Georgi Velev Integrating new sources of clean production in addition

Georgi Velev Integrating new sources of clean production in addition to increasing industrial electrification, e-mobility and heating and cooling means that grid investment must be a priority. Everything else will leave ready-to-implement solutions waiting, slowing down the transition. The fact is that more than a third of EU networks are now more than 40 years old. Eurelectric has drafted a manifesto called " Connecting The Dots ". According to him, 375-425 billion euros should be invested by 2030 - a large but lower figure than many other expert forecasts. The benefits and savings are of the same magnitude and the work will create up to 620,000 quality and local jobs per year in the EU27 and the UK. But increasing network capacity alone will not be enough. Eurelectric emphasizes that network flexibility will play a key role, such as distributed energy resources (DER) peak load management, network congestion management, voltage maintenance from already connected assets, digitization, automation and smart meters. And politicians need to recognize the different starting points between countries and their projected needs, Eurelectric said. European distribution networks urgently need to increase cost-effective investments in order to be suitable for this purpose in an increasingly decarbonised, decentralized and digitalised energy system. Between € 375 and € 425 billion in investment by 2030 Connecting The Dots, the first study of its kind conducted by Eurelectric and E.DSO with analytical support from Monitor Deloitte, revealed that investments in the distribution network will require 375-425 billion euros by 2030. Most of them are caused by extensions and replacements related to renewables (70% of new solar and wind power will be connected at the distribution level), modernization and increasing levels of electrification in industry, e-mobility and heating and cooling. Why is Europe still not investing enough in distribution networks? The standard type of business is the enemy of innovation. European national regulatory agencies maintain regulatory frameworks in place with short-term remuneration models that allow distribution system operators to connect customers while keeping all energy sector stakeholders in sync. Meanwhile, parts of distribution networks built to meet peak demand are already congested and cannot easily connect new capacity from renewable sources. European countries and their regulators do not appreciate the fact that in order to achieve our decarbonisation targets, Member States must plan for the long term and the prospect of a true energy union. We need to work with European politicians so that the challenge of climate change that we all face can be met by the investment community and by Europe as a whole, with a holistic approach to network investment. What does it mean to be in front of the curve? The “Connecting The Dots” project found that more than a third of EU networks are over 40 years old. This number is likely to exceed 50% by 2030, which means that the link between electricity generation and consumers is through outdated infrastructure. This proves the case of an unprecedented investment cycle in the distribution networks, which is already overdue. An example of this is e-mobility: we have the technology to deploy electric cars on a large scale, as well as ambitious targets for launching them across Europe. However, the automotive industry, regulators and distribution operators are at a standstill, as infrastructure concerns limit sales of electric vehicles. But the relatively low number of electric vehicles on the road ultimately limits the necessary network improvements - a real egg and hen situation. The current model of network investment is exhausted and it must be acknowledged that projected investments with a long-term planning horizon will ultimately be profitable. They will optimize the flows resulting from the ever-increasing share of variable renewable sources, while ensuring the seamless integration of loads coming from electrified heating and transport, and maintain a consistently high levels of security of supply. What are the benefits? The societal benefits of sustainability, the economy and competitiveness resulting from this transformation will far outweigh the financial costs. To name just a few: the EU can save 17-22 billion euros in CO2 costs a year, more than 175 billion euros in fossil fuel imports and ultimately reduce average electricity costs by 28-37 billion euros in the long run. In addition, 30-35 billion euros (~ 90% of future investment) can be offset by EU producers and service providers, which will contribute to the economic recovery after a pandemic. Moreover, investments in distribution networks will maintain between 440-620,000 quality and local jobs per year in the EU27 and the UK. What role will flexibility play? Without flexibility, investment requirements would be significantly higher. The study finds that flexibility can mitigate peak demand forecasts and electricity growth scenarios, as well as reduce investment needs. This is especially true for e-mobility, where it is assumed that at least 50% of electric vehicles will be charged during off-peak hours. With access to the flexibility coming from medium and low voltage networks, distribution companies could better optimize the use of the distribution network and minimize the need for future network reinforcements. This is possible by providing flexible services such as distributed energy resources (DER) peak load management, network congestion management and voltage maintenance from assets already connected to their distribution network. Nevertheless, the potential to replace or complement flexibility needs to be carefully assessed, as current electrification requires additional investment efforts to facilitate new electricity uses and the integration of RES. The high level of flexibility of the system requires additional investments in digitalization and automation of the network and accelerating the implementation of smart meters. The different starting points between countries and projected needs, in particular due to their network situations, must also be taken into account. In this context, it is difficult to assume that any of these investments in the electrification and modernization sector can plausibly be replaced by flexibility measures alone. Electricity distribution companies will always pursue an optimal CAPEX / OPEX balance, including optimal activation of flexibility sources, if the regulatory framework stimulates network operators in a consistent manner. However, many of the rules introduced by the Clean Energy Package are still being implemented and, despite the European framework for using flexibility and optimizing grid investment solutions, we still lack appropriate national regulatory frameworks for supply of flexibility services. In the context of competitive decarbonisation in Europe, distribution networks are an investment for society without regret. To make European networks suitable for a decarbonised future, policymakers need to work to improve investment frameworks, facilitate distribution network companies` access to EU funds and speed up the authorization and licensing processes.