EU Set to Pave Way for 565 Billion Euro Overhaul of Electricity Grid

Sep 23, 2022 by Bloomberg
image is BloomburgMedia_RIMFJWT0G1KW01_23-09-2022_09-00-09_637994880000000000.jpg

Lines of electricity towers and power cables near the Chinon Nuclear Power Plant, operated by Electricite de France SA (EDF), in Avoine, France, on Wednesday, Sept. 8, 2022. French President Emmanuel Macron backed a EU-wide windfall tax on profits of energy companies, becoming the latest country to support the extraordinary measure to rein in the effects of a deepening crisis.

The European Union’s executive branch will lay out a plan to digitalize its energy grid as it seeks to spur the roll out of renewables to reduce its dependence on Russian fuel. 

The “Digitalizing the Energy System” action plan, to be unveiled by the European Commission next week, will require a 565 billion euro ($556 billion) investment in infrastructure by the end of the decade to achieve its green plans and end reliance on Russia, according to a draft document seen by Bloomberg News.

Under the proposal, the bloc seeks to promote the sharing of data on electricity use starting in 2024 to help boost flexibility in the region’s energy markets, for example by allowing solar panels and electric vehicles to put power back into the network.

The region needs to install solar panels on roofs of all commercial and public buildings by 2027 and on all new residential buildings by 2029. The document also calls for 10 million heat pumps being installed over the next 5 years and to get 30 million zero-emission vehicles on the road by 2030. 

“The Russian invasion of Ukraine and current high energy prices have only increased the need and speed to ensure that the EU increases both its independence from Russian fossil fuel imports and its strategic sovereignty and security in creating a digital energy system,” the action plan, which is still subject to change, said.

With Russia squeezing gas deliveries and power plant outages further sapping supply, wholesale energy prices soared to more than 10 times their seasonal average over the past five years.

The plan will be the latest in a raft of measures the EU has put forward to wean itself off Russian gas and speed up the transition to renewable energy. As the region’s demand for power grows, a more resilient energy network will be required to adapt to solar and wind technologies that can vary depending on the weather, while also directing electricity to where it is most needed in the bloc.

Read more: EU Energy Intervention Plan Triggers Concerns Over Green Deal

The commission is also set to publish a document Sept. 28 detailing steps to ease volatility and increase trading volume in energy markets after surging prices led to ballooning margin calls, in addition to measures the bloc could take to reduce fuel prices, according to EU diplomats. 

On Sept. 30 energy ministers are scheduled to debate proposals to impose a windfall levy on low-cost power producers and cut demand for electricity, especially during peak hours.

The EU by March will set up a group tasked with boosting data sharing on energy between member states and companies. The bloc will also support transmission system operators to create a “digital twin” of the electricity grid, which will help boost its efficiency.

To protect the network from cybersecurity risks, the Commission will propose regulation addressing the threat posed to hydrogen and gas infrastructure, though no fixed timeline is given.

(Updates with cybersecurity legislation in final paragraph.)

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©2022 Bloomberg L.P.

By John Ainger , Alberto Nardelli

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