The power network is one of Europe’s critical infrastructures, as it transports and enables the access of reliable electricity to all businesses and households. With around 18 million kilometers of power distribution lines across Europe – 450 times the Earth’s circumference – the grid is considered a ubiquitous and universal good.
Yet, the role of power distribution is evolving as Europe accelerates its transition to a net zero emission economy. But what makes up the electricity grid? How does it work? What are the challenges ahead, and how resilient are our power lines to extreme weather events, evolving cyber threats and increased power demand?
What is the electricity grid?
The power grid is an interconnected network of transmission and distribution lines, and substations, transporting electricity between producers and consumers.
From the high-voltage transmission lines to the low-voltage power distribution networks, the grid is the backbone of our electricity infrastructure. Without it, there would not be any supply of electricity to the hundreds of millions of connected households and industries in the EU.
The grid is treated as a natural monopoly due to the expensive costs required to set, operate and maintain the infrastructure required for delivering power. Having a selected number of entities responsible for building and managing electricity networks in a specific area is more efficient and cost-effective since duplicating infrastructure in the same area would be impractical.
These entities are called Distribution System Operators (DSOs).
Who are DSOs?
DSOs are distribution system operators in charge of managing our electricity infrastructure and ensuring security of supply. There are over today who make sure electricity is efficiently carried from Europe’s power lines directly to around 300 million European households and businesses.
European system operators manage around 10 millions kilometres of power lines and supply around 2800 TWh of electricity per year. DSOs are regulated companies, meaning that their activities and financial resources are overseen and regulated by National Regulatory Authorities to ensure the cost-efficient, reliable and secure development and operation of their networks.
Who are the National Regulatory Authorities?
The National Regulatory Authorities (NRAs) are independent governmental entities responsible for regulating and overseeing the electricity industry within a specific country or region. The NRAs regulate the DSO monopolies to ensure transparent and non-discriminatory access to electricity networks, ensure their smooth functioning, guarantee their independence, and contribute to the construction of the European internal electricity market.
At European level, the cooperation between the different NRAs is ensured by ACER, the Agency for the Cooperation of Energy Regulators. The agency was established in March 2011 by the Third Energy Package legislation as an independent body to foster the integration and completion of the European Internal Energy Market for electricity and natural gas.
What does Eurelectric do about power distribution?
At Eurelectric we advocate on behalf of European distribution system operators to have their views and needs heard during the European policy-making process at all levels, including the drafting, negotiation and implementation of new legislation.
The task of a DSO is not an easy one. With the energy transition in full swing, it’s crucial to keep a neutral, market-facilitating distribution network as a platform where new forces in Europe’s energy system interact. Yet the speed and scale needed to deliver on Europe’s decarbonisation targets and reach net zero requires an urgent modernisation of our ageing electricity lines. Getting our electricity infrastructure ready for net-zero is one of our Presidency’s key priorities, as detailed in Eurelectric’s Presidency Manifesto.
In Eurelectric’s President Leonhard Birnbaum words:
“The big transformation of our economy and society happens in the power grids. We must urgently prioritise the growth and digitalisation of our infrastructure to enable consumers to reap the benefits of their own flexibility and ensure access to clean, reliable electricity.
Policymakers and regulators need to supercharge the green agenda and support electrification. Simple cost control is no longer an option, and Eurelectric will be carrying this message loud and clear in Brussels and beyond.”
What is the difference between power transmission and distribution?
Historically, the power system can be separated into three distinct parts :
- Power generation
- Power transmission
- Power distribution
Power generation is where the electricity is produced by means of different kinds of power plants.
At power transmission level, the electricity is conveyed across long distances at high voltage levels (> 220 kV) to reduce power losses.
Power distribution is where the electricity is distributed to consumers at lower voltage levels for safety reasons and consumer accessibility. In other words, power distribution networks are the links that connect high and extra high voltage power lines to deliver electricity coming from power generation points to the ultimate point of consumption: households and businesses. Small-scale generation assets such as small wind farms, solar farms, electric vehicle charging stations are usually connected directly at the distribution level due to the capacity size and voltage levels of such assets.
Overall, 60% of the European power system is composed by low voltage lines, 37% by medium voltage lines and 3% by high voltage lines. Although the definitions for high, medium and low voltage differ from country to country for historical reasons, according the European Committee for Electrotechnical Standardisation (CEN-CENELEC), low voltage is the level below 1 kilowatt (kV); medium voltage ranges between 1kv and 36kV and high voltage is for any level over 36 kV.
How does the power distribution system work?
Electricity consists of tiny particles called electrons that move between generation such as a solar PV panel, a wind turbine or a nuclear power plant, and end users, namely energy consumers. The energy flows through materials like transmission and distribution wires which vary in voltage levels. Electricity flows are difficult to control, their voltage and frequency levels must be carefully operated and monitored since a small deviation from the established voltage or frequency levels can have severe consequences: power outages, blackouts, permanent damage to plugged-in equipment.
Substations connect the different parts of the grid by using various electrical devices including transformers, voltage regulators, fuses, circuit breakers, switches and meters. As shown below, these devices serve a wide variety of critical roles based on which parts of the electrical grid they are being connected to.
As substations handle dangerous voltage levels of power, all the electrical devices must be heavily insulated. To reach this level of safety insulating mediums are used such as fluorinated gases (F-gases), – which will be phased out given their massive global warming potential – air, vacuum among others.
How has the power system changed over time in Europe?
In the 1980s, renewable energy penetration was practically nonexistent. What the system relied on was massive, centralised power plants that would deliver hundreds of megawatts of electricity to the system. This electricity would then be funnelled down the transmission, then the distribution system until it reached the end user. That was it.
Today, renewable generation scatters Europe’s countryside with a megawatt or so here and another few over there. Furthermore, people have solar panels on their houses, shopping centres have them on their roofs. People also now drive electric cars that, not only consume energy but can send it back to the grid if they do not need the stored electricity in the car’s battery. Heating is increasingly electrified. Consumers also have smart meters that enable them to adjust their electricity usage to when demand is lower, and prices are more favourable.
In other words, we witness today an increase in electricity demand which will only accelerate in the coming years, fundamentally changing our power systems and society at large, as shown in our Decarbonisation Speedways study.
With a large majority of renewable sources connecting at distribution level, our system is shifting towards decentralisation. At the same time, Europe society is becoming more and more electrified thanks to the growing adoption of distributed technologies like heat pumps, smart thermostats or electric vehicles.
Zooming in: What are distributed assets?
As defined by Eurelectric distributed energy resources (DERs) are geographically dispersed generation, such as rooftop solar PVs, loads, like electric heat pumps, and storage, as small scale batteries, connected to the medium and low-voltage distribution level.
Which challenges is Europe’s power distribution facing today?
With more and more distributed assets, we are now in an age where interactions with the grid are bi- or even multidirectional. As the number of resources connected for both energy injection and withdrawal grows, energy flows become more increasingly bidirectional.
This complicates the traditional system – the so-called transmission-centric model. The hold-up is the fact that we live in a 21st-century world with 20th-century infrastructure. To deliver the power system of the future – a so-called decentralised model – we need to expand, modernise and digitalise to increase our grids’ capacity all while making efficient use of the capacity that already exists.
The Commission’s ambitious electrification targets laid out in REPowerEU call for an additional 605 GW of renewable energy by 2030, as we point out in our capacity report. Over 80% of the additional renewable capacity will be connected at distribution level.
1. An Ageing Infrastructure
Meanwhile, our distribution power lines are ageing. If distribution assets are not timely replaced after their useful life, Europe would have approximately 40% to 55% low voltage lines over 40 years old by 2030.
With electricity demand rising by 1.8% every year by 2030 and the number of connection requests accumulating, Europe’s ageing networks risks facing increasing congestion and power outages. In a few countries, this is already the case.
“The energy system is changing fast, so we need a new, forward-looking approach when we modernise and expand our electricity grid. This means designing network plans with a stronger renewable focus that considers wider time horizons and zooms in on more granular low-voltage areas, where most PV connections take place.” – said Eurelectric’s Secretary General Kristian Ruby.
By 2030, Europe will see around 50 to 60 million heat pumps, 65 to 70 million electric vehicles (EVs) and over 620 gigawatts of additional renewable capacity as foreseen by REPowerEU. Today, while becoming ever more critical to the continent’s carbon neutrality, the capacity of our existing copper cables to integrate mass electrification and meet ambitious decarbonisation targets is limited.
Scarce capacity translates into longer waits for connections, more congested areas, and greater costs for network users. Cumbersome permitting, and insufficient investments further complicate this picture.
Lack of visibility
While the number of distributed assets connected at the distribution level increases, system operators lack visibility on the full state of the grid.
The roll-out of electric vehicles and heat pumps has a direct impact on the integrity of local grids and DSOs are developing solutions to facilitate the shift towards electro-mobility across Europe. Today these assets are not easily visible to grid operators.
At our annual event Power Summit we discussed how the power distribution grid can handle more EVs and how to turn EVs into assets.
To optimise the management of an increasingly complex and decentralised power system, it is crucial to improve the level of observability of the infrastructure. System operators must be informed in real time, or as close as possible to real time, about the flows as well as deviations happening in their networks to then compare such figures to their own forecasts in order to re-balance the grid.
Boosting closer collaboration and transparent data exchange among TSOs, DSOs and market players, as well as national authorities, is paramount to have a more detailed grasp of the requested time of connection and capacity needs. Robust data-sharing mechanisms can enable operators to perform more accurate forecasts on emerging generation patterns and capacity requests.
Providing data access, however, should not come at the expense of customers' privacy. Implementing clear privacy and security measures is vital to protecting sensitive information and maintaining trust among all relevant actors.
4. Climate Change
The latest projections suggest that the world is well on its way to over 1.5°C of warming by 2030 and each season brings further proof that climate change is causing more and more extreme weather events. Such an increase will affect us all.
Heat waves, wildfires, floods, and cold spells score new records every year and have a particularly strong impact on the electricity value chain. In July 2021, floods in Belgium and Germany resulted in 200 000 customer outages. During the winter 2021-2022, storms in the UK and Ireland led to over one million households being without power.
“Adaptation to climate change and extreme weather has become a big challenge for power companies. Climate-related resilience is a growing component of utilities’ investment strategies and requires all actors to act together: utilities but also policymakers and other sectors which are critical during extreme weather events, such as telecommunications.” – said Eurelectric’s Secretary General Kristian Ruby.
The power system already has a host of adaptation measures available for the management of climate hazards. These include physical hardening and uprating of power lines, physical protection measures, additional water spill gates for hydropower dams, resizing of thermal and nuclear plant cooling structures, additional redundancy of grid design, preparedness planning, backup products, and digital tools to enhance visibility and management of the energy system down to low power voltage levels.
Yet, the scale of the challenge demands more action on climate adaptation on a par with climate mitigation. Eurelectric has detailed how to strengthen the electricity sector vis-a-vis climate-driven extreme weather events in its Resilience Study.
Which solutions can get Europe’s power infrastructure up to speed with the energy transition?
“Getting our electricity networks fit for net zero should be a top priority in the coming years, both at EU and national level” – says Kristian Ruby, Secretary General at Eurelectric – "This requires a new mindset among regulators and legislators. One that anticipates Europe’s capacity needs to integrate more renewable projects, and one that accommodates unprecedented electrification of transport, buildings and industry to match the speed and scale needed for Europe’s energy transition.”
Anticipatory planning for grid extension is now key to meeting EU electrification needs by 2030 and ensuring reliable electricity across thousands of kilometers of power lines throughout Europe. The surest way to enable such an urgent build-out is to plan with a longer time horizon, which spans from 5 to 10 years, and invest ahead taking into consideration our net zero horizon.
Anticipatory investments should be structurally incorporated with a clear regulatory framework in the electricity market design reform to bridge the EU’s €7 billion annual investment gap in electricity infrastructure.
As shown in Eurelectric’s Decarbonisation Speedways study, the EU currently invests €23 billion per year in power distribution infrastructure. This is way too low: investment in distribution grids should reach no less than €36 billion per year until 2030 and up to €65 billion per year until 2050, considering the anticipated additional demand to deliver on the EU decarbonisation’s agenda. The cost-sharing for such investments should be thoroughly designed for the benefit of the whole European society.
Catalysing the necessary levels of investment also requires accelerated permitting to expand the grid. Today, lengthy permitting often delays connection of renewable project deployment or new end-use electrified assets like charging points for EVs and heat pumps, thus creating a structural time lag.
A simplified permitting process must urgently be agreed upon by policymakers. Factoring infrastructure updates into a generator’s project under a unique permit can also ease this administrative burden. Digitalising permitting and connecting processes is another very effective solution to standardise and simplify procedures while ensuring transparency among all stakeholders.
Concurrently, while developing new infrastructure, existing grids should be optimised to the fullest.
As we know, wind and solar cannot consistently produce energy at all hours of the day, a feature defined as intermittency. Their variable generation creates challenges for TSOs and DSOs to balance their grid. The risk of deviation from the correct balance increases with the growing number of renewable assets connected to the system. At the same time, these distributed energy resources also offer opportunities for DSOs to boost flexibility.
Zooming in: What is flexibility?
As defined in our Solar Connection analysis, flexibility refers to the ability to respond and adapt to fluctuations in energy supply and demand. Flexibility involves enabling power users to shift their electricity consumption or production to non-peak hours, where power demand is lower. Consumers or producers can reduce or increase their electricity demand or production within certain limits, or even participate in demand response programs where they actively respond to price signals from the grid.
Flexibility can also be provided by network users at the connection time with the so-called “flexible connection agreements”.
What are flexible connection agreements?
These are contractual arrangements whereby a project developers in need of grid connection provides a degree of adaptability and responsiveness in the connecting phase in a typically congested area in exchange for faster connection. These agreements thus allow for a more dynamic approach to grid connections, as they take into account factors such as available capacity, demand fluctuations, and the overall condition of the network.
The key idea behind flexible connection agreements is to enable more efficient use of existing infrastructure while accommodating changes in demand patterns, technological advancements, and other variables that may affect the energy landscape. This can lead to faster, more cost-effective, and environmentally sustainable connections.
In addition, the allocation of investments for grid reinforcement can also be redirected towards areas where they are most necessary. Flexible connection agreements also provide financial incentives to customers by offering them advantageous tariff structures thanks to the possible avoidance or deferral of reinforcement costs.
Overall, flexibility in demand and production allows for better management of electricity supply and demand imbalances, optimises power use, and enhances grid stability and efficiency.
An increasingly digitalised equipment
Europe’s energy mix, digitalisation is absolutely necessary to properly manage our power system.
Modernising our grid via digitalisation increases capacity out of existing assets. For instance, curbing technical losses throughout the entire European grid via automated monitoring and access to consumers’ real-time consumption profiles could save as much as 10 medium-sized power plants.
Digitalisation would also benefit the connection phase of distributed assets. As shown in our Solar Connection analysis, connection delays caused by congestion and lengthy grid development permitting are driving up PV installation costs, putting solar’s competitive edge at risk. To avoid slowing down Europe’s energy transition, several actions can be taken in the immediate term to optimise grid connections and achieve faster PV integration. Digitalising and standarsing such processes is one of them.
Lastly, digitalisation is a critical precondition for more flexibility and demand-side response. Electricity consumers can in fact contribute to grid management and enhance the overall system stability by shifting or lowering their consumption to less congested hours through demand-side response schemes and local flexibility markets.
Unleashing higher flexibility, however, requires a smarter grid. Regulators should incentivise TSOs and DSOs’ investments in digitalisation as a critical component to delivering a more resilient power structure and efficient service to users.
New technologies like smart metering are being rolled out to customers across Europe to enable demand-side response while improving the accuracy of electricity bills and allowing DSOs to operate their networks more efficiently thanks to better access and more granular data.
Zooming in: What are smart meters?
Smart meters are a type of meter that is installed to measure the consumption of electricity, gas, or water in a home or business. It is called a "smart" meter because it is able to communicate this information back to the utility company using a wireless connection. Learn about smart meters here.
Clearly, more digitalisation also means higher exposure to cyber threats, calling for European DSOs to develop strategies and capabilities to guard their circuits against cyberattacks. Integrating renewable energy sources such as solar and wind requires exchanging a great amount of data with the distribution grids. Digitalisation will enable increased communication among system operators and all relevant actors. Yet, this greater influx leaves us more vulnerable to cyber security threats.
If data is altered, AI would act on incorrect information. Preventing information distortion thus requires increased monitoring of the technology at hand and specific protocols to tackle potential cyber-attacks by denying outside access to sensitive information. Protocols for cyber threats need to be drilled into people’s minds in the same way that physical threats are going into the future.
Beyond cyber, security threats to Europe’s electricity infrastructure are also worryingly growing, such as the sabotage of Baltic wind farms or the sabotage of the Nord Stream pipeline. The clearest examples of security threats to critical infrastructures come from Ukraine. At Power Summit, we discussed how Ukraine managed to keep the lights while under attack from Russia.
What is happening in the power distribution political landscape?
More recently politicians started looking at the power infrastructure as a fundamental asset of our energy transition.
On 5 September 2023, during a high-level Grid Forum which gathered policymakers and industry leaders across Europe, the European Commission announced the release of a European Action Plan for grids.
This plan will be a strategic policy document that outlines the Commission's objectives, priorities, and proposed actions to bring Europe’s power infrastructure up to speed with the green transition. More details are expected to be revealed by Commissioner Kadri Simson on 29 November.
Learn what the electricity industry calls for in this upcoming European Action Plan.
We need you
Ambitious targets to implement, new challenges to face and the climate clock keeps on ticking faster targets: the energy industry needs all hands on deck to succeed!
Boosting the number of green workers in Europe is now crucial to implementing our decarbonisation targets. Europe must equip its workforce with the right skills to deliver the efficient, clean, and safe electrical installations we need. In this way electrification can also help to fuel local growth and career opportunities – shows the Electrification Alliance Manifesto.
This means expanding the ‘pipeline’ of workers by reaching out to young people, existing professionals and workers looking to change careers. We can do this by making green jobs more attractive, increasing gender diversity, ensuring that technical education and apprenticeships are properly valued, and making upskilling readily available. Europe must make the most of the Skills chapter in the Net Zero Industry Act (NZIA).
Concretely, the NZIA’s Net Zero Platform should:
1) continuously monitor the gap between the number of workers available and the numbers required to deliver the energy transition;
2) engage young people and workers looking to re-skill with targeted communication campaigns and training opportunities – especially in regions transitioning from fossil fuels;
3) frontload the recognition of qualifications to maximise worker mobility.
This will give industry, especially small and medium enterprises (SMEs), the confidence to invest in their workforce.
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