Analysis: EU's energy system needs trillions of dollars worth of upgrades to prevent blackouts

 

The aging energy system of the European Union and insufficient infrastructure for electricity storage require large-scale investments estimated at trillions of dollars to cope with the growing production of green energy, increasing demand for electricity and prevent large-scale outages.  

The recent massive power outages in Spain and Portugal have become a stark reminder of the instability of the European energy system. Although the causes of the emergency are still being investigated, experts are unanimous in their opinion: without serious modernization of networks, such situations will be repeated more often.

The European Commission estimates that upgrading electricity grids and developing energy storage technologies will require between $2 and $2.3 trillion by 2050. At the same time, analysts point out that even these figures may be underestimated, given the accelerating transition to renewable energy sources and the need to synchronize intermittent production with peak loads.

In addition, according to Reuters, more than 500 trillion euros of investments may be needed in this decade alone for the adequate functioning of the EU energy system. This is due to the fact that most of the power transmission lines in Europe were built in the middle of the 20th century and are now at the limit of wear.

Why is this important?

Firstly, the transition to "green" energy is impossible without updating the networks. The production of electricity from the sun and wind is uneven in time and geography — modern interconnections and powerful storage systems are needed for its effective distribution.

Secondly, the overall demand for electricity is increasing. Electric vehicles, heat pumps, data centers, and industry require more capacity, which puts additional pressure on already overloaded networks.

Third,  the EU's energy security is under threat. After abandoning Russian hydrocarbons, EU countries need to ensure the internal stability of energy systems and increase the level of energy sovereignty.

What is already being done?

The European Commission has already allocated more than €2 billion for the modernization of energy systems in Eastern and Central European countries, including Bulgaria, Poland, Lithuania and Romania. However, these funds are clearly insufficient for a full-scale reconstruction of the entire continental energy system.

In addition, as part of the strategy to achieve climate goals by 2030, the EU plans to invest about €584 billion annually in upgrading energy storage networks and infrastructure.

Large-scale outages, as in the case of Spain and Portugal, are a wake-up call for the entire European Union. Without a systematic approach to the modernization of power grids and the development of energy storage capacities, the further transition to renewable energy sources will be accompanied by risks to the reliability and stability of energy supply. Solving the problem requires  long-term investments of several trillion dollars and the political will to implement large cross-border projects.