Europe’s distribution systems are often outdated, underutilized and a bottleneck in the energy transition. They are in urgent need of modernization. The longer we wait, the higher the costs in the future, warns Prof. Jochen Kreusel. We spoke to him about investment backlog and resilience, bottlenecks in modernization and how available grid capacity can be better utilized.
Kreusel is the Global Head of Market Innovation at Hitachi Energy and President of T&D Europe, the European association of grid technology providers. The electrical engineer is also an honorary professor at RWTH Aachen University.
At the opening ceremony of The smarter E Europe 2024 in Munich, Kristian Ruby of Eurelectric said that around 30 percent of Europe’s distribution systems are over 40 years old and not equipped to meet the challenges of the future. Is that true?
The numbers are true. The majority of Europe’s power grids was built between the end of the Second World War and the seventies. Not only to repair the damage caused by the war, but also because of a surge in electrification around this time. Discussions about the renewal and lack of investment in power grids have been going on since the nineties. The situation has not improved much since then. In the early 2000s, grid operators actually invested even less because the companies were focused on separating transportation from generation, also known as unbundling. You can see the dip pretty clearly in the investment statistics from this period.
This is not an easy question to answer, in part because many products out there are still the first of their kind. Some components can be inspected and measured, so we know more about their condition. Other components do not allow this. Some are past their expiration date, so to speak, but they still work. But for how long? It is said that infrastructure has a long memory. For example, with some cables, it is difficult to assess their condition at all – but at a certain point, they suddenly stop working the way they used to. That is why we need to start renewing the grid before it starts to hurt. About half of the large investment sums would need to be allocated to the modernization of the distribution systems. Waiting any longer will only lead to higher costs in the future.
The challenges are manifold. The main issue is that there is an overlap in requirements, which creates a very demanding situation. The increase in investment due to the need for modernization and the simultaneous increase in the speed of transformation, especially in recent years, has led to a sudden increase in demand for grid components that no one had anticipated. All of a sudden, everyone was talking about supply chains. Now, about two years later, this part of the situation has improved. Manufacturers have invested in more production capacity and continue to do so. And our customers are increasingly making arrangements with us on a much longer-term basis.
But there is another major bottleneck: the lack of skilled workers, especially for projects of grid operators. Our association members also increasingly report that, for example, transformers cannot be accepted at the agreed time because there are no workers to install them.
That is true, and what’s more: Renewed grids do not generate new or additional revenues for grid operators at first. If all goes well, the grids can be better utilized in the medium term, both through the targeted electrification and through better control of feed-in and consumption. But if the investments are made and consumption does not increase, grid charges would have to rise sharply. This would overwhelm many consumers. The industry is already complaining about high energy costs today. A more efficient retrofit and expansion, on the other hand, could save costs.
It is clear though that climate change will not wait. Unfortunately, Germany’s and the EU’s goals are largely focused on the expansion of generation, while consumption is lagging behind the desired development. Taking this into account could slow the pace of expansion. The point is not to weaken our goals, but to find a better balance. Financial incentives for siting green power plants in grid-compatible locations could also help. So far, this has not been implemented anywhere.
In recent years, we have seen a sharp acceleration in grid expansion. Grid projects typically take longer to plan than to build. This distorts the public’s perception because at first it seems as if nothing is happening. What’s more, monitoring and control at the distribution system level has been found to be necessary. In retrospect, the years under the old German coalition government (known as the “traffic light” coalition), were a real boost for the transformation of our energy supply when compared with the previous governments. Much was accomplished quickly and efficiently – even if this is mostly seen and recognized by experts.
There is no way around retrofitting the power grids, that is for sure. Digitalization is also well underway, and today’s software is able to decide much faster what to do when there is a disruption or when the situation changes due to the weather. For instance, in the past, a generous share of the capacity in the power grids was reserved for disruptions. In an emergency, one power line could absorb the electricity from another line without the need of technicians. Today, such corrections can be made much faster, reducing the amount of reserve that needs to be held and thus increasing the capacity for normal operation. Ultimately, there is no one-size-fits-all solution, because one power grid is very different from another, and they always have to be considered at a local level.
A popular measure is dynamic line loading, because power lines can handle more load in cold temperatures than when it is hot outside. In Germany, several thousand kilometers of power lines are already operated this way. There is also potential in better utilizing existing grids. Today, the utilization of distribution systems is not very high – less than 25 percent on average. This is because they were designed for peak demand, which occurs rarely. Consumers benefited from this because they could be assured of a steady supply.
Today, grid operators have a much wider range of tools at their disposal, making it possible to increase grid utilization without sacrificing consumer convenience. For example, battery storage systems, which are becoming increasingly cost-efficient, can shave peaks and improve overall grid utilization. That is precisely the idea behind grid boosters, for example.
In Europe, level of electricity supply security is very high. This has not changed despite the growing share of green electricity in the grid. In this context, resilience describes the ability of a system to handle unexpected events, such as the flooding of Ahr valley in Germany in the summer of 2021. When the switchgear is located in the valley, as was the case in the Ahr valley, the system is not resilient. As part of the rebuilding, the switchgear was moved to a higher location – making the power supply more resilient. In the future, we need to think about these things before a disaster strikes and figure out how to better protect our systems.
Italy was one of the first countries to deploy smart meters, as well as to define its expectations for this infrastructure. They took metering a step further to make metering and billing more efficient. The UK and Ireland have already introduced short-term flexibility markets. This is a logical step for these countries, because they are electrical islands. As such, they are under more pressure to ensure frequency stability than the European continent.
But Europe’s continental electricity market also has some very sophisticated elements. In recent years, the time at which the market closes has been moved closer and closer to operation. Today, the markets operate in near real time. This makes it possible to respond quickly to fluctuations in green power generation, which saves a lot of money. Europe is leading the way in this area. Generally speaking, there are advanced solutions in many places around the world. Where and when they have developed depends heavily on what problems the transformation has brought. This is a huge opportunity for everyone to learn from each other.
This interview was conducted by Niels H. Petersen.