also changing as is the way they interact with the grid, all this while the infrastructure ages. Today, 30% of our grids are over 40 years old, which by 2050 could reach 90%. Such developments challenge the reliability of our power system. 

Investments in modernisation: digitalisation, reinforcement and expansion, are therefore crucial for an electric future. 

If we do not address the challenges faced today, the grid will become a serious bottleneck, putting the electric future in jeopardy. Instead of the significant growth mentioned above, we can expect 62 million less heat pumps, 73 million less EVs and 371 GW less solar PV to be connected in Europe in 2050 than if we take investment in the grid seriously. 

Heat pumps

>

62 M

not connected by 2050

EV

>

73 M

not connected by 2050

Solar PV

>

371 GW

Not connected by 2050

How do we take grid investment seriously?

Investing for speed: upping the game

To be clear, we have done well investing in our grids to date. With an average of €33 billion (bn) per year going invested in our distribution grids over the past years on average, we are at a much higher level than ten years ago and getting things done with it: connections, number of substations, expansion and digitalisation have all increased. But as electrification takes off, so too will the needed investment. 

No less than a doubling of investment will be needed to keep up with a doubling of electricity consumption. That means €67 billion per year from now until 2050. 

What is all this money needed for? There are several areas we need to invest in – some more costly than others, but all no-less important than the other: 

Demand reinforcements

Roughly €29 bn per year to expand grid capacity and enable connections of new power demand.

Replacements and renewals

Roughly €18 bn per year to modernise cables as the ones in place age out. Remember, 90% of EU power lines will be over 40 years old by 2050.

Generation reinforcements

€8 billion a year will enable capacity expansion to connect assets to the grid. We are talking of hundreds of gigawatts of clean and renewable energy, 70% of which will connect at the voltage level.

Resilience

Our electricity cables will need to handle external events, including cyber-attacks and extreme weather events. As these issues become more prevalent, we must earmark €5 bn a year to resilience and reliability.

Smart meters

Customers can use smart meters data to adjust their demand to cheaper periods while DSOs can understand areas of the grid facing congestion and respond accordingly. This should see €4 bn a year to expand their roll-out.

Automation and digitalisation

These enable further system benefits, reducing the need for human oversight and adjusting operations to the reality on the ground in real time. This should also see €4 bn a year.

“Billions” is a lot…

and is certainly no pocket money, but in 2023 we also spent €451 billion (source: Eurostat) – nearly 7 times more – on fossil fuel imports. And this one year after REPowerEU which was meant to cut gas consumption across the Bloc by 15%… Europe also spent 1.5 times more on its transport infrastructure – road and rail in 2021. 

…but there are strategies to reduce…

We identified three strategies to lower the overall grid investment cost to €55 billion a year: 

1

Anticipatory investments. Today, investing in power demand that has not yet been requested to connect is not enabled. It would however be the most cost-effective way to upgrade the grid at the speed and scale needed for our energy transition. This could reduce the overall investment figure by over €6 bn a year.

2

Asset performance excellence. These systems account for the replacement of old infrastructure and the digitalisation of the rest to improve the network functioning. With this solution, the overall financing need could drop by another €1 bn with the cost of digitalising the grid factored in.

3

Grid-friendly flexibility that enables system operators to manage congestion, again accounting for the cost of digitalisation and generation to enable this would reduce the investment figure by another €4 bn.

…and new technologies can help even more

Beyond effective strategies that lower the overall investment need, we also have technological solutions that can go even further. New solutions include: 

Smart transformers

These solutions enable the changing of voltage levels in a dynamic matter, whether at medium- or low-voltage (MV or LV) – something usually reserved for high-voltage (HV) transmission lines. These transformers can optimise lower voltage distribution lines and reduce the overall need for reinforcement.

Dynamic line ratings (DLR)

A solution that enables real-time observation of external factors such as weather so system operators can safely increase limits and therefore line capacity, reducing the need for reinforcement. We also collected case studies from our Business Associates with practical examples of how DSOs manage complexities of the grid.

Digital twin

A digital twin is a digital model and representation of physical network assets and their environment. The twin is developed with satellite pictures to depict the asset and its environment while existing network sensors are used to understand current conditions. With the modelling of the network and loads and other parameters of the network, it gives real time observability of the power infrastructure. This enables to use and operate the network more efficiently and optimises planning of capital expenditures (CapEx) to improve assets.

We also collected case studies from our Business Associates with practical examples of how DSOs manage complexities of the grid.

Case studies

Grid Investment Planning and Execution

Grid requirement tackled

  • Due to the focus on renewable energy sources, an increasing number of infrastructure construction, maintenance and customer connection projects have to be evaluated, planned and executed. This leads to a shortage of experienced project planners and therefore requires digitization of the planning process and improved, data-driven decision support.
  • The different nature of investments requires a wholistic overview about investments (Capex) but also expenditures (Opex) to have the full picture.
  • An increasing amount of data from network assets and smart meters has to be taken into account in the decision and planning process.
  • Further targets influencing the asset investment strategy include higher energy efficiency, shift to renewable gas and to a circular economy.

Approach & Solution

  • Approach: Provide an integrated solution landscape that enables strategic asset investment planning and the simulation of different business models based on real-time insights. Planning is seamlessly integrated with portfolio management and project execution. The solution landscape allows full traceability to enhance transparency, supports investment and project planners, standardizes the overall process and enables data driven decisions.
  • Solution: The solution landscape combines an ERP solution (SAP S/4HANA) with integrated Portfolio and Project Management (SAP EPPM) and an analytical solution (SAP SAC). Unisys Integrated Portfolio and Investment Management (IPIM) extends the solutions with an overlay that creates a native integration between modules, allows mass data upload, an improved user handling and additional technical accelerators as well as comprehensive process knowledge.
  • Implementation: 6 months implementation as part of an SAP S4/HANA transformation to drive overall digitalization of the business led by the ERP and Finance team from the customer. It was started with the investment and budgeting processes to show quick wins during the transformation. Change comes often with resistance. When centralizing and standardizing processes a key challenge is to  have all stakeholders on board and continuously

Benefits

  • Benefits for the end-customer: Ensure security of supply in spite of increasing volatile renewable energy sources and provide clean energy.
  • Benefits for the DSO:
    • Consolidate and standardize global processes covering strategy, expenditures, investments and operations
    • 30% increase of PMO (Project Management Office) efficiency: Better manage high quantity and frequency of investments and divestments and integrate with other processes.
    • 25% quicker planning process: Real-time monitoring of investments, providing increased transparency and allowing faster and more-effective decision-making
    • Better data reliability and availability as all data resides in one platform and a reduced risk of tool interdependencies. The result is increased agility, data transparency on all organizational levels and aligned goals.
  • Benefits for the energy system: Better manage investments required for the shift to renewable energy sources. Leverage investments to boost energy efficiency and implement a circular economy.

Coordinated operation of distributed energy resources

Grid requirement tackled

Challenges: Customer connections, Grid Planning and Grid Operations.

Investments:

  • Curtailment/Reinforcement reverse power flow to allow: Renewables integration, Overload prevention and Congestion alleviation.
  • Growth & grid reinforcement to accommodate: Increase in distributed generation and Electrification of heat and transport.
  • System digitalisation & substation automation to power: Operational and flexibility systems and Data management/Analytics.

Approach & Solution

  • Approach: The holistic coordination of distributed energy resources from the secondary transformer substation is the best way to tackle expanded grid requirements.
  • Solutions: The operation of smart distribution transformers with OLTC is coordinated with existing distributed generation, batteries and EVs.
  • Implementation: This holistic approach has been experimentally assessed in two leading European Smart Grid Laboratories: Test Centre for Smart Grids and Electromobility (SysTec) of the Fraunhofer IEE, and the Energy System Integration Lab (SYSLAB) of the Denmark Technical University (DTU). Nowadays, we are waiting for regulatory sandbox approval (along 2024) to test the proposed use case in a small Spanish DSO: CMH (Puerto Lapice).

Benefits

  • Benefits for the end customer: Improved quality of energy supply, avoided or limited need for curtailment.
  • Benefits for the DSO: Increased Hosting Capacity, thereby delaying or limiting expensive and long-term grid reinforcement.
  • Benefits for the energy system: This holistic approach, based on DER operation and coordination from the secondary transformer substation, complements local flexibility markets, which alleviate congestion in a market-based manner.

Enhancing DSO Flexibility with INGA for EV Charging Infrastructure

Grid requirement tackled

Challenge: Addressing grid congestion and instability by managing the demand from EV charging infrastructure through proactive collaboration between   DSOs and CPOs.

Grid Requirement Tackled:

  • Data Integration Platform: Established a comprehensive data platform integrating EV charging demand with grid capacity, utilizing smart algorithms for peak load management.
  • Secure Communication: Enabled secure, trusted exchanges between DSOs and CPOs for real-time congestion management, leveraging secure & interoperable communication protocols.
  • Demand Curve Flattening: Implemented strategies for demand response, distributing EV charging loads more evenly across the grid.

Approach & Solution

Approach: Employed a combination of Intertrust’s secure data orchestration and INGA’s intelligent grid applications to facilitate a seamless, efficient dialogue   between grid operators and charging service providers, underpinned by smart charging techniques.

Solutions:

  • Standardized Interface: Adopted OpenADR for uniform communication, ensuring interoperability across various charging infrastructures and grid systems.
  • Demand Clearing House: Centralized data management for optimizing load distribution, enhancing grid resilience against surges in EV charging demand.

Implementation:

Timeline: Launched in 2021, with ongoing phases for integration, testing, and scalability adjustments.

Collaborators: INGA is led by E.ON and is built on Intertrust technology. The goal is to integrate multiple DSOs, and CPOs focusing on establishing a scalable framework for nationwide implementation.

Benefits

Benefits:

  • End-Customer: Ensured uninterrupted access to charging services with reduced risk of grid overloads and blackouts, enhancing grid reliability.
  • DSO: Gained advanced tools for demand management, mitigating congestion risks and improving grid efficiency.
  • Energy System: Supported the transition to electric transport, contributing to a sustainable, low-carbon future with increased renewable energy integration

Grid Planning- Decarbonization of residential and commercial heating

Grid requirement tackled

  • Electrification of heating of commercial and residential buildings will increase the energy demand. However, with the accurate planning and optimized demand management( DERMS system) we can optimize network usage and reduce the need of infrastructure upgrades.
  • A distribution level simulation study helps in achieving decarbonization goals set up policy makers. Renewable penetration targets and highlights the load profile and identify the peaks (1- season , 2- time (within a day).
  • This study would help with grid planning and management, highlighting areas needing future investment to ensure that the grid is fit for the growing demand and to integrate renewables into the system safely, maintaining reliability and performance.

Approach & Solution

  • Approach: [Gather distribution load data, create model in model manager module ( DERMS) , run simulations for 5 years , 10 years horizon to estimate the demand growth and anticipated impact on the grid reliability. We will also estimate the DERs and recommend DER management with DERMS Optimization model]
  • Solutions: [Solution is to perform a distribution grid planning study for selected city with software like DERMS. Upon gathering information from the study, DSO can precisely plan the infrastructure upgrades, create demand response policies, derive customer incentives for peak shaving etc. ]
  • Implementation:
    • Milestones – build Data Model > Power flow analysis for future years 2026, 2030 etc , study the results to identify the impending challenges in the grid resilience.
    • Shareholders: Utilities who usually owns the data models, GE Digital – to create the model

Benefits

  • Benefits for the end-customer: Economical , uninterrupted and safer energy supply.  KPI : Diff in energy prices over the years, number of hours without power supply (CAIDI)
  • Benefits for the DSO: Grid resilience with 100% Decarbonization roadmap . Better DER management and increased visibility of demand on residential, commercial loads.
  • Benefits for the energy system: Better grid planning, Integrated study – (transmission and distributed ) level for reliable grid operations and planning.

If your company has a solution that could be featured here, reach out to

The payoff

Investments are never made without a payoff – so what is the Grids for Speed payoff? 

Let’s go back to our fossil fuel imports. As mentioned, our figures are in line with the European Commission’s S2 scenario of the 2040 Climate Target Impact Assessment, which foresee massive electrification. This scenario also corresponds with a massive reduction in the imported fossil fuel bill in Europe – from €451 billion in 2023 to €142 billion a year from 2041-2050. 

Grids for Speed enable electrification that reduces fossil fuel imports by €309 billion a year for the 2040s. 

But it isn’t just economics

Grids for Speed is not simply about economic efficiency. Its about much more, including our energy security and climate action. 

In December 2023, the European Environmental Agency showed that the current national energy and climate plans (NECPs) submitted by Member States put the EU on track to miss more than 30% of our 2050 net zero target. Grids for Speed enables rapid electrification that will speed up decarbonisation efforts across society and meet our climate ambition.

Electricity only makes up 23% of final energy consumed in the EU meaning a majority of Europe still runs on fossil fuels, more imported than not. This raises serious concerns for our security of supply, as we learned with the energy crisis. Grids for Speed can repatriate our energy security by enabling more homegrown clean and renewable energy deployment and energy system flexibility.

Policy recommendations

How can we capitalise on Grids for Speed? Based on the joint analysis we undertook with EY, we have arrived at five key policy areas where we can enable the financing flows for Grids for Speed.

1

REGULATION

CHALLENGES
Regulation not ready for major investment push.
SOLUTIONS
Financing costs and growing OPEX recognised regularly & competitive returns on capital.

2

FINANCE

CHALLENGES
Funding, tariffs & financial tools don’t allow sufficient investment
SOLUTIONS
Easily accessible funding, financing instruments and de-risking tools.

3

PERMITTING

CHALLENGES
The needs and speed required must be reflected in permitting.
SOLUTIONS
Streamline permitting with "bundled" approach (e.g. RES & grid expansion permits linked.

4

SUPPLY CHAIN

CHALLENGES
More critical materials, +100% more transformers and +70% more kms of lines needed.
SOLUTIONS
Upsize EU manufacturing, diversify supply chain, shorten procurement and delivery, improve recycling.

5

SKILLS

CHALLENGES
+2M jobs and skilled workforce needed.
SOLUTIONS
Create re-&-upskilling programmes & accelerate automation.