Europe's Struggle with Overloaded Power Grids Threatens Sustainability Goals

Featured Image: GIS Reports

With the energy transition in full swing, European countries are struggling to keep pace with the growing demands from the electricity grid. In other words, the power grid is becoming overloaded due to limited capacity, and this of course comes with challenges for electricity generators, consumers, businesses, and most of all for the grid operators – the ones responsible not only for connecting every house and company to the grid, but also for balancing supply and demand. Join us as we explore what this means and what can be done.

As Europe aims to achieve ambitious sustainability targets by lowering greenhouse gas emissions and transitioning to renewable energy sources, the demands on the electricity grid are intensifying. This is exacerbated by the widespread adoption of high-power devices such as electric cars, heat pumps, and industrial electric boilers. While we are not necessarily using more electricity than ten years ago, we are increasingly using devices with higher power and higher simultaneity. In other words, previous consumption patterns did not entail users typically drawing maximum power simultaneously, however, the energy transition has led to a surge in demand for electricity at peak times. This shift has exposed a fundamental mismatch: the way we use the electricity infrastructure no longer matches the design principles of that infrastructure. 

The capacity of power grids, which form the backbone of the energy transition, is in this way being outpaced. Businesses are grappling with the challenges posed by strained infrastructure and there are long waiting lists for companies that want to electrify or expand. For this reason, guaranteeing a stable supply of electricity has never been more important for a secure green energy transition and the functioning of critical infrastructure.

Grid operators in countries like the Netherlands, Germany, Spain, Portugal, France, and Hungary are sounding alarm bells as they struggle with this issue. In Germany, HDE managing director Stefan Genth warns that the energy transition risks failure due to prolonged waiting times for grid connections. While the government is demanding more from companies, the network connection issues are hampering the energy transition.

In the meantime, the European chemical industry association Cefic emphasises the importance of a stable power infrastructure for achieving climate goals, and advocates for more direction from Brussels and faster permit procedures for the construction of power grids.

What is the situation in the Netherlands?

Featured image: Electricity grid feed-in capacity map, Netbeheer Nederland

The Netherlands is also struggling with grid challenges - which have been going on for longer than in many other countries, since it is often considered a leader in sustainable energy. This congestion impacts both the supply and consumption of electricity, leading to limitations on new connections and expansions for large consumers, and even restrictions on connecting new homes in certain areas like Almere. 

In addition, grid challenges extend beyond typical energy demands: they encompass critical infrastructure vital for maintaining the country's unique position below sea level. The recent winter's heavy rainfall placed immense strain on pumping stations operated by water boards, prompting concerns over electricity consumption exceeding contractual agreements.

The situation underscores the intricate balance between ensuring water management and preventing grid overload. The Union of Water Boards advocates for priority access to the power grid for water managers, recognizing the vital role they play in safeguarding against flooding. However, discussions with grid operators have yielded limited progress, as the network becomes increasingly strained from all fronts. 

Around 9,400 companies are on waiting lists for new or more powerful grid connections, some facing delays of up to ten years. This waiting list used to have a first come first serve-principle, which implied that the first parties to apply would be the first to be given access to the electricity grid. But as grid operators navigate the complexities of managing scarce capacity, the Netherlands Authority for Consumers and Markets (ACM) will make it possible for network operators to give priority to electricity users with critical societal functions (housing, security services, healthcare or schools). Water safety also remains high on the agenda, in recognition of the indispensable role played by water boards.

As the waiting list gets longer, some companies go to neighbouring countries, but as grid limitations become an issue all over Europe, the challenges initially observed in the Netherlands are now spreading. While there is still some space on the grid in some countries in Southeast Europe, as soon as they start electrifying at a larger scale, there will be problems there as well.

The need for investment

Despite the pressing need for expanded power networks, investments fall short of targets in many European countries. ​​In 2023, The European Union calculated that this decade alone, around €584 billion in investments are necessary to modernise, expand and smarten electricity networks. Adequate grid planning and investments are crucial to ensure that electricity is transferred from regions with large renewable potential to demand centres. 

In 19 of the 23 European countries, plans for grid expansions are insufficient. Investments lag furthest behind in France, Spain and Poland. Delays in infrastructure development not only hinder efforts to electrify industries but also result in cutbacks for renewable energy production, as solar panels and wind turbines have to be turned off if the grid cannot handle the supply of green energy. This, in turn, results in high costs as grid operators sometimes have to (under certain conditions) compensate the operators of wind and solar parks for the lost income. 

What is the solution? 

Addressing these grid capacity issues requires concerted action and streamlined processes for infrastructure development. A huge number of kilometres of cables need to be dug in order to address network capacity issues. According to calculations made by the International Energy Agency (IEA), this equates to 80 million kilometres worldwide. That is equivalent to 2,000 trips around the planet, or a doubling of the current nets. While initiatives like the Crisis and Recovery Act in the Netherlands aim to expedite procedures, bureaucratic hurdles persist in many countries, prolonging the timeline for network expansion. 

In conclusion, Europe's struggle with overloaded power grids poses a significant challenge to its sustainability aspirations. Urgent and coordinated interventions are needed to strengthen power infrastructure, facilitate the transition to renewable energy, and ensure the continent remains on track to meet its climate goals - so we can progress towards a greener, more sustainable future for Europe and beyond.

The challenge of modernising Europe's electricity system requires comprehensive planning and a holistic approach. This means considering all aspects and components of the electricity system, including generation, transmission, distribution, and consumption, in an integrated and coordinated manner. The first step is to acknowledge the full extent of the consequences of grid congestion: only with clarity around this will there be enough urgency to implement innovative solutions.  

In the past year and a half, the project Energy Scale-Up has dedicated efforts to raise awareness about grid congestion while envisioning potential future challenges. Embracing the vision of locally distributed energy systems, we foresee a landscape where smart energy hubs foster collaboration among companies situated in the same area to maximise grid capacity utilisation, while also enabling communities to be actively engaged in matching supply and demand. Picture a future where neighbourhoods operate as interconnected bubbles or holons, where residents collaborate to optimise energy generation, storage, and consumption. These localised energy hubs, connected to the larger grid, represent a paradigm shift towards a decentralised energy system. Through agreements covering aspects like energy generation, storage, conversion, and usage, companies and communities can work together to optimise energy management.

Featured image: Stantec

Notably, pioneering efforts in this direction have already commenced. Early adopters like Daniël Bakker (along with his KWR team) and Auke Hoekstra have quantified the considerable cost-saving potential of such systems. This highlights not only the feasibility but also the tangible benefits awaiting those who embrace this innovative approach.

Despite the potential of smart energy hubs, information about them remains fragmented, and many initiatives are still in their early stages. Energy Scale-Up is actively addressing this issue by spearheading the development of energy hubs. This involves centralising knowledge, preventing duplication of efforts, and fostering collaboration among stakeholders. Key steps include mapping existing and potential future energy hubs and knowledge transmission about common challenges and available tools, through organised events. In addition, we ensure that the voices of the companies are heard by policymakers and institutions responsible for formulating plans and regulations to alleviate congestion. Without this crucial communication bridge, they risk operating in isolated ivory towers, detached from the practical insights essential for effective solutions. 

Under the umbrella of the Sustainable Scale-Up Foundation, Ideas From Europe and Energy Scale-Up are actively engaged in accelerating the energy transition in Europe. To learn more about what we’re doing, sign up for our newsletter and follow us on social media to keep up to date with events and projects.