Electricity Grids Under Pressure: Where to Invest in Europe’s Energy Transition

The blackout that occurred on April 28 in Spain and Portugal has reignited the debate on the energy transition in Europe. Although the conclusions of the investigation have not yet confirmed any hypothesis, the gigantic blackout has resurfaced accusations made by some against renewables, which are considered, due to their volatile nature, responsible for an imbalance between electricity generation and demand. However, the event has forcefully reminded us of an urgent need: the resilience and proper management of electricity networks are essential for Europe's energy security . Their financing is a priority.

The electrification of Europe is essential for the continent's energy transition strategy to succeed in the fight against global warming . It also represents a component of sovereignty in the face of dependence on fossil fuels, which Europe itself imports in large quantities. On 6 May, the European Commission announced that it would eliminate imports of Russian gas by the end of 2027, which accounted for 19% of gas consumption in 2024. Electrification is essential to avoid replacing one dependence with another, such as that on American liquefied natural gas (LNG).

Implementing the International Energy Agency's electrification scenario is a daunting challenge. It will require increasing the share of electricity in final energy needs from around 23% in 2022 to 57% in 2050, while renewables will need to increase from 42% to 90% of the electricity mix by 2040.

But the European electricity grid is aging . About 40% of the 11.3 million km of power lines are over 40 years old. The grid must therefore be renewed and expanded to absorb the massive electrification of the future: electric vehicles, heat pumps, industrial needs... In its analysis report, the European Court of Auditors predicts a 60% increase in consumption during peak hours by 2050 and warns that " significant investments ", estimated at 1,871 billion euros by 2050, will need to be made in the 27 countries of the European Union.

This modernization must be accompanied by the strengthening of interconnections between countries in order to manage fluctuations and generate savings of several billion euros per year. For example, the project in the Bay of Biscay between the French and Spanish networks should allow a doubling of the electricity exchange capacity, avoiding, according to RTE (Réseau de Transport d'Électricité), the loss of 7,430 GWh/year of green electricity. Electricity storage solutions are also essential, such as the introduction of smart meters to smooth out peaks in demand, and "prosumers", i.e. consumers who generate their own electricity.

Faced with these challenges, we are convinced of the need to support grid operators , key players in this transformation, such as the German company E.ON, one of the main grid operators in Europe, which has announced a €42 billion investment plan to modernise European energy infrastructure by 2028. We also invest in Elia, a grid operator in Belgium, which works on cross-border interconnections to facilitate the exchange of electricity between countries, and plays a key role in the development of offshore projects to connect offshore wind farms to onshore grids. Another example is National Grid, in the United Kingdom, which develops infrastructure and solutions for greater integration of renewable energy and improved grid resilience with continental Europe.

Transition is the gamble of the century . Investing in this theme of the future will provide an answer to major challenges.