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1、#Grids4SpeedGRIDSFOR SPEEDExecutive summary:report overview2Grids for Speed(GfS)is a comprehensive examination of investments and enablers needed to ensure that our grids are fit and ready for a more electrified society.Failure to invest in distribution grid modernisation will stall much-needed conn
2、ections of technologies,such as renewables,heat pumps and electric vehicles(EVs).The anticipated upsides of reduced carbon emissions,greater energy efficiency and lower energy bills may not materialise,or at least not as quickly as the world needs.GfS sets outs the vision and framework for the distr
3、ibution grid to achieve the energy transition by 2050 in the EU27 countries and Norway(EU27+Norway).It scrutinises the critical and sometimes underestimated role of distribution grid infrastructure in accelerating the shift towards sustainable,low-carbon energy systems.Our starting point is Eurelect
4、rics REPowerEU 2050 scenario.Described in Eurelectrics Decarbonisation Speedways report,the scenario integrates both the European Commissions Fit For 55 and REPowerEU policy packages.In GfS,we evaluate the scale of capital investment needed to:Increase the distribution grids capacity to deploy renew
5、ables Replace ageing infrastructure Integrate advanced technologies for efficient grid management and controlOur analysis is informed by data from distribution system operators(DSOs)serving more than 60%of European energy users.It also includes National Energy and Climate Plans(NECPs),network develo
6、pment plans(NDP)and proprietary EY data.And it is modelled by EY and Imperial College London(ICL)through to 2050,using ICLs internationally acclaimed representative grid modelling methodology.We identify the key enablers that must be in place to deliver the required investment and speed up grid deve
7、lopment.In terms of regulation,we consider adjustments to the current incremental and backward-looking regulatory framework,to a true forward-looking approach that supports the grid acceleration required to realise the energy transition.And we determine how the supply chain,from materials to manufac
8、turing,permitting and talent acquisition,must scale to deliver grids for speed.In this report,we explore the societal benefits that will be made possible by investment,including energy bill savings,job creation opportunities and,crucially,decarbonisation.In detailing investment needs,identifying app
9、ropriate regulations,formulating a supply chain action plan and addressing societal dividends,this GfS report becomes a valuable roadmap towards the energy transition.For policymakers,industry stakeholders and investors across the EU27+Norway,it offers insights and brings clarity to the strategic op
10、tions they face,and their roles in facilitating a swift and efficient transition towards greener energy.Executive summary:key findings3PolicyPolicyThe distribution grid must be central to energy policy and system design,not an afterthought.The distribution grid should develop at the speed of other s
11、ocietal mega shifts,such as decarbonisation,electrification and digitalisation.Electricity grid reliability and resilience are critical in an increasingly electrified society,where electricity will make up 60%of all energy demand,compared with just 20%today.InvestmentInvestment67 billion investment
12、annually is needed to 2050 is needed to deliver a distribution grid that will enable the energy transition.Failure to get the grid ready in time will not only slow the energy transition but also jeopardise energy security and the benefits of decarbonisation.The electricity system is now in an except
13、ional period of growth,meaning that the investment profile is front-loaded.Investment must double until 2040 from roughly 36 billion today,then continue at 1.7 times todays levels through to 2050.Innovation in distribution grids is opening up new emerging grid strategies that can reduce the investme
14、nt required by around 18%to 55 billion annually when supported by right regulatory environment.Those emerging grid strategies include anticipatory investment(i.e.,proactively oversizing grid capacity when constraints and other works occur,in anticipation of increased demand),asset performance excell
15、ence(i.e.,use of real-time data and artificial intelligence(AI)to optimise asset health)and grid-friendly flexibility(i.e.,actively managing demand during peak times across voltage levels to defer grid growth).Anticipatory no-regrets investment is the most cost-effective strategy for building out di
16、stribution grid capabilities that are fit for a decarbonised future.Societal benefitsSocietal benefitsEfficiency gains from electrification will see energy bills almost halve by 2050 in a net-zero scenario,assuming that tax remains constant in relative terms.Today,direct and indirect jobs in the dis
17、tribution grid sector represent around 0.4%of the EU workforce(835,000 jobs).Delivering the required GfS investment could create more than two million additional jobs.Reliable and resilient electricity supply has a massive societal value that far exceeds the cost of implementation.GfS investments in
18、 the distribution grid will support the connection of clean electricity technologies and the realisation of net zero.Stagnated investment will fail to connect three-quarters of these technologies.43%43%of investment is for demand-driven reinforcement67bn/year67bn/yearinvestment is required between 2
19、025 and 2050 in the EU27+Norway2x2xcurrent investment between 2025 and 2040 in period of growth1.7x 1.7x current investment between 2041 and 2050AnticipatoryAnticipatoryinvestment is a no-regrets approach to optimise investment12bn 12bn saved/yearsaved/year if emerging grid strategies are realised&s
20、upported by the right regulatory environmentRegulatory enablementRegulatory enablementThough DSOs are regulated differently across the EU27+Norway,regulations have enabled them to jointly invest 33 billion annually between 2019 and 2023.Regulation must now transform if DSOs and national regulatory a
21、uthorities(NRAs)are to be sufficiently flexible,agile and able to unlock early investment at a larger scale than in the past 30 years.Prioritisation is needed to deliver large-scale investment that creates most value for society.Capital expenditure(capex)for grid expansion must be accompanied by ope
22、rating expenditure(opex)that enables continued and efficient operation.Reforms,such as the Electricity Market Design(EMD)agreement,that are already planned in European regulation must be implemented quickly.New initiatives must be developed and implemented as soon as possible this decade to support
23、the acceleration of investment to 2040.Supply chain enablementSupply chain enablementIncreased volumes of critical grid materials,such as copper,aluminium and electric steel,are urgently needed.Anticipated global shortages in copper this decade may trigger price surges.Equipment manufacturing is und
24、er strain,with forecasts showing a need to double number of transformers and increase grid length by 70%to 2050.Policy support is critical to secure an agile and resilient supply chain,from mineral extraction to procurement,for distribution grid development.Executive summary:key findings4Empowerment
25、 to scale investmentEmpowerment to scale investmentMeasures to support DSOs in competition for investment by providing confidence and regulatory certainty should also enable an attractive risk/reward investment profile,with appropriate prioritisation and regulatory oversight.Improved regulatory proc
26、essesImproved regulatory processesBy allowing decisions to be made quickly,transparently,objectively and with confidence,regulation supports DSOs and users with prioritisation.2x transformers and 1.7x 2x transformers and 1.7x grid length to 2050grid length to 2050Keeps financing cost allowances up t
27、o date and minimises the lag between making the investment and the start of cost recovery.Contents5The need for GfS in the energy transition1Societal benefits of GfS6Revamping distribution grids for the energy transition2Regulation to deliver GfS 7Grid investment strategies enabling the energy trans
28、ition3Scaling and innovating the supply chain8GfS modelling methodology4References9Grid investment pathways to 20505Appendices10AcknowledgementsThis report was jointly prepared by Eurelectric and EY in collaboration with Imperial College London and with the support of power grid companies and nation
29、al electricity associations.The contributing authors were Serge Colle,Paul Micallef,Matt Corkery,Steve Heinen,Selcan Kayihan,Ali Ahmadi,Leonardo Costa,and Tom Morris(EY),and Professor Goran Strbac,Predrag Djapic,and Danny Pudjianto(Imperial College London).And the Steering Committee members were Mar
30、ta Castro and Luis Alberca Carpintero(Aelec),Paul de Wit and Samira Rotteveel(Alliander),Benjamin Dvel and Carmen Descamps(BDEW),Elena Giannakopoulou(PPC)and Dimitrios Stratogiannis(HEDNO),Rui Goncalves and Gonalo Faria(E-REDES),Rmy Garaude and Florine Cardin(Enedis),Silvia Piana,Alejandro Falkner a
31、nd Mena Testa(Enel),Dr.Tobias van Leeuwen and Alina Laszlo-Orth(E.ON),Grinne OShea and Kieran ONeill(ESB Networks),Kirsten Lemming Zandberg and Tyge Helms Skov(Green Power Denmark),and Jrn Bugge and Christine Kaaly(Renewables Norway).We would also like to thanks the contributions of the Eurelectric
32、Committee Chairs,Daniele Agostini,Yvan Hachez,Goran Hult,and Alain Taccoen.The report was supervised by Mlis Isikli and Zsuzsa Csek(Eurelectric)with the standing support of Oliver Franz(E.ON)and Louise Rullaud and Savannah Altvater(Eurelectric).The coordination of the report benefitted from essentia
33、l support of Alyson Lizin(Eurelectric).Thanks to Evgeniya Nikolova,Nic Steinwand,Chiara Carminucci and Gael Glorieux of the Eurelectric Strategic Communications Department.Many associations,companies,and institutional bodies were consulted throughout the development of the report including:Accenture
34、,the European Union Agency for the Cooperation of Energy Regulators,Agora Energiewende,Amazon,AVERE,Breakthrough Energy,CAN Europe,CEER,Compass Lexecon,CurrENT Europe,E3G,EASE,the European Commission,ECF,E.DSO,the EU DSO Entity,EHPA,the European Investment Bank,GE Vernova,Ormazabal,RAP,Schneider Ele
35、ctric,SmartEn,SolarPower Europe,Sustainable Public Affairs,Systemiq,T&D Europe,TENEO,and Transport&Environment.The report has benefitted greatly from their contributions.#Grids4SpeedThe need for GfSin the energy transition1Distribution grids are evolving but acceleration is needed as big changes res
36、hape and disrupt society.Electricity distribution grids:the forgotten giants of the energy transition8PastPastFutureFutureElectricity distribution grids deliver electricity directly to homes,offices,businesses,factories and any other places that use electricity.Distribution grids connect customers w
37、ith the transmission electricity grid,which in turn connects very large users and power plants.Distribution grids are owned,developed,maintained and operated by DSOs.Distribution grids comprise physical elements,such as substations,transformers,electric overhead and underground lines,smart meters an
38、d associated infrastructure.They also include digital control and management systems.For more on digitalisation,please see Wired for Tomorrow(2024),a new Eurelectric report on the digitalisation of DSOs.In the past,energy was generated at the transmission level and flowed down to the distribution le
39、vel where it was consumed.Energy flows are now bi-directional,with generation and consumption happening at every level.This changes and increases DSOs responsibilities.Transmission grid extra high voltage(EHV)Above 150 kVDistribution grid high voltage(HV)Above 38 kVDistribution grid medium voltage(M
40、V)Up to 38 kVDistribution grid low voltage(LV)400 VNote:Voltage level definitions are indicative and may differ by country.Major societal shifts bring new electricity grid priorities 9Resiliency Resiliency and reliabilityand reliabilityElectricity demand Electricity demand growth and variabilitygrow
41、th and variabilityEmpowering Empowering customerscustomersSocietal mega trends are Societal mega trends are changing energy systems at changing energy systems at disruptive speeddisruptive speedGrowing electricity distribution Growing electricity distribution grid priorities grid priorities Increase
42、 in Increase in distributed distributed renewable renewable energyenergyIncrease in Increase in severe severe weather weather eventseventsIncreasing Increasing reliance on reliance on electricityelectricityCyber Cyber threatsthreatsEnergy Energy affordabilityaffordabilityNew customerNew customerexpe
43、ctationsexpectationsDigitalisationDigitalisationElectrification Electrification of heat and of heat and transporttransportDecarbonisationDecarbonisationResiliency and reliability10More More extreme extreme weather weather eventseventsCyber Cyber attacks lead attacks lead to data and to data and oper
44、ational operational losseslossesRising Rising reliance on reliance on electricityelectricityThe number of cyber incidents is increasing.For instance,a military cyber attack on a satellite in February 2022,killed the internet connection to approximately 5,800 wind turbines in Germany.05020
45、002020212022Heat/cold waves,droughts and forestfiresEconomic losses from natural disasters in EU(bn)Economic losses from natural disasters in EU(bn)Changing climate and more extreme weather events impact grid resilience2.In 2022,climate-related losses amounted to 650 billion in
46、 the EU.As electricity will meet 60%of all energy demand by 2050,distribution grid infrastructure becomes the backbone of the economy and makes reliability and resilience critical.10%20%40%60%80%20050Electricity%in final energy demandElectricity%in final energy demandSource:Eurelectric.So
47、urce:Center for Strategic and International Studies(CSIS),International Energy Agency(IEA).Number of cyber attacksNumber of cyber attacks1.The renewable penetration forecast assumes a lower level of decarbonisation than the 45%targeted by the Renewable Energy Directive.Electricitys role in the energ
48、y mix is therefore likely to be higher should this target be met.2.More information on grid impact of extreme weather events and Resilience is available in Eurelectrics The coming storm:Building electricity resilience to extreme weather.0%10%20%0100200Other significant incidentsElectricity-related i
49、ncidents%of all attacks that were Electricity relatedSource:European Environment Agency(EEA).Electricity demand growth and variability11Electrification Electrification of buildings,of buildings,transport and transport and industryindustry50%81%83%84%0%20%40%60%80%100%2020203020402050Capacity mixRene
50、wable Energy Sources17542515,5692370500300202120302050Heat pumpsEVs0200040002020203020402050GWBattery energy storage system(BESS)Onshore WindSolar PVDecarbonisationDecarbonisationBy 2050,electricity generation will be largely decarbonised across the EU,requiring a rapid increase in interm
51、ittent renewables.The electrification of buildings(heat),transport and industry will contribute significantly to growing electricity demand,both in terms of growing capacity and new connections.The deployment of EV chargers will require 15,000 new connections a day.About 70%of future renewable gener
52、ation and electricity storage will be connected to the distribution grid.Distributed renewable capacity in Europe will grow nearly six-fold fold from 2020 until 2050.This represents a massive increase in intermittent capacity to add to the distribution grid.Heat pumps and EV in the EU(millions)Heat
53、pumps and EV in the EU(millions)Renewable energy capacity in the EURenewable energy capacity in the EURenewable penetration in EURenewable penetration in EUSource:Eurelectric.Source:Eurelectric.Source:Eurelectric,IEA.Note:All analysis is REPower EU-inspired and does not factor in the 45%targeted by
54、the recent Renewable Energy Directive.Renewable capacity,renewable penetration,heat pumps and EV demand in the EU are likely to be higher should this target be met.DecentralisatiDecentralisationonEmpowering customers12Rising Rising customer customer expectationexpectationRising Rising affordability
55、affordability concernsconcernsDigitalisationDigitalisationDigital transformation is revolutionising processes,products,services and experiences across all industries,including the energy sector.Europe accounted for 22.7%of global digitalisation spending in 2023.Informed by their experiences in other
56、 sectors,such as retail and banking,customer expectations of critical infrastructure providers,such as grids,are increasing.The average energy bill in 2022 was more than a months wages for low-paid workers in most EU Member States.1010%EU population lived in energy poverty in 2022 52%52%EU consumers
57、 said they spent more on electricity in 2022 than in 20237 7%EU population had arrears on their utility bills in 20221,853,907In US$trillionsCAGR116.1%Global spending on digitalisation(US$trillions)Global spending on digitalisation(US$trillions)Source:EY Customer Experience Transformation
58、(CXT)consumer research survey 2022 and EU Eurobarometer.EU consumers prefer to use digital channels for all interactions50%50%Daily internet use in the past decade has increased most in rural areas(45%),followed by towns(30%)and cities(29%)80%80%EU customers believe that everyone should try to reduc
59、e energy consumption during peak hours8 81 1%Source:IDC Worldwide Digital Transformation Spending Guide 2023.Source:Eurostat,European Trade Union Confederation.Digital preferences must be met while retaining traditional channels,such as telephone,mail and public announcements,to serve all customers
60、with same quality standards.1.Compound Annual Growth Rate.Progress on distribution grid connections and reliability,but must go faster13Source:Eurelectric Power Barometer 2023.Customer Customer requestsrequestsNumber of Number of substationssubstationsDistribution Distribution line lengthline length
61、New lines are needed to ensure distribution grids can continue to connect customers.More requests for new or larger connections(both generation and demand)put significant strain on the grid.New substations are needed to keep the grid reliable,and able to accommodate growing customer numbers and inte
62、grate renewables into the system.In some areas,the grid is already at capacity,and new connection requests will be turned down or significantly delayed.Waiting lists for HV connections can be up to eight years.This incremental increase will be insufficient to accommodate the energy transition.This i
63、ncrease in line length will be insufficient to accommodate the integration of renewables and more customers.New customers connected in 2022 compared with 2019+19%+19%Smart meter penetration in 202256%56%Reduction in grid outages between 2018 and 2021-11%11%Increase in primary substations between 201
64、8 and 2021+1.51.5%Increase in secondary substations between 2018 and 2021+1.2%+1.2%Increase in total length(km)between 2021 and 2022+0.8%+0.8%Increase in underground cables(km)between 2021 and 2022+1.7%+1.7%Increase in overhead lines(km)between 2021 and 2022+0.80.8%Grid investment must keep pace wit
65、h societal shifts14Resiliency and Resiliency and reliabilityreliabilityElectricity demand Electricity demand growth and variabilitygrowth and variabilityEmpowering Empowering customerscustomers6x6xincrease in distributed renewable capacity1313x xincrease in economic damage from extreme weather 3 3x
66、xincrease in electricity share of total energy6x6xincrease in cyber attacks25%25%increase in energy prices8080%of customers wanting personalised experience50%50%of customers preferring digital for all interactions200 x200 x increase in EV and heat pump sales3x3xincrease in renewable capacity as%of e
67、nergy mix KeyHistoric Historic(2012201222 22 statistic)statistic)FutureFuture(c.2020(c.202050 50 statistic)statistic)PresentPresent(2022(2022 statistic)statistic)Major societal shifts are underway.Grids are modernising but investment must accelerate to match the disruptive speed of change.0.8%0.8%in
68、crease of increase of distribution distribution grid length grid length(2021(2021-22)22)19%new 19%new customers customers connected connected(2019(201922)22)11%11%reduction reduction in grid in grid outages outages(2018(201821)21)Mega trends are occurring at an exponential rate the distribution grid
69、 is growing incrementally#Grids4SpeedRevamping distribution grids for the energy transitionShifting roles and investment priorities,escalating energy demand and the pursuit of net zero:DSOs take on transformative challenges.2GfSGfSTo adequately respond to the societal shifts,enhanced grid requiremen
70、ts are neededSocietal mega trends create internal and external challenges for DSOs.In response,DSOs must prioritise resiliency and reliability,electricity demand growth and variability,and empowerment of customers.To deliver the energy transition and resolve the challenges,grid operators must enhanc
71、e the grid across all grid-related business areas.16Customer Customer connectionsconnectionsGrid planning Grid planning and asset and asset m managementanagement Infrastructure Infrastructure deliverydeliveryGridGrido operationsperationsFacilitation ofFacilitation ofmarkets and markets and servicess
72、ervicesEnhancements are needed across all grid business areasEnhancements are needed across all grid business areasGrowing Growing grid grid priorities priorities Societal mega trendsSocietal mega trendsEmpowering customersEmpowering customersElectricity demand growth Electricity demand growth and v
73、ariabilityand variabilityResiliency and Resiliency and reliabilityreliabilityIncrease in Increase in distributed distributed renewable renewable energyenergyIncrease in Increase in severe severe weather weather eventseventsIncreasing Increasing reliance on reliance on electricityelectricityCyber Cyb
74、er threatsthreatsEnergy Energy affordabilitaffordability yNew customerNew customerexpectationsexpectationsDigitalisatioDigitalisation nElectrificatioElectrification of heat n of heat and and transporttransportDecarbonisationDecarbonisationThe evolving role of the grid operator17For more on how digit
75、alisation is being used to meet these growing requirements,please see Wired for Tomorrow(2024),a report by Eurelectric.LegacyLegacyresponsibilitiesresponsibilitiesEvolving Evolving responsibilitiesresponsibilitiesCustomer connectionsCustomer connectionsCater to high volumes of requests for new or ex
76、panded connections for distributed energy resources(DERs),including solar photovoltaic(PVs),EVs and heat pumps(HPs).Expedite customer site assessment decisions.Standardise diverse connection options and types(e.g.,non-firm/flexible,etc.).Facilitate the digitalisation of processes and requests to con
77、nect(contracts,signatures,opinions,etc.).Manage the steady flow of new connections for buildings,often in parallel with multi-year construction projects.GridGrid planning and asset planning and asset m management anagement Use bottom-up customer data and insights to forecast future demand.Harness pr
78、obabilistic/risk-based reliability of supply criteria and assessments.Apply wired and non-wired flexibility solutions to address grid constraints and increase resilience.Adopt predictive asset management practices.Identify current and upcoming grid constraints and reinforce as required with grid sol
79、utions.Determine reliability of supply criteria and assessments.Manage and assess the condition of assets with little real-time operational information.Infrastructure deliveryInfrastructure deliveryIncrease collaboration with local planning authorities to manage permitting,and liaison with other uti
80、lities to address increasing underground congestion.Improve customer communications around planned/unplanned outages.Meet social and governance obligations in procurement.Prioritise cost-efficient delivery of distribution infrastructure projects.Coordinate with other infrastructure projects.Grid ope
81、rationsGrid operationsIncrease grid visibility(real-time DER monitoring)down to the LV level.Increase automation or augment operation of assets or field-crew dispatch.Conduct real-time management of DERs(e.g.,storage,wind).Procure,contract and activate flexibility resources.Increase coordination wit
82、h the transmission system operator(TSO).Integrate operational technology cybersecurity operations centres.Conduct real-time operation and load balancing for the HV and MV distribution grid.Coordinate field crew intervention for manual switching and repair.Ensure power quality meets required threshol
83、ds.Facilitation of mFacilitation of ma arkets and rkets and servicesservicesFacilitate customer participation(e.g.,energy sharing)in the electricity markets,and incorporate new actors(such as aggregators and energy communities).Provide transparency on flexibility needs(i.e.,type,location)Provide non
84、-discriminatory access to the distribution grid for all customers and users(e.g.,end users,power generators and service providers).Own and operate smart metering infrastructure,(including data exchanges for supplier switching)in some geographies.Investment categoriesInvestment categories Different c
85、ost categories for stabilising,reinforcing or modernising the gridSystem digitalisationSystem digitalisation1 1 and and substation automationsubstation automationInvestment in:Operational systems2Flexibility systems3Crew workforce and order management systemsCore business systems4Data management/ana
86、lyticsCybersecurity For more on digitalisation,see Wired For Tomorrow(2024),a report by Eurelectric.GenerationGeneration-driven driven reinforcementreinforcementInvestment in grid reinforcement to accommodate reverse power flow from renewable generation.This allows excess generation to move to where
87、ver it is most needed.Targeted resilienceTargeted resilienceInvestment in targeted upgrades that are not addressed by other investment categories,such as:Undergrounding cablesNew feeder links to provide more backstop capabilityExcludes measures that strengthen overhead grids(e.g.,aerial bundled cond
88、uctors).Smart meter installationsSmart meter installationsInvestment in:Initial rollout of smart meters at customer connection points and auxiliary systemsUpgrade and renewal of smart metering infrastructure to deliver on growing demand from customers and DSOsImplement necessary information and comm
89、unications technology(ICT)softwareRenewal and replacementRenewal and replacementInvestment in replacing assets,either due to their age or condition,or because they are coming to the end of their useful lives.Excludes decommissioning costs.DemandDemand-driven reinforcementdriven reinforcementInvestme
90、nt in the grid to accommodate growth in demand and connections due to:New or relocating customersElectrification of heat,transport and industryNote:Savings from flexibility will be quantified by comparing scenarios with different levels of flexibility.New grid responsibilities require different inve
91、stment needs181.For example,operational technology,cyber,AHM.2.ADMS.GIS and data management or comms for RTUs and real-time monitoring.3.Distributed energy resource management systems(DERMS)and DER gateway.4.ERP,CIS and CRM systems.EU policy goals:why operators must invest in modernising grid infras
92、tructure19 Informed by the most recent political and market trends,Eurelectrics Decarbonisation Speedways depicts how Europe can achieve climate neutrality in or before 2050,as well as reach ambitious targets in 2030.Eurelectrics REPowerEU scenario adopts the EUs REPowerEU policy plan,which accelera
93、tes European independence from Russian energy and the transition to decarbonised energy sources.This scenario underpins the demand and generation forecasts for GfS.To achieve the EUs political goals,grid development and modernisation are essential.They will help to secure a cost-efficient,timely and
94、 secure delivery of the energy transition.GfS assesses related grid investment needs and the enabling regulatory framework.Change Change in in electricity electricity consumption(pages consumption(pages 2020-2121)Shift in peak demand(page Shift in peak demand(page 2323)Connecting renewables(page Con
95、necting renewables(page 22)22)Grid age(page 24)Grid age(page 24)Based on the REPowerEU scenario,four indicators will impact Based on the REPowerEU scenario,four indicators will impact future grid investment:future grid investment:GfSGfS determines what is needed from a grid investment and determines
96、 what is needed from a grid investment and regulation perspective to deliver on EU policyregulation perspective to deliver on EU policyMillion tonnes of CO2 equivalentObservations and outlookObservations and outlookElectricity consumption(TWh)Electricity consumption(TWh)Surge in electrification and
97、consumption demands greater grid reliability20 After 20 years of stagnation,electricity demand will grow,becoming the dominant fuel of the economy.This is due to increased use by existing customers and new connections,as well as the electrification of transport,industry,heating,etc.The decrease seen
98、 between 2010 and 2020 reflects weather conditions,economic activity and greater energy efficiency.Reliable supply of electricity by distribution grids will become increasingly important to the economy.Greater reliance on automation across all voltage levels will identify faults and reconfigure the
99、grid so that electricity can be restored and outage times minimised.Investment in meshing the grid and automating open points will deliver these benefits.In parallel,a seamless and secure supply chain will allow crews to intervene,access critical network assets and correct system faults.Increased gr
100、id resilience means it can withstand external threats,including natural disasters and cyber-attacks.Next Next 30 30 yearsyearsLast 30 yearsLast 30 yearsRising consumption in the EU27+Norway0005001.0001.5002.0002.5003.0003.5004.0004.5005.00002020203020402050+2,000(80%)+500(25%)Source:Euros
101、tat,Supply,transformation and consumption of electricity;Eurelectric,Decarbonisation Speedways.Note:Annual electricity consumption variation in 2020 was not only affected by normal short-term variations such as weather and economic activity,but also restrictive measures to slow down the spread of CO
102、VID-19.For reference,electricity consumption was 3%lower in 2020 compared with 2019.Investment needed in Investment needed in Digital systems for crew workforce and order management for grid repairs and outagesTargeted resilienceRenewal and replacementThree sectors contribute to greater electricity
103、consumption in the EU27+Norway210005001.0001.5002.0002.50002020203020402050Buildings02020203020402050Transport02020203020402050IndustryLast30 yearsNext30 yearsLast30 yearsNext30 yearsLast30 yearsNext30 years+600(40%)+500(50%)+/-0+900+/-0+400(40%)Observations and outl
104、ookObservations and outlookElectricity consumption by sectors(TWh)Electricity consumption by sectors(TWh)Consumption in the EU27+NorwaySmart metering and increased grid visibility to know where growth occursInvestment needed in Investment needed in Demand-driven reinforcementSystem digitalisation an
105、d substation automationSource:Eurostat,Supply,transformation and consumption of electricity;Eurelectric Decarbonisation Speedways Buildings and industry currently represent 65%+of electricity consumption.Given the increasing electrification of transport over the next 30 years,these three sectors wil
106、l represent 90%+by 2050.Buildings and industry electrify their heat production,and use more digital and IT services.However,increased consumption is partially offset by greater energy efficiency measures and the continuing shift from a manufacturing-to a knowledge-based economy.While marginal today,
107、the transport sector will grow exponentially to become the third-largest electricity consumer within the next 30 years.To realise the benefits of energy security,decarbonisation and reduced local pollution,the electricity grid must be developed and reinforced so that it can both transport electricit
108、y to where it is needed and swiftly connect new loads from heat and transport.Observations and outlookObservations and outlookRenewables production(TWh)Renewables production(TWh)How onshore wind and solar PV will impact distribution grids in the EU27+NorwayConnecting renewables to manage energy cons
109、traints,production and consumption22Renewable addition0005001.0001.5002.0002.5003.0003.5004.0004.5005.00002020203020402050Next 30 yearsNext 30 yearsLast 30 yearsLast 30 years+3,000(600%)+500 Electricity markets operate across broad geographic zones or at national levels.Distribution grids
110、,however,are not restricted by physical boundaries and can transport electricity beyond electricity markets.Most renewables are produced and consumed within the same distribution grid.This is more efficient as losses are lower with less distance between production and consumption.However,due to the
111、intermittent nature of renewables,the distribution grid needs more real-time monitoring and management systems to maintain reliability and stability.The grid must be sized to ensure that electricity can flow from where it is produced to where it is consumed;otherwise,renewables production will be cu
112、rtailed.Timely grid development is important to accommodate and connect accelerating renewables capacity.Investment needed in Investment needed in Generation-driven reinforcementSystem digitalisation and substation automation1Source:Eurostat,Supply,transformation and consumption of electricity;Eurel
113、ectric Decarbonisation Speedways 1.ADMS to maximise the value of renewable energiesPeak visibility is critical due to the anticipated change in peak demand230050060070080090002020203020402050Next Next 30 30 YearsYearsLast Last 30 30 YearsYears+300(60%)+100(25%)Observations and
114、outlookObservations and outlookPeak demand(GW)Peak demand(GW)Changing peak load in the EU27+Norway Peak demand or production denotes the maximum amount of electricity required during a specific moment of the year.It defines grid sizing at each voltage level.If peak demand can be lowered by shifting
115、demand to another moment,while still meeting customer requirements,then it creates flexibility,which is a means to defer costly grid reinforcement.Electricity grid companies must be able to identify peak loading for each asset.This can be challenging,given the complexity of interconnected systems an
116、d switching mechanisms,and the need to forecast electricity demand for each asset.In the past,when demand was more predictable and steadier,DSOs relied on top-down forecasting and simulation models at higher voltage levels only.This will no longer be sufficient.DSOs now need bottom-up forecasting,us
117、ing smart meter data and granular grid simulation tools,across all voltage levels and time horizons,from microseconds to years.Smart meter installationsSmart meter installationsInvestment needed in Investment needed in DemandDemand-driven driven reinforcementreinforcementSystem digitalisation and Sy
118、stem digitalisation and substation automationsubstation automation1 1Source:European Network of Transmission System Operators for Electricity(ENTSO-E);Eurelectric Decarbonisation Speedways1.Digital systems for data management,grid simulation and forecasting30%of todays grid is more than 40 years old
119、 240%10%20%30%40%50%60%70%80%90%100%202020302040205040 yearsObservations and outlookObservations and outlookAge of grid infrastructure(LV power lines)Age of grid infrastructure(LV power lines)Progressive asset ageing if none of the infrastructure is replaced after 2020 in the EU27+Norway 30%of today
120、s grid is more than 40 years old on average,with some assets significantly older.To ensure resilient and reliable grids,investment in grid replacement and renewal is evaluated using a risk-based assessment and decision-making framework.When prioritising the replacement and renewal of assets,age is o
121、ne factor in determining asset health.Other factors include the make,build,environment surrounding the asset,location,public risk,loading,impact of failure and inspection records.Advanced monitoring(including smart meter data)and maintenance data,combined with predictive algorithms and digital twins
122、,can help to optimise asset health.However,periodic replacement and renewal remain essential.Overlaying grid expansion and customer connection requests with advanced forecasting and simulation tools also supports anticipatory investment.Targeted resilienceTargeted resilienceInvestment needed in Inve
123、stment needed in Renewal and Renewal and replacementreplacement1 1System digitalisation and System digitalisation and substation automationsubstation automation1 11.Renewing existing grid,while harnessing opportunities for strategic reinforcement,further monitoring(including smart meter data)and dig
124、ital asset health management systems.Various DSO investment is needed to enhance the rapidly changing electricity systemCurrent state of play:The electricity grids of the EU27+Norway are entering a period of rapid change in terms of overall electricity consumption(kWh),renewable generation and peak
125、demand(kW).At the same time,the existing grid is ageing.Enabling an electric future:To deliver on EU policy goals of carbon neutrality and energy security,GfS assesses distribution grid investment needs through to 2050.This investment analysis,presented in chapter 5,focuses on six investment categor
126、ies,including physical grid growth,renewal,targeted resilience,and automation and digitalisation.25Investment categoriesInvestment categoriesMain change Main change indicatorsindicatorsChange Change in in electricity electricity consumption consumption Change in Change in peak peak d demand emand Co
127、nnecting Connecting renewablesrenewablesGrid Grid ageageInvestment Investment categories categories System System digitalizationdigitalization and substation and substation automationautomationGenerationGeneration-driven driven reinforcementreinforcementTargeted Targeted resilienceresilienceSmart me
128、ter Smart meter installationsinstallationsRenewal and Renewal and replacementreplacementDemandDemand-driven driven reinforcementreinforcement#Grids4SpeedGrid investment strategies enabling the energy transition3How DSOs can determine the right investment strategy and pathway to enable an electric fu
129、ture.Grid investment needed to achieve REPowerEU and decarbonisation goals27Grids for Speed(GfS)uses the demand and generation outlook to 2050,considers the investment required for the distribution grid to manage the additional demand and generation and the impact of three key emerging investment st
130、rategies on this investment.Unlocking this investment and the physical realities of delivering the grid are considered in an action plan to support the scale out of the distribution grid and the benefits this will bring.Pathways combine different investment strategies that DSOs can take to achieve n
131、et-zero goals.GfS examines how these three key emerging grid investment strategies interact with each other and current investment strategies.It explores the impact on the investment required.GridGrid-friendly friendly flexibilityflexibilityAsset Asset performance performance excellenceexcellenceAnt
132、icipatory Anticipatory investmentinvestmentMain pathwayMain pathwayCurrent practiceEmerging practiceGfS is anchored in the demand and decarbonisation scenario REPowerEU,which is proposed in Eurelectrics Decarbonisation Speedways.This scenario delivers the EUs 2050 goals,as defined in the European Co
133、mmissions REPowerEU and decarbonisation(Fit for 55)policies.1.Demand and generation outlook3.DSO pathways2.DSO investment strategiesDSOs currently use multiple tried-and-tested investment strategies,such as increasing the capacity of grid sections or asset renewal cycles.Additionally,GfS models thre
134、e emerging grid investment strategies:1.1.Anticipatory investment Anticipatory investment involves proactively expanding grid capacity when constraints and other works occur to meet the 2050 demands,rather than merely making incremental increases.2.2.Asset performance excellence Asset performance ex
135、cellence is achieved by using real-time data and AI to optimise asset health.3.3.GridGrid-friendly flexibility friendly flexibility means actively managing demand during peak times across voltage levels to defer grid growth.Asset performance excellenceAsset performance excellenceAnticipatory investm
136、entAnticipatory investmentGridGrid-friendly flexibilityfriendly flexibilityGfS(all of it)GfS(all of it)0%10%20%30%40%50%60%70%80%90%100%110%120%130%referencedoubleElectricalElectrical capacity of assetcapacity of asset(e.g.,transformer,cable,line)(e.g.,transformer,cable,line)Economics supports antic
137、ipatory investment in distribution grid projects28Variable cost(capacity-dependent)Fixed cost(capacity-independent)Anticipatory Anticipatory investmentinvestmentPM1 and engineeringMaterials and equipmentRegulatory and permittingInstallation&Civil WorksTypically,for a 1020%increase in cost,capacity c
138、an be doubled2 2x xcapacitcapacity yImplication for distribution grid strategyImplication for distribution grid strategyCost breakdown for a grid asset reinforcement projectCost breakdown for a grid asset reinforcement projectIndicative representation of the cost breakdown for a grid overhead line a
139、nd cable installation project(other grid assets have similar characteristics)Electricity grid projects are dominated by fixed costs for electrical installation and civil works,along with permitting,engineering and project management costs.Only material and equipment component costs are variable,as t
140、hese are determined by the electrical size or capacity of the project.Typically,increasing the capacity of a grid project(e.g.,line,cable or transformer installation)will only increase the cost of the project marginally,if within the same voltage level.For instance,doubling capacity may increase cos
141、ts by around 10%to 20%yet provide additional capacity for planned future projects,such as renewables integration,new housing developments or heat electrification.Where future strong load growth is likely,it may be prudent to strategically size up capacity as an anticipatory investment during reinfor
142、cement or replacement projects.This will reduce the investment required in demand-and generation-driven reinforcement as additional capacity is available.Source:EY analysis,and ACER and PWC(2023),Unit Investment Cost IndicatorsInvestment impacted in Investment impacted in DemandDemand-driven driven
143、reinforcementreinforcementGenerationGeneration-driven driven reinforcementreinforcement1.PM is project managementAsset performance excellence:optimising the use of the grid29RiskRiskReal-time monitoring of asset condition,such as load,temperature and pressureAdvanced AI and machine learning(ML)algor
144、ithms dynamically predict asset health and probability of failure across extensive data sets of assetsPrepare condition-based asset maintenance schedule and harness field information to enrich asset healthProbability ofProbability offailurefailureImpact of Impact of failurefailureTargeted Targeted m
145、aintenancemaintenanceMonitorMonitorModelModelImplication for distribution grid strategyImplication for distribution grid strategyAsset performance excellence entails using health and riskAsset performance excellence entails using health and risk-based processes powered by data and AIbased processes
146、powered by data and AI Asset performance excellence harnesses the power of data,analytics and AI for asset management practices that consider the real health and condition of the asset.As a result,asset replacement is optimised to a just-in-time basis and investments are directed to the next most cr
147、itical area.Additionally,unplanned outages from asset failure are proactively avoided,which improves reliability and customer outcomes.Asset maintenance schedules are reduced,evolving from reactive to condition-based maintenance,which further benefits reliability.Asset health simulation can be appli
148、ed to decisions about distribution grid operations,further maximising asset lifespans.Investment impacted in Investment impacted in Digital systems for asset Digital systems for asset performance excellenceperformance excellenceAsset performance Asset performance excellenceexcellenceRenewal and Rene
149、wal and replacementreplacementGrid-friendly flexibility is needed to reliably optimise grid investment30Nationallevel-50 millionconnectionsLVlevel-200connectionsSpare capacity0500020406080100Electricity price/MWh GW0200400600800100000:0002:0004:0006:0008:0010:0012:0014:0016:0018:0020:0022
150、:0000:0002:0004:0006:0008:0010:0012:0014:0016:0018:0020:0022:0020.01.202221.01.2022kW50 EVs50 EVsGrid-friendly flexibility considers the grid load across all voltage levels and optimises flexible demand accordingly Using market-driven flexibility without DSO input,triggered only by wholesale market
151、prices,to synchronise demand from,for example,EV charging will create new grid constraintsGridGrid-friendly friendly flexibilityflexibilityImplication for distribution grid strategyImplication for distribution grid strategyStatic marketStatic market-driven or nondriven or non-regional flexibility wi
152、ll create new regional flexibility will create new constraints and additional investmentconstraints and additional investment The electricity system operates on international,national and regional levels,across HV,MV and LV grids.Flexibility actions taken at the national or wholesale market level ca
153、n cause overloading and congestion in distribution grids,most importantly when bringing demand back(demand synchronisation through loss of diversity).The graphic illustrates a wholesale market actor that wants to optimise at the national and wholesale level.The actor dispatches demand after 21:00,bu
154、t significant load remains at the LV levels,which must be considered.If all flexibility resources are dispatched simultaneously,demand will synchronise and local peaks will increase.To avoid the need for increased reinforcement in the distribution grid,near real-time monitoring of grid loading is ne
155、eded.Grid-friendly flexibility optimises demand dynamically to defer grid reinforcement.Real-world data from 20 and 21 January 2022 in Germany.Source:MITNETZ STROM and SMARD market data.Investment impacted in Investment impacted in Digital systemsDigital systemsfor flexibilityfor flexibilityDemandDe
156、mand-driven driven reinforcementreinforcementGenerationGeneration-driven driven reinforcementreinforcementHow DSO pathways can interact to deliver REPowerEU31Decisions on grid investment strategies are Decisions on grid investment strategies are dependent on regulation,technology and dependent on re
157、gulation,technology and customer expectationscustomer expectations:GfS estimates 67 billion grid investment is required annually to 2050 to deliver the energy transition,as described in REPowerEU.However,uncertainty stems from future electricity regulation and underlying incentives,evolving customer
158、 expectations and technology development.To address uncertainty,GfS analyses conventional distribution grid pathways,as well as three emerging grid strategies.Together,they illustrate the investment impact in reaching the REPowerEU target in 2050.Each investment pathway is capable of realising the R
159、EPowerEU EU targets,but at varying levels of cost,benefit and societal impact.Current investment practices are Current investment practices are considered across all pathwaysconsidered across all pathways,but the three emerging investment strategies provide additional levers to optimise investments:
160、Anticipatory investmentIncremental investmentAsset performance excellenceCurrent asset performanceNo grid-friendly flexibility1Grid-friendly flexibilityDSO emerging DSO emerging investment strategiesinvestment strategiesDSO pathwaysDSO pathways1.Assumption:Market-based flexibility may be used,but in
161、 ways that avoid synchronising customer demand and creating new peaks.Main pathwayMain pathwayAsset performance excellenceAsset performance excellenceAnticipatory investmentAnticipatory investmentGridGrid-friendly flexibilityfriendly flexibilityGfS(all of it)GfS(all of it)Current practiceEmerging pr
162、actice#Grids4SpeedGfS modelling methodology4Investment forecasting built on real-world grid data and world-class modelling and analysis.GfS methodology overview33Data collationData collationInvestment modellingInvestment modellingDSO dataPublicly available reportsEurelectric dataEY insights and data
163、ICL representative grid modellingInvestment analysis for EU27+NorwayEmerging grid strategy optimisationRegulatory toolsAction planAction planSupply chain scalingSocietal benefit analysisSocietal benefitsSocietal benefitsRobust and comprehensive data sources underpin GfS34EU regulation EU regulation
164、and NECPsand NECPsCurrent and emerging European regulation were assessed.EU NECPs were reviewed to understand:The 10-year plan of the Member State Energy mix insight Policy measures Infrastructure changesEY dataEY dataEY has internal proprietary data and models,such as the ERTA model,heat pump and E
165、V forecasting tools,power price forecasts and RECAI reports that were leveraged.Eurelectric Eurelectric datadataIn the last year,Eurelectric has published 11 key reports,including positions on electricity market design and anticipatory investment.The data generated to create these reports was a rich
166、 source of industry information for GfS.Public reportsPublic reportsOver 30 public reports have been used to support GfS.Sources such as Eurostats databases and CEERs report on regulatory frameworks are invaluable for the up-to-date data they provide.DSO data DSO data surveysurveyThe data survey had
167、 high representativeness,with more than 60%of connections in the EU27+Norway covered and representation from 21 countries(17 countries for regulatory assessment),with 10 countries covering more than 80%customers.DSO grid DSO grid plansplansDSOs have provided EY with their grid development plans,whic
168、h include:-Extensive current-state information Future projections Regulatory compliance plans Investment plansCalculating investment:ICL representative grid model and EY analysis35ICL internationally acclaimed representative grid modelImperial College London(ICL)developed a unique and internationall
169、y acclaimed methodology to realistically represent the distribution grid in whole-of-system investment planning models.For each EU27+Norway country,the distribution grid is modelled,investment assessed and flexibility valued by creating a representative grid.Representative grids model each local geo
170、graphic area based on its population density and assign a representative grid topology,adjusted for local conditions.Investment categories Investment categories See page 18 for description of scope System digitalisation and System digitalisation and substation automationsubstation automationUsing DS
171、O input data and expert knowledge,we determined unit costs for the systems and calculated future investment(including replacement costs).We calculated the cost to automate one substation,multiplied by the number of stations to be automated.GenerationGeneration-driven reinforcementdriven reinforcemen
172、tWe calculated investment needed for reinforcement of the grid to accommodate reverse power flows from renewables to move electricity out of the area.We assumed that a local grid is only designed to export up to double peak demand.Beyond that,generation customers will be either curtailed,or choose t
173、o own storage or to connect in a more favourable location.Targeted resilienceTargeted resilienceWe determined the number of cables underground,and additional feeder links used for targeted resilience upgrades.In parallel,we calculated resilience improvements from reinforcement and renewal investment
174、s.Investment was calculated based on DSO historical data,grid plans and current estimates.Smart meterSmart meterUsing historical data to set the baseline,we calculated how many smart meter installations are still required,as well as investment needed for ongoing renewal and upgrades of smart meter i
175、nfrastructure.Using DSO data and EU Commission data,we calculated the required investment to meet countries smart meter targets.Renewal and replacementRenewal and replacementUsing the weighted average age of the top five asset classes,and their useful life,we calculated the annual depreciation of th
176、e asset base.This is assumed to be the level of investment required to renew and replace the assets.DemandDemand-driven reinforcementdriven reinforcementThe REPowerEU demand is overlaid in the representative grid models to understand the level of investment required to meet the scenario.Note:Smart g
177、rid technologies,such as on-load tap changers(OLTC)and dynamic line rating,are not modelled,but discussed on page 50.These technologies are alternatives to alleviate demand-and generation-driven reinforcement.ICL representative grid methodology 36InputModelKey:LV dataLV data Area size Desired custom
178、er distance/clustering parameter Distribution transformer density LV customer density customer mix Average power from current loadingAdditional MV and HV dataAdditional MV and HV data MV customer density Matrix of LV grid tiles Number of HV/MV transformers per site and MV feeders per transformerFor
179、each country,ICL created ICL created representative grids representative grids for LV,MV and HV,using fractal theoryStatistical parameters for real grids(country Statistical parameters for real grids(country level)level)Grid length(overhead,underground)Grid asset numbers(transformers)and voltage lev
180、els LV and MV customer numbers customer type Grid branching rate factor Average power from current loading Active power lossesMapping/calibration to country Mapping/calibration to country level level so that statistical parameters match real gridsBaseline demand profiles and scenario inputs on DER a
181、doption Distributed generation(DG)Energy storage EVs Heat pumps Other smart appliancesCalibrated representative grids representative grids for rural,semi-rural,semi-urban and urban grid typesAllocation modelRepresentative Representative gridsgridsDemand-driven grid reinforcement reinforcement volume
182、 and cost volume and cost for lines,transformers and substationsImpact assessment using load flow to identify thermal identify thermal and voltage constraint and voltage constraint along specific section of the gridIf flexibility in scenario,DER optimisation model for peak demand reductionSecurity o
183、f supply(including back-feed),design parameters and asset data:power factor,desired conductor and transformer constructions,desired feeder and transformer headroom,and conductor and transformer cataloguesReinforcement:incremental or anticipatory(enough investment to meet demand by 2050)Future demand
184、(without DER adoption),diversified peak demand and coincidence factorFuture renewable generation,diversified peak production and coincidence factorGeneration-driven grid reinforcement reinforcement volumes and costs volumes and costs for lines,transformers and substationsImpact assessment using load
185、 flow to identify thermal identify thermal and voltage constraints and voltage constraints along specific sections of the gridAssume curtailment Assume curtailment up to up to 1 1%of annual energy generatedHow representative grids calculate growth and curtailment 37DemandDemand-driven grid driven gr
186、id reinforcementreinforcementGenerationGeneration-driven grid driven grid reinforcementreinforcementExplained on previous pageFor winter peak,summer peak and low-demand,high-generation conditions InputModelKey:Notes:Attributing reinforcement to either demand or generation requires a convention as re
187、inforcement effectively serves both.Here,demand-driven reinforcement is first determined by modelling for demand only.Then,the additional generation-driven reinforcement is derived by modelling the grid with demand and generation connected.Smart grid technologies,such as on-load tap changers(OLTC)an
188、d dynamic line rating,are not modelled,but discussed on page 50.Other investment categories analysed by EY38Calibrate resultsCalibrate resultsUse representative grids and historical DSO data to calibrate the future investment forecast.Develop assumptionsDevelop assumptionsDevelop assumptions to unde
189、rpin analysis,i.e.,that replacement and renewal costs are equal to annual depreciation.Calculate future Calculate future investmentinvestmentUse grid development plans,DSO data and public targets to understand the investment required to meet targets and demand.Index investment Index investment forec
190、astforecastUse the producer price index(PPI);turn investment forecasts into real figures.Data collationData collationCombine public reports,DSO and EY data;identify discrepancies or inaccuracies.Note:For full investment methodology per category,please see Appendix A.Our approach to the regulatory as
191、sessmentOur regulatory assessment set out on section 7 focuses on the key blockers that must be removed to empower DSOs to deliver the investment in,and management of,the networks needed for GfS.We outline the structure of the regulatory analysis below.39Our investment analysis highlights the key ne
192、eds for the delivery of the GfS investment.The regulatory frameworks and regulatory tools are assessed against these key investment needs.Our review of regulatory frameworks builds on our DSO survey and identifies common regulatory challenges across the EU27+Norway.These common regulatory challenges
193、 are blockers to GfS.They must be addressed as part of the new regulatory GfS toolbox.We outline top regulatory tools needed to address or dismantle the regulatory blockers.These regulatory tools will empower DSOs to deliver the key investment needed for GfS.Our GfS regulatory analysis concludes tha
194、t the GfS toolbox should both enforce of current legislation and regulation and develop new GfS policies to support DSOs.Regulations should empower national dialogue and decision-making between Member States,NRAs,TSOs and DSOs,and account for national differences.We then assess how quickly these sol
195、utions can be implemented given the need to invest quickly in the grid.We also assess the targeting of regulatory reforms to the main driver of investment needs for different notional DSOs.Key investment Key investment analysis needsanalysis needsRegulatory challenges Regulatory challenges block blo
196、ck GfSGfS deliverydeliverySolutionSolutionImplementation and Implementation and targetingtargeting#Grids4SpeedGrid investment pathways to 20505Annual grid investment is front-loaded.It must double initially to 2040,but the success of emerging grid strategies could cut the cost by 18%.Summary of inve
197、stment forecast41Electricity distribution grid investment of 67 billion annually is required to 2050 to build a distribution grid that can enable the energy transition.Failure to get the grid ready in time will not only slow the energy transition but also jeopardise energy security and the benefits
198、of decarbonisation.The electricity system is in an exceptional decade of growth,meaning the investment profile is front-loaded.Investment must double until 2040 from roughly 36 billion today,continuing at about 1.7 times todays levels from 2040 onwards.Distribution grid demand-driven reinforcement i
199、s driving 43%of this investment,designed to alleviate both voltage and thermal constraints in LV,MV and HV grids.This highlights the importance of considering physical technical realities of the distribution grid in any policy and strategic assessment such as this.Emerging grid strategies,comprising
200、 anticipatory investment,asset performance excellence and grid-friendly flexibility,can reduce the investment required by around 18%to 55bn annually,but must be supported by a fit-for-purpose regulatory framework.Anticipatory investment is the most cost-effective emerging grid strategy.Grid-friendly
201、 flexibility appears to be an attractive option,from a societal perspective,for deferring investment in countries with rapid electrification.However,the business case,from the DSO perspective must take into account the compensation scheme for customers and aggregators.4343%Investment is for demand-d
202、riven reinforcement 6767bn/yearbn/yearOf investment is required between 2025 and 2050 in the EU27+Norway2 2x x Current investment between 2025-2040 in period of growth1.7x1.7xCurrent investment between 2041 and 2050AnticipatoryAnticipatoryinvestment is a no-regrets approach to optimise investment12b
203、n saved/12bn saved/yearyearif emerging grid strategies are realised&supported by right regulatory environmentGrid cost:150 per capita annually to deliver the energy transition to 2050To achieve the REPowerEU scenario across the EU27+Norway,around 67 billion annual investment is required,on average,b
204、etween 2025 and 2050.This equates roughly to the amount paid on implicit fossil fuel subsidies in the EU about 56 billion average annual spend(20082021),rising to 120 billion in 2022.To put this in perspective,67 billion annual investment represents roughly 0.4%of gross domestic product(GDP)as of 20
205、24 in the EU27,or 150 per capita annually.Failure to get the grid ready in time will slow down the energy transition and put energy security at risk.In 2021,the economic damage from power outages was a reported 50 billion.Demand-driven reinforcement accounts for 43%of the investment and will ensure
206、the grid is sufficiently sized to deal with increased demand from the electrification of heat and transport.An estimated 237 million EVs and 251 million heat pumps are anticipated by 2050,which will facilitate market-driven flexibility via virtual power plants(VPPs).Replacement and renewal accounts
207、for 27%of investment and will modernise ageing grid assets to optimise reliability and resilience.Generation-driven reinforcement represents 12%of annual investment and will allow excess renewable generation in one local area to be diverted to wherever it is needed.Additionally,targeted resilience w
208、ill focus on strengthening the grid and building additional redundancy through meshing.42Note:All investment numbers shown in this section are in nominal terms and are derived using a standard PPI at country level.The PPI used is shown in Appendix D.The investment per capita is derived based on a po
209、pulation of 452 million for EU27+Norway.Investment must accelerate now to enable net zeroInvestment will need 2x current investment in the next 15 years and 1.7x current investment in the final decade to 2050.The current decade of electricity growth is extraordinary,akin to the inter-war and post-wa
210、r period.Current demand growth to 2040 is driven by rapid electrification of the economy in general,and of the transport and heat sectors in particular.But the backward-looking regulatory investment framework means that grid investment has not yet accelerated sufficiently,leading to significant grid
211、 congestion.Due to current demand growth,immediate acceleration in grid investment is needed to develop the grid to 2040.Failure will result in connection delays and greater grid congestion,which will slow the energy transition.430%10%20%30%40%50%60%00708020232025204020412050Peak demand c
212、hange between periods billion annually(nominal)Annual grid investment and peak demand change in the EU27+Norway TotalAutomation&SystemDigitalisationSmart MeteringTargetedResilienceReplacement&RenewalReverse PowerReinforcementGridReinforcementGrid reinforcements needed to mitigate thermal and voltage
213、 constraints44LVLVMVMVHVHV0552025204020412050 billion annually(nominal)Annual distribution grid investment split by voltage level ThermalThermalVoltageVoltage0552025204020412050 billion annually(nominal)Annual distribution grid investment split by thermal and voltage constraint
214、sLV investment accounts for 44%of the 67 billion annual investment,MV for 41%and HV for 15%.In terms of unit costs,HV projects are more expensive due to technical complexity and scale.The LV grid accounts for 60%of grid length today.This is where the majority of new EV and heat pump loads connect,ad
215、ding substantial load to the grid.By 2050,the LV grid will serve not only 250 million homes but also a similar number of heat pumps and EVs.Reinforcement is required to address thermal and voltage constraints.Thermal represents 60%of reinforcement to 2030;voltage is similar.Thermal constraints are w
216、ell understood and occur when load exceeds capacity.They are behind just over half of all investments.However,the electricity grid can only operate if voltage remains within certain parameters.Voltage drops along the power line and cable,as a function of conductor,length and load.Notes:LV is defined
217、 here as 400V,MV up to 38 kV,and HV above thatTransformers are classified based on their secondary voltage side i.e.,HV/MV transformers are included in MV investment costs.Voltage constraints can be partially addressed by regulators and capacity banks,which are not modelled here.France,Germany and I
218、taly represent 50%of the grid investmentInvestment varies greatly across the EU27+Norway.Key driving forces are population density,increases in peak demand and the speed of the energy transition.France,Germany and Italy represent 50%of investment through to 2050.This is higher than their share of en
219、ergy consumption(40%),but similar to their GDP(50%).Investment per capita,is highest in Norway,Denmark and the Netherlands.Some countries invested significantly in their distribution grids in the past five years.However,the incremental backward-looking regulatory framework does not sufficiently cate
220、r for the transformational stage of investment,which will likely extend over the next 30 years.Countries with multiple and diverse DSOs tend to have higher investment requirements.45All numbers are nominal in average annual investment to 2050Denmark 2bnFrance 5.4bnGermany 17.7bnItaly 10.1bnIreland 1
221、.1bnNetherlands 4.8bnNorway 1.7bnGreece 1bnPortugal 0.8bnSpain 4.3bnRest of EU27 18.2bnTotal annual distribution grid investment in the EU27+Norway split by country(20252050)There are diverse investment demands from the EU27+NorwayEach country has its own starting point,environment and future challe
222、nges,which dictate the type of investment that is most needed.The investment pathways reflect the uniqueness of each grid.For instance,Italy,Germany and Denmark require a greater share of demand-driven reinforcement;Norway,France and the rest of the EU27 must invest more heavily in grid replacement
223、and renewal.A subsection in Appendix C of this report provides a detailed view on country-level pathways and explains the rationale for investments.460%10%20%30%40%50%60%70%80%90%100%Distribution grid investment split between investment categories(20252050)Demand-drivenreinforcementGeneration-driven
224、reinforcementReplacement andrenewalTargetedresilienceSmart meteringAutomation andsystemdigitalisationThree grid strategies could reduce investment by 18%to 55 billion annuallyIf all emerging grid strategies were combined,investment to 2050 could be reduced by 18%,or 12 billion annually.Anticipatory
225、investment is the most cost-effective strategy,as it only creates cost reductions.Its success hinges on regulatory support and granular load forecasting,which is informed by data.Asset performance excellence creates additional benefits,such as enhanced reliability and resilience,and lower opex costs
226、.Grid-friendly flexibility brings a positive societal cost-benefit ratio,keeping in mind that the necessary activity payment has not been considered.Potential for deferred network reinforcement capacity means more investment is required to integrate generation-driven reinforcement from renewables.Th
227、e alternative is higher curtailment,which would slow the benefits of decarbonisation.47GridGrid-friendly flexibilityfriendly flexibilityAsset performance Asset performance excellenceexcellenceAnticipatory Anticipatory investmentinvestmentWhen assets are up-sized,grid reinforcement project costs incr
228、ease only marginally.This is because most costs are fixed and are not dependent on electrical capacity or equipment size(see page 28 for more details).All countries can benefit from anticipatory investment over the forecast window.However,DSOs must have excellent long-term forecasting capabilities,i
229、nformed by smart meter data and an understanding of customer behaviours.Anticipatory investment also offers additional headroom for generation-driven reinforcement from renewables.This allows electricity to be transported to wherever it is needed,reducing the need for curtailment.Advanced grid strat
230、egies do more than optimise investment48Asset performance Asset performance excellenceexcellenceGridGrid-friendly flexibilityfriendly flexibilityAnticipatory Anticipatory investmentinvestment billion annually(nominal)billion annually(nominal)billion annually(nominal)Grid-friendly flexibility deliver
231、s a 2.5:1 cost-benefit ratio across the EU27+Norway.The cost-benefit of a smaller network is offset by the need to accommodate generation-driven reinforcement from renewables or to accept higher curtailment.At a national level,the cost-benefit is positive in 19 countries with strong peak-demand grow
232、th.Grid-friendly flexibility will deliver a 4+billion net benefit,which will be societal.An activation payment for flexibility is required by market actors.Greater interoperability and standardisation of heat pumps,EV chargers,etc.will support cost efficiency.Flexibility systems can be used to enabl
233、e faster connections of clean technologies(renewables,electric charging hubs,etc.).These so-called flexible connections can deliver additional decarbonisation and customer satisfaction benefits.01234Demand-drivenreinforcementGeneration-drivenreinforcement00,511,522,5Replacement andrenewalDigitalisat
234、ionassetperformance02468Demand-drivenreinforcementDigitalisationflexibilityGeneration-drivenreinforcementOptimised condition and health monitoring and modelling deliver a 2.4:1 cost benefit ratio across the EU27+Norway.At the national level,the cost-benefit is positive in 21 countries.Additional ben
235、efits,which are not captured,include higher grid resilience and reliability,fewer unplanned outages,fewer public security risks,and reduced operational costs due to streamlined maintenance schedules.BenefitCostLegend55 billion distribution grid investment needed;less than current spend on fossil fue
236、ls importsGfS investment required for grids is comparable with historical spend on rail and road networks.Currently,investment in grid infrastructure is below investment in rail and roads.55 billion is less than the spend on implicit fossil fuel subsidies,and far below the amount spent on fossil fue
237、l imports.The graph considers pre-energy-crisis spend on fossil fuels,which has since risen sharply.Fossil fuel imports stood at 277.2 billion in 2022 and implicit fossil fuel subsidies rose to 122 billion.The investment required is significant,but it is not without precedent for critical infrastruc
238、ture.Lifting grid investment to match road investment is required to deliver the net-zero-ready grid,if emerging grid strategies are harnessed.494964366755560100120140Rail(2021)Road(2021)Historic gridinvestment(2023)MainGrids for speed Average implicit fossil fuel subsidy(200821)Fossil fu
239、elimports(2022)billion annually(nominal)Distribution gridOther infrastructureFossil fuelsFossil fuel imports have risen sharply since the energy crisisA net-zero future foundation can be delivered with a spend similar to that of road and rail infrastructureSource:EEA(2023),Fossil fuel subsidies;Orga
240、nisation for Economic Co-operation and Development(OECD)infrastructure investment.Smart grid technologies further optimise reinforcement investments in targeted applications50Smart grid technologies are part of todays distribution grid planning toolbox,to address grid constraints by optimising the u
241、se of the grid without physical reinforcement.Grid engineers are assessing these technologies against reinforcement as part of the technical,economic and benefit assessment of a specific constraint,and the outcome is highly dependent on local conditions(i.e.,asset health,exact load profile,demand fo
242、recast,customer mix,topology).This detail is beyond the investment focus of GfS.However,the capability and application of key technologies are introduced to illustrate how smart grid technologies can contribute to refining reinforcement investments and ensure a more targeted and efficient allocation
243、 of resources,which is an important asset for DSOs to manage the transition.OnOn-load tap changers(OLTC)load tap changers(OLTC)CapabilityCapability:A transformer modifies voltage between its primary(higher)and secondary(lower)voltage sides through varying core windings.If primary windings are reduce
244、d,secondary voltage increases,and vice versa.All grid transformers use multiple primary winding taps to adjust the voltage adjustments on the secondary side.OLTCs enable voltage level adjustments during transformer operation,and with the assistance of advanced distribution grid management systems,th
245、is can be done remotely to optimise the grid in response to real-time conditions.While this practice is common at higher voltage substations,it is not typically implemented at MV and LV substations.ApplicationApplication:Expanded use of OLTCs in MV/LV networks to broaden the voltage envelope dynamic
246、ally and maximise integration of LV-connected generation(mainly PV)and,to a lesser degree,demand.GfSGfS investment benefit:investment benefit:Optimise LV generation-driven reinforcement caused by voltage constraints.Line voltage regulator(LVR)Line voltage regulator(LVR)CapabilityCapability:An LVR(al
247、so called voltage stabiliser or voltage conditioner)stabilises the voltage level of an electrical circuit.An LVR is essentially a transformer connected in a series that employs sensors and control to make voltage adjustments.ApplicationApplication:LVRs are frequently implemented in MV and LV network
248、s particularly in rural areas with extensive feeders or significant generation where pronounced voltage fluctuations are a common challenge.LVRs dynamically adjust voltage levels,effectively smoothing out small voltage irregularities and,consequently,deferring the need for grid reinforcement.GfSGfS
249、investment benefit:investment benefit:Optimise MV and LV generation-driven and demand-driven reinforcement by managing voltage constraints.Dynamic line rating(DLR)Dynamic line rating(DLR)CapabilityCapability:Grid line limits are generally set based on static environmental conditions(e.g.,weather).DL
250、R uses multiple sensors and measurement data,such as wind speed and temperature,to determine the real-time safe capacity of overhead lines.The results allow grid operators to safely increase conductor limits temporarily.ApplicationApplication:DLR is especially well suited to maximising line capacity
251、 for wind power integration as,during windy periods,the wind cooling effect on the conductor allows the thermal limit of the line to be increased.DLR can therefore offset generation-driven reinforcement.GfS investment benefit:GfS investment benefit:Optimise HV generation-driven reinforcement caused
252、by thermal constraints.#Grids4SpeedSocietal benefits of GfS6Grids for speed set to have a significant impact on household energy bills,reliability,job creation and,critically,decarbonisation.How grids for speed can deliver society-changing opportunities 52Energy bills and affordabilityEfficiency gai
253、ns from direct electrification can reduce household energy consumption significantly.Electricity distribution fees are expected to stay flat to 2050 as increased GfS investment is offset by an overall increase in electricity consumption volumes.By 2050,European household energy bills could halve in
254、a net-zero scenario.Job creationDirect and indirect jobs in electricity distribution represent around 0.4%of the EU workforce(835,000 jobs),but structural challenges around age,diversity and skill gaps must be addressed urgently to ensure success.GfS can create more than two million additional direc
255、t and indirect jobs.DecarbonisationTo meet net-zero goals,GfS investment must be accelerated.Stagnated grid investment would mean that almost three-quarters of connections for key decarbonisation technologies,such as heat pumps,EV and renewable generation,and for use in low-carbon industries,do not
256、materialise.And that will jeopardise the pursuit of net zero.Reliable and resilient energy supply is paramount in an electric society.Already today,the value of electricity when it is unavailable is 100 times higher than its purchase price for residential customers and much higher for businesses.In
257、2021,the economic damage from power outages was a reported 50 billion.Reliability and resilienceEfficiency gains from direct electrification will slash household energy consumption53Other energy-efficiency gains will come from improvements to building envelopes and reduced kilometers travelled as be
258、havioural shifts,such as the use of shared or light mobility alternatives,become more entrenched.Though electricity consumption will go up overall a consequence of the electrification of everything the net result of energy efficiencies will be a significant reduction in household energy consumption.
259、30%90%+,including charger lossesElectricElectricengine engine PetrolPetrolengine engine 3xEnergy efficiency98%300500%2Electric Electric heat pumpheat pumpGas Gas boilerboilerCar usageHome heating1Average EU household energy Average EU household energy consumption for home and car usageconsumption fo
260、r home and car usage3x5xEnergy efficiency050050Annual consumption(MWh)ElectricityOilGasOtherDelivering the grids for speed will pave the way to net zero by 2050(as set out in the REPowerEU scenario)by securing reliability and resilience.In a net-zero scenario,direct electrifica
261、tion will deliver three-to fivefold energy-efficiency gains to end users,on top of the decarbonisation benefits that accompany an increasingly renewable energy mix.Source:Household energy consumption from Eurelectric Decarbonisation Speedways;Heat pump efficiency from IEA,The Future of Heat Pumps(20
262、22).1.Bioenergy-fuelled combined heat and power(CHP)and district heating are other key technologies to decarbonise heat.2.The efficiency of heat pumps is typically expressed as coefficient of performance(COP),but here,a percentage is used to make the number comparable.For the efficiency range stated
263、,air-source heat pumps are on lower and ground-source heat pumps in the upper side.The efficiency of a heat pump varies with the temperature lift(i.e.,difference between input and output temperature)and is therefore lower during colder ambient temperatures.Distribution grid fees stay flat to 2050:in
264、vestment costs offset by higher overall electricity consumption 54Estimated distribution fees Estimated distribution fees Estimated distribution revenue Estimated distribution revenue requirement and distribution requirement and distribution electricity consumptionelectricity consumption0,000,200,40
265、0,600,801,001,201,401,601,802,0020050Relative change(2018=1)Allowable distributiongrid revenueElectricityconsumption00708020050/MWh This GfS report establishes that about 67 billion annually,roughly twice the current level of investment,is needed to 2050 to build the
266、 distribution infrastructure to enable REPowerEU.As new investments are recovered progressively over 40 years or more,electricity distribution fees do not directly go up as new investment is added.The amount that distribution grids can recover is called allowable revenue and is composed of the follo
267、wing factors.(allowable revenue=capex return+depreciation+operations and maintenance)However,the electricity distribution fee is affected by electricity consumption.As investment goes up,electricity distribution consumption increases in parallel due to electrification,meaning that investment is shar
268、ed across a larger customer base.This analysis finds that electricity distribution fees are expected to remain flat to 2050,as the increase in allowable revenue from higher grid investment is offset by the increase in electricity consumption.05001.0001.5002.0002.5003.0003.50020050/yearEle
269、ctricityOilGasOtherEuropean household energy bills could halve by 2050 in a net-zero scenario 55Household energy billHousehold energy bill-45%45%Average EU household energy Average EU household energy consumption for home and car usageconsumption for home and car usage050050Ann
270、ual consumption(MWh)ElectricityOilGasOtherThe net-zero REPowerEU scenario for Europe assesses all energy fuel sources and includes high end-use electrification.GfS investment,along with other electricity supply investments,could reduce the average EU household bill by 45%across all energy sources by
271、 2050.Furthermore:Total energy need is reduced due to direct electrification and other energy-efficiency gains(see page 53).The growing volume of electricity offsets investment in the distribution grid and other supply infrastructure.The extent of future energy bill reductions will vary across count
272、ries.It will depend on:The level of electrification and energy-efficiency gains achieved The retail electricity price determined by the unique characteristics of a countrys electricity system and mix The costs of investment in assets needed to deploy the energy transitionNote:The electricity bill ca
273、lculation includes supply,transmission,distribution and tax.The methodology is described in Appendix F.Price models for Small and medium-sized enterprises and industrial customers are not available.Grids for speed will boost job creation56Direct jobs Direct jobs in planning,operating and maintaining
274、 distribution networks,which make up around a quarter of direct energy sector jobs in EU27250250 280k280kdirect jobsdirect jobsIndirect jobs Indirect jobs in manufacturing electricity distribution equipment(transformers,control equipment,lines,etc.)and in the construction of utility projects500500 6
275、40k640kindirect jobsindirect jobsTo deliver the 21st century distribution grid and meet DSOs evolving requirements(see page 17)for planning,building and operating the distribution grid,existing job profiles are expanding.At the same time,new jobs are being created to strengthen engagement with new c
276、ustomers(e.g.,in the transportation and heat sectors)and with stakeholders,as well as in meeting new customer expectations and delivering new market services.Digitalisation will play a key role in enabling utility processes to scale.Digital innovation will help to:Increase LV visibility using more s
277、ensors and by harnessing smart meter data,supported by data analytics and algorithmsManage customer engagement and connection processes for rapidly increasing volumes of new connectionsDigitalisation will also increase productivity in the manufacturing and construction sectors and create new digital
278、 jobs.However,digitalisation cannot offset the increase in workforce that is needed to deliver increased grid investment needs.2 M 2 Madditional direct andadditional direct andindirect jobs by 2050 inindirect jobs by 2050 indistribution gridsdistribution gridsTomorrowTomorrowTodayToday750750 920k920
279、kdirect anddirect andindirect jobsindirect jobs0.42%0.42%EU27 workforceEU27 workforceCombined,direct and indirect jobs in electricity distribution account for 0.38-0.46%of the EU27 workforceSource:Eurostat(2021),Structural business statisticsNote:The job creation estimate is likely conservative,an I
280、MF working paper finds that each 1 million invested in the energy sector creates four to thirteen jobs.Based on this assumption,the additional investment of 600 billion EUR in grid investment by 2050 will create two million to seven million jobs.Source:IMF(2021),The Direct Employment Impact of Publi
281、c Investment.For more on jobs,see Eurelectric(2024),Wired for Tomorrow.Ongoing reliability and resiliency from grids for speed57Source:Electricity North West,The Value of Lost Load(2018).0500300350400450AverageresidentialVulnerableLow-incomeFuel poorUrbanRuralwith PVwith HPwith EVSMErelat
282、ive VoLL(averge cusotmer=100)Socio-economicstatus LocationClean tech adoptionVoLLVoLL values for specific DSO in function of sociovalues for specific DSO in function of socio-economics,location and clean tech adoptioneconomics,location and clean tech adoptionIn 2021,power outages cost the European e
283、conomy more than 50 billion(EEA).The growing role of electricity in the energy mix,up from 20%today to 60%by 2050,and the increasing prevalence of adverse weather events are set to increase the cost of outages and the value of reliable supply to customers.The value of lost load(VoLL)denotes the mone
284、tary cost that electricity customers place on unserved electricity,which happens when supply fails to meet demand(e.g.,due to outages or insufficient capacity).The exact value of VoLL varies,dependent on methodology,time of day,type of customer,etc.Crucially,however,unserved electricity is valued at
285、 100 times more than the actual cost of electricity itself(around 0.28/kWh in 2021)for residential connections,and significantly more for SMEs and industrial customers.Among residential customers,the socio-economically challenged,rural communities,and those using heat pumps and EVs,etc.,value reliab
286、ility more highly than other groups.For as long as lost electricity is valued more highly than it costs,and while outages continue to cost the economy billions,a reliable electricity supply remains imperative.Note:A detailed assessment of value of security of supply is beyond the scope of this repor
287、t.VoLL represents a typical customer,but individual businesses and households can experience significantly different impacts from electricity outages.For instance,a power cut might be a slight inconvenience for a residential home during holidays,but it could cause significant financial harm to a dom
288、estic customer running a business from home or a business customer that relies on continuous power supply,such as a data centre or a manufacturing plant.Also,VoLL does not capture broader non-monetary costs,such as loss of customer trust,stress,inconvenience and even health risks.Finally,VoLL does n
289、ot necessarily increase linearly with the duration of the outage.Short interruptions might cause minor disruptions,while prolonged outages can result in exponentially greater damage,as systems fail and products or materials are spoiled.Grids for speed:the massive risk of underinvestment for decarbon
290、isationWithout the grids for speed investment,even a grid investment growth stagnating at 1.5%annually will create a 605 billion shortfall in distribution grid investment by 2050.This would mean that connections for three-quarters of all heat pumps,EVs,renewables and low-carbon industry technologies
291、 would not materialise meaning carbon emissions would go up and decarbonisation targets would be missed.58190 million heat pumps not connected120 million EV chargers not connected1220 GW of distributed renewables not connected240 TWh of missed industrial electrification18001800 2060 Mt 2060 Mt COCO2
292、 2eq eq additional CO2 emissions by 2050CO232%32%37%37%of total emission reductions required to achieve decarbonisationFailure to accelerate gris for speed investment means 74%of connections in key technologies would be missed:Note:The percentage of emission reductions is relative to 1990 emissions.
293、#Grids4SpeedRegulation to enable grids for speed7Regulation underpins the timely delivery of GfS investment and DSOs ability to support decarbonisation.Summary regulatory analysis 60Regulatory enablementRegulatory enablementThough DSOs are regulated differently across the EU27+Norway,regulations hav
294、e enabled them to jointly invest 33 billion annually between 2019 and 2023.Regulation must now transform if DSOs and NRAs are to deliver investment at a larger scale than in the past 30 years.Regulation must focus on empowering DSOs to confidently make investment choices.Regulation must support emer
295、ging grid strategies(e.g.,anticipatory investment and grid-friendly flexibility)that can reduce the investment required by around 18%from 67 billion to 55 billion annually.Regulation to fit DSO needsRegulation to fit DSO needsDSO investment will be driven by growth in either demand or in DG,or a mix
296、 of both drivers(at the same or different voltage levels).Most GfS regulatory reforms will benefit all DSOs.However,to be most effective,regulatory change should also target the main investment drivers.Regulation must empower national dialogue and decision-making between Member States(MS),NRAs,TSOs
297、and DSOs to account for national variations.Implementation of a new regulatory frameworkImplementation of a new regulatory frameworkRegulatory change must be implemented quickly to reflect incoming reforms in European regulation,such as the EMD agreement.New initiatives must be developed and impleme
298、nted as soon as possible this decade to support the acceleration of investment through to 2040.Regulatory changes for grids for speedEmpowerment to scale investmentEmpowerment to scale investmentMeasures support DSOs in competition for investment by providing confidence and regulatory certainty.They
299、 include an attractive risk/reward profile on investment,with appropriate prioritisation and regulatory oversight.Improved regulatory and enabling Improved regulatory and enabling processesprocessesBy allowing decisions to be made quickly,transparently,objectively and with confidence,regulation supp
300、orts DSOs and users in prioritising decisions.Financial support for network investmentFinancial support for network investmentBy keeping financing costs allowances up to date,the gap between investment and start of cost recovery is minimised.1.An anticipatory investment is one that proactively addre
301、sses expected developments,looking beyond immediate needs of generation or demand,assuming with sufficient level of certainty that new generation and demand will materialise,notwithstanding potential low utilisation in the short term.(2)Flexible solutions refer to contracts or other operational mech
302、anisms that provide voluntary adjustment of the generation injection and/or the consumption power in response to an external signal.The assessment of regulatory analysis builds on key investment needs for DSOsOur regulatory assessment set out on this section focuses on the key blockers that must be
303、removed to empower DSOs to deliver the investment and management of the networks needed for GfS.We outline the structure of the regulatory analysis below.61Key investment analysis needsKey investment analysis needsRegulatory challenges Regulatory challenges block block GfSGfS deliverydeliverySolutio
304、nSolutionImplementation Implementation and targetingand targetingInput to regulatory analysis and discussed in sections 2 to 5 of this reportCurrent Current regulatoryregulatorylandscapelandscapeInput to regulatory analysis based on DSO experiences and published reportsOutline of macro challenges to
305、 delivery of GfS and the DSO needsOutline of top regulatory tools to address the regulatory blockers to build the GfS regulatory toolbox.Implementation of solutions Targeting of regulatory reformsFocus areas on new regulatory tools implementationRemuneration frameworkRemuneration frameworkRegulatory
306、 environment integral to DSOs ability to invest62Regulatory frameworks are the rules,principles and processes set up by the EU,MS and NRAs.They guide,control or influence the behaviour,actions and operations of regulated businesses,such as DSOs.Incentives and obligations are regulatory tools that of
307、ten form part of remuneration frameworks to encourage or require DSOs to deliver on requirements that are deemed beneficial to society.These incentives have a financial impact on DSOs.Remuneration frameworks are systems or structures outlining how DSOs are compensated for their services.They regulat
308、es how DSOs recover investment and operational costs,and make profit through grid tariffs on consumers and electricity producers.For DSOs,the investment process starts with grid planning and concludes at the end of asset life.The investment cycle is informed by regulatory requirements,restrictions a
309、nd processes.Subject to approval/benchmarking,investment costs are added to the RAB for cost recovery and assessed for efficiency.RAB denotes the value of the capital investment of a regulated company.The depreciation of the RAB allows for recovery of investment costs over the life of an asset.The c
310、ost-recovery profile influences the attractiveness and financeability of the investment.Regulatory frameworkRegulatory frameworkIncentives and obligationsIncentives and obligationsInvestment cycleInvestment cycleRegulatory asset base Regulatory asset base(RAB)(RAB)Regulatory period(RP)Regulatory per
311、iod(RP)Regulatory systems in GfS are either:Incentive-based systems,which use incentives and outputs to incentivise the regulated companyCost+systems,which aims to return a stable rate of return above costs to the regulated companyThere are three main types of regulatory frameworks:Revenue cap sets
312、the maximum revenue a DSO can earn in a yearPrice cap sets the maximum user charge for a DSO in a yearHybrid Sets remuneration based on cost+system and other regulatory toolsA regulatory period is the timeframe determined by an NRA during which:Terms and conditions for grid tariffs are setRevenues,o
313、utputs,and incentive mechanisms for DSOs are also setRemuneration frameworks can benchmark or consider allowances for capex and opex either individually or combined.These allowances can then be used either for capex or opex separately or interchangeably.Regulatory systemRegulatory systemTypes of rem
314、uneration Types of remuneration frameworkframeworkSeparate and joint treatment Separate and joint treatment of capex/of capex/opexopexPlease see Appendix E for additionally defined terms.Remuneration Remuneration FrameworkFrameworkSystem System Duration Duration of RPof RPCountriesCountriesSubSub-ca
315、tegoriescategoriesTreatment of capex and opexTreatment of capex and opexAdjustments to capexAdjustments to capexAdjustments to opexAdjustments to opexRevenue CapRevenue CapIncentive-based 15 YearsAustria,Czechia,Denmark,Estonia,Germany,Ireland,Netherlands,Portugal,Spain,Sweden and Norway,Separate ca
316、pex and opexSeparate capex and opex:Czechia,Estonia,Ireland,Spain and SwedenYes:Yes:Czechia,Denmark,Germany,Ireland,Netherlands,Norway and SpainYesYes:Austria,Czechia,Denmark,Ireland,Norway,Portugal and Spain Joint capex and opexJoint capex and opex:Austria,Denmark,Germany,Netherlands,Norway and Por
317、tugalNo:No:Portugal and SwedenNo:No:Estonia,Germany and SwedenPrice CapPrice CapIncentive-based 15 YearsHungary,Lithuania,Poland and Romania Separate capex and opex Separate capex and opex for all Yes:Yes:Hungary,Lithuania,Poland and Romania Yes:Yes:Hungary,Lithuania,Poland and Romania No:No:0No:No:
318、0HybridHybridCost+1 with incentive regulation elements 14 yearsGreece and Italy2Separate capex and opexSeparate capex and opex for all Yes:Yes:Greece and ItalyYes:Yes:Greece and ItalyNo:No:0No:No:0Prevailing Prevailing modelsmodels3 3 Incentive based Incentive based regulation is most regulation is
319、most widely adoptedwidely adoptedSeparate capex and opex:58%Separate capex and opex:58%Yes:93%Yes:93%No:68%No:68%Regulation today across the EU27+Norway63Wide-ranging DSO regulatory frameworks have been adopted across the EU27+Norway.Despite these differences(outlined in the table below),DSOs experi
320、ence common challenges in expanding investment to deliver GfS.1.Cost+remuneration framework,which is followed in some EU countries such as Belgium and Croatia,is out of the scope of this report as none of the survey respondents indicated using the approach.2.From 2024 onwards,Italy will shift to a t
321、otex framework,jointly considering capex and opex.3.Prevailing model defined as the model that applies to DSOs that serve the largest share of customers in aggregate across EU27+Norway from our sample data.Existing regulation challenges scale and pace of GfS investment6467 billion investment 67 bill
322、ion investment annually until 2050 to annually until 2050 to enable energy transitionenable energy transitionAnticipatory investment Anticipatory investment is the most costis the most cost-effective emerging grid effective emerging grid strategystrategyGridGrid-friendly flexibility friendly flexibi
323、lity to support DSO grid to support DSO grid managementmanagementGrid investment is frontGrid investment is front-loadedloadedRegulatory and other processes could slow delivery of needed investment in some geographiesFinancial and regulatory constraints and/or investment disincentives over allocates
324、 risks to DSOs unless additional network demand is certainEconomic and societal benefit not prioritised for connectionsInsufficient regulation,incentives or allowances to support grid friendly flexibilityCommon macro Common macro challenges for challenges for GfSGfSKey investment Key investment anal
325、ysis needs for analysis needs for GfSGfSPlease see Appendix E for description of the common regulatory challenges within each macro challenge.Changes to regulatory regime to deliver GfS65What What GfSGfS needsneeds Access to capital at a competitive rate of return DSO confidence for DSOs of cost rec
326、overy through appropriate risk and reward mechanisms commensurate with the scale of investment needed Confidence for DSOs that costs assessments reflects their true cost Adjustments to opex to reflect higher capex and growth of the grid,including digital solutions Financial support to invest in new
327、asset performance excellence 67 67 billion investment billion investment annually until annually until 2050 2050 to to enable energy transitionenable energy transition Ability to invest ahead of need where there is a strong supporting rationale.This includes capex for the grid and for digitalisation
328、 as well as supporting opex Ability to consider events and connections far into the future and to streamline investment Freedom for Member States to prioritise investment to connect new demand and DG to areas where investment will deliver greatest societal benefit Clarity on the actual number of gri
329、d connection requests to support effective DSO decision-making on investmentAnticipatory investment is Anticipatory investment is the most costthe most cost-effective effective emerging grid strategyemerging grid strategy Remuneration framework allowances to enable DSOs to make best use of grid-frie
330、ndly flexible solutions Standardisation of tariff methodologies to generate an effective level of grid-friendly flexibility from market participants and support a rapid and cost-effective energy transition Flexible connection charges/options Ability to manage increase in demand driven by greater ele
331、ctrificationGridGrid-friendly flexibility to friendly flexibility to support DSO grid support DSO grid managementmanagement Timely recognition of capex needs to support financing Streamlined regulatory processes and other enablers(such as permitting for grid investment)for DSOs to invest in and meet
332、 surging grid requirements Agile and timely amendments to regulatory frameworks to support a surge in investmentGrid investment is frontGrid investment is front-loadedloadedRegulatory tools to deliver 67 billion investment annually66Key finding from Key finding from investment analysisinvestment ana
333、lysis1.Please see focus discussion on role of non-tariff funding on page 78.67 billion investment 67 billion investment annually until 2050 to annually until 2050 to enable energy transitionenable energy transitionLinked regulatory Linked regulatory challengechallengeTimeliness of capex and Timeliness of capex and opex recognition in opex recognition in investment mechanisminvestment mechanismAffo