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Perspectives 19-08-2022

9 min read

Proactive grid planning is key to unlocking Europe’s net-zero vision

Time is of the essence in meeting Europe’s green energy targets but when it comes to adapting the continent’s grid infrastructure to transporting green electrons, progress has been too slow. As the energy transition is well underway with renewable energy capacity growing exponentially every year, curtailed wind farms and overloaded local networks are daily reminders that grid expansion is not keeping up the pace.

In this Perspectives, Giles Dickson, Chief Executive Officer of WindEurope, and Jochen Kreusel, Global Head of Market Innovation at Hitachi Energy, argue that absolute urgency is required in connecting renewables more efficiently. In a joint interview, they request that all industry actors work together more collaboratively from the outset in order to avoid delays and explain that regulation needs to change to give transmission system operators incentives that reward this kind of efficient planning and deployment.

Proactive grid planning is key to unlocking Europe’s net-zero vision

Between 230 and 450 GW

Expected offshore wind capacity by 2050 in Europe

Speeding up grid development

Q: What do you see as the main challenges ahead for the energy industry?

Giles Dickson (G.D.), WindEurope: We need to accelerate grid build-out, all over the European power system and on both transmission and distribution networks. Here’s just one example: in its scenarios, the European Commission foresees between 230 and 450 GW of offshore wind capacity by 2050. Let us assume we need to add 300 GW by 2050. This means adding 200 MW every week as of today. And, of course, adding 200 MW of offshore generation capacity on a weekly basis requires building and adapting the grids accordingly. We have never before seen such extraordinary transformation speed in the energy system.

At WindEurope, we have highlighted again and again that the annual investments in grids need to double. This is certainly a financial challenge, but finance remains the smallest part of the problem.

Doubling investments also means doubling our efforts for earlier and better planning, permitting and construction.

Q: This sounds like a very big challenge. Why should we invest in grid infrastructure when many argue that distributed generation should play the role of meeting local supply?

Jochen Kreusel (J.K.), Hitachi Energy: This is a frequently raised question, indeed. Considering the huge task in front of us we certainly need to do whatever we can to minimize the need for additional grid capacity.

But on the other hand, grids are a very efficient means to harvest variable generation from weather-dependent sources on a continental scale.

At Hitachi Energy, we have a strategic power system modelling group – we call it Power Systems of the Future – in which we are using sophisticated simulation models. For Europe, we found that the different renewable energy resources we have – hydro, wind, and solar power – are quite complementary in case they are well distributed across larger regional areas. This means that different regions help each other whenever they have surplus or insufficient local generation. Our analysis has shown that isolated supply would result in 30 to 40% higher system costs due to the installed renewable generation capacities being utilized inefficiently and because of the need for additional storage. In a previous Perspectives, the CEOs of European transmission grid operators Elia and 50Hertz highlight that they are planning investments in additional cross-border capacity to ensure security of supply.

Two more comments on the role of distributed generation in local supply: First, the vast majority of distributed generation is connected to the distribution grid. Hence, when talking about grid development, we always need to keep all voltage levels in mind. And second, distributed generation can help increase resilience by providing emergency supply for critical applications, such as medical sector, water supply and telecommunication, in case of disturbances on system level.

But it is unlikely that distributed generation is able to provide full supply all throughout the year at acceptable cost – and here is where the transmission level comes in. 

Taking bold actions

Q: Due to the enormous additional electrification, we have to use existing and new grid capacity as efficiently as possible. How can this be done?

J.K.: This is where technology comes in.

We need to equip grids in a way that allows us to operate them more flexibly and with higher utilization than in the past.

This includes, for example, better observability across all voltage levels, digitalization, or power electronics allowing us to control load-flows more accurately.

Unfortunately, such functional adjustments are not foreseen in today’s regulatory frameworks. We therefore need a collaborative process involving grid operators, network users and technology providers through which we agree on the functionalities of the grid of the future and a roll-out plan. Otherwise, we will continue fixing problems once they have occurred. This is neither efficient nor fast.

Q: If grids are crucial to enabling renewable energy growth, what needs to change to incentivize grid operators to make key investments?

G.D.: We are in favour of moving system operators from a revenue model focused on capital expenditure (capex) to one based on total expenditure (totex). We need to see regulatory changes that support investments and incentives to reward efficient planning and timely delivery.

Q: Coming back to the need to accelerate: What particular needs does the wind energy industry have when it comes to accelerating grid expansion?

G.D.: We need to work more in parallel than sequentially and drive deeper cooperation with system operators from the early design stages of the infrastructure.

All stakeholders need to be involved from the very beginning and they need to engage! For the wind industry, for instance, this means that we need to find ways to disclose our investment plans earlier and to commit to them.

We need to eliminate all waiting times during planning and permitting. Even if this means working in parallel on the permitting of several possible grid scenarios. It would help us gain time once we know which projects will materialize. Of course, this can temporarily increase the workload and resources needed within permitting authorities, but in the long term it can be the most cost-effective approach.

We need to decouple risks and design incentives for faster and more efficient grid build-out.

We are talking about developing an interconnected system by independent actors. On the one hand, investors in renewables are depending on grid connections and sufficient grid capacity overall to make their investment profitable. On the other hand, grid operators also need certainty that investments in generation will advance once grids are ready. Technically, we cannot change these interdependencies, but we could at least address them economically with the right incentives and rewards. These would drive more efficient infrastructure delivery and increase certainty for investors, both in generation and grid infrastructure.

Role of education

Q: How are manufacturers affected by the request to accelerate grid expansion?

J.K.: The unprecedented need for upgrading and refurbishing requires more of everything: more factory capacity, more material supply and last, but certainly not least, more skilled people. We cannot create skilled people overnight, but fortunately we can build factories comparably fast. In order to do so we again need sufficient certainty, which means that also on the manufacturing side we require early and reliable alignment, in this case between our customers and us.

Regarding the need for more skilled workers: one of the things that all of us can and should do is communicate the opportunities, communicate that working in our industry is a very important and purposeful contribution to the future of our planet.

I think that policymakers and governments, including academic institutions, should support us in propagating these messages. Academic institutions indeed play an important role in raising awareness about speeding up the energy transition among young students. With the support from our industry, the academia can help modernize teaching curriculums based on latest developments in energy, keep courses relevant, and direct new topics for energy research projects to develop new insights into current energy problems. It is indeed important that young students share early on in the culture and behavior of wanting to create a cleaner future.

Q: Education indeed is a key issue in the energy transition. How is the lack of skilled workforce affecting the wind energy build-out and what is being done to address this?

G.D.: Workforce is essential for the success of the energy transition. The wind energy sector already employs 300,000 Europeans today, but the transition from fossil fuels to renewables has only just begun. If governments deliver on their wind energy pledges the industry will grow by 50% this decade and employ 450,000 by 2030. Competition is fierce as other renewables and green-tech sectors are also seeking fresh talent.

The distributed and decentralized nature of renewables creates additional needs for skilled workers in the areas of system integration, grid operation, trading and elsewhere. And digitalization is creating whole new job profiles and requires new skillsets.

European governments must also set up reskilling and upskilling programs for workers who want to join the wind sector as career changers. This is especially important in countries that are transitioning away from coal mining. In Romania, for example, the national wind energy association has established a successful reskilling project through which around 400 former coal miners are trained every year to take care of operations and maintenance of the country’s growing fleet of wind farms. Cases like this one show that miners bring valuable skills to the renewable energy industry. Reskilling programs are crucial for an inclusive and just transition that leaves no one behind.

Europe also needs to adjust its academic curricula to provide students with the technical skills needed for the different roles in the sector. With the launch of the new educational hub ‘LearnWind’, WindEurope aims to inspire the talent of tomorrow to pursue a career in wind energy. The new hub offers basic explanations about wind energy, a book on job profiles in clean energy, teaching resources and hands-on activities.

450000 workers by 2030

Number of workers to be employed if wind energy pledges are delivered

Targeted action and collaboration

Q: You recently developed a comprehensive report jointly with Hitachi Energy, focusing on power grid development. Why did you feel the need to extensively discuss network build-out?

G.D.: Electricity is and will remain the backbone of the energy system as direct electrification of demand remains the most cost-effective way towards climate neutrality. The two main pillars of direct electrification are renewables and grids, and we need to divide our focus and efforts between these two aspects.

Grid build-out needs to follow the fast pace of direct electrification, but this has been challenging up to now for various reasons. Today, grid build-out requires much more targeted actions.

Our report looks more deeply into the barriers to grid planning and development and makes refined recommendations for immediate action.

Q: What examples can you name that have shown the benefits of a collaborative approach?

J.K.: There are three examples I’d like to mention: One, incentives for grid optimization and smart monitoring. The idea to discuss new grid infrastructure functionalities required in the future was originally proposed by grid technology providers with strong support from grid users and their interest groups, particularly WindEurope and Solar Power Europe. The need to design incentives for investments in grid optimization has been recognized by several grid operators in the meantime. European distribution system operators, the European Network of Transmission System Operators for Electricity (ENTSO-E) and the European Agency for the Cooperation of Energy Regulators (ACER) have highlighted the need of adaptation of regulatory frameworks to the needs of the energy transition. Smart monitoring can contribute to such incentives and is now driven by the European Commission and an increasing number of national regulatory authorities. As a result, we have very fruitful and future-oriented discussions among all stakeholders on what kinds of grids we need for the energy system we are aiming for.

The second example is HVDC (high-voltage direct current) interoperability.

Meshed, multi-vendor interoperable HVDC systems will be a key building block for the European power system of the future, particularly for the cost-efficient development of offshore wind.

This means that the approach to HVDC systems, which are historically vendor-specific, point-to-point systems, will undergo a fundamental transformation. We recently launched the READY4DC EU-funded project, led by RWTH Aachen University with the participation of transmission system operators, HVDC technology providers and WindEurope. The project aims to facilitate this development and to prepare the technology in time to reach the 2050 targets.

The third example is industrial cybersecurity. With the widening network of interdependencies surrounding the wind sector and the development of powerful supporting digital technologies, the potential for cybersecurity vulnerabilities also increases. At Hitachi Energy, we believe that collaboration and an ecosystem approach are key to proactive cyber planning and defense, as described in another recent Perspectives. Working with our partners Deutsche Telekom and Securitas, we have created an approach that unites physical, IT, and OT protection for industrial organizations, including participants along the energy value chain. This is only possible with innovative collaboration and the sharing of expertise.

Q: What motivates you personally to help accelerate the energy transition?

J.K.: Access to energy is fundamental for human development. In the meantime, with nearly eight billion people living on our planet, it has become a matter of survival. But the way in which we have dealt with energy in the past, and to a large extent still do, has not been sustainable at all. The non-renewable energy resources we’ve been using have not been sustainable and we have disregarded what we have released into the atmosphere and the environment.

Ever since finishing my studies, I have been working on building energy systems based on renewable sources. In the beginning it was more about finding out what is actually possible, but eventually, it shifted to a focus on actually making it happen. 

G.D.: The energy transition is the major challenge of this century in Europe. The deployment of renewables is one of its two main drivers together with energy efficiency.

My personal driver is removing as many barriers as possible to the wide deployment of renewables. Wind energy has huge potential for technological development and innovation which makes this industry even more exciting and dynamic!