Jointly undertaken with
A â‚Ź400 billion investment challenge 5. Investments rely heavily on enabling regulatory requirements frameworks 4. This investment increase should not translate into a major additional cost to the KWh 3. Societal benefits with regards to sustainability, competitiveness and the economy significantly outweigh the economic impact on distribution tariffs
2. This is a considerable investment, 50-70% higher than today
1. DSO investment needs: â‚Ź375-425bn
.
Massive energy system changes needed by 2030
+40-50m heat pumps
50-70m electric vehicles
+335 TWh (add. demand) industrial and P2X
Electrification
Emission-free generation
Energy efficiency & conservation
+470 GW centralised renewables
+40 GW self-consumption
~70% renewable capacity connected to distribution grids
>50% EV charging in off-peak hours
Foster the roll-out of smart meters
g
Total electricity demand will rise by +1.8% per year by 2030 DSO grids will need reinforcements and additional transformation capacity in substations to effectively accommodate for the anticipated rise in demand and ensure quality of supply
Final electricity demand per country (TWh; 2030)
Final electricity demand (TWh; 2005-2030) 4,500
Average
CAGR* 2017-2030
EU27+UK
~3,530
Germany 4,000
France
+1.8% 3,500
3,000
0 2005
725-768
2010
2015
2020
2025
2030
479
1.8% 3.1% 0.8%
Italy
310
0.7%
Spain
294
1.8%
Poland
174
1.3%
Sweden
150
1.6%
Denmark
71
6.1%
Portugal
55
1.2%
Hungary
52
2.1%
Ireland
38
3.0%
CAGR (2017-30; %) Source: Eurelectric; DSOs and associations; iea; Monitor Deloitte * Compound annual growth rate
All sectors will contribute to electricity demand growth
Source: Eurelectric; DSOs and associations; iea; Monitor Deloitte * Compound annual growth rate
70% of new 510 GW RES capacity will be connected at distribution level RES capacity additions (GW; 2017-2030) EU27+UK
~510
Germany
98
~70%
~40
~940
~93%
9.0
179
Spain
65
~25%
2.3
119
France
65
~85%
~1
111
~83%
~0
95
Italy
42
Denmark
15
~37%
0.2
22
Poland
15
~67%
6.6
24
Portugal
14
~56%
1.9
27
Sweden
12
~30%
n.a.
38
Ireland
10
~43%
0.2
13
~90%
n.a.
7
Hungary
6
New RES connected to DSO grids (%; 2017-2030)
Source: Eurelectric; DSOs and associations; Monitor Deloitte
Self-consumption capacity additions (GW; 2030)
Cumulative RES capacity (GW; 2030)
Distribution grids are ageing Average age of low-voltage lines in 2020 (in %)
• Investment needs due to modernisation by 2030 may grow
35-40% 30-35%
25-35%
• If assets are not replaced after their useful life, 40-55% of our low-voltage lines could be >40 years old by 2030 • Modernisation needs vary depending on expansion timings at national level
< 20 years
20-40 years
>40 years
The replacement equipment must be planned to ensure compatibility with new digital assets and avoid obsolescence
Source: Eurelectric; DSOs and associations; Monitor Deloitte
Distribution grid investments should focus on 8 key drivers Electrification of buildings & industry
Modernisation
Electrification of mobility
Digitalisation & automation
Smart meters
Renewable generation
Resilience
Storage & others
Key investment drivers: modernisation, renewables and electrification
Source: DSOs and national associations; Monitor Deloitte
Modernisation is the first area of investment in most of countries (nominal â&#x201A;Źbn; 2020-30)
90-105
15-16
Modernisation
Automat. of substations/ transformer stations
Replacement and modernisation of grid assets (e.g. lines, transformation centers), to maintain high levels of robustness
Automation of substations at distribution level, including remote control of substations
30-35
145-170
Smart meters
Total 2020-30
13-15
Monitoring
Grid monitoring to improve efficiency and security of supply Data management (storage, processing, cybersecurity, etc.)
Smart meters (1st and 2nd generation) to enable customersâ&#x20AC;&#x2122; monitoring and increase observability of LV grid
Modernising and replacing aging assets, especially in low voltage, has no downside Investments in digitalisation will help integrate a high volume of DER resources, and enable customer participation
Electrification and decarbonisation will trigger new grid build out Investments in distribution grids due to electrification and renewables by country (nominal â&#x201A;Źbn; 2020-30)
Final electricity demand (CAGR; 2017-2030))
Electric Vehicles (BEV and PHEV) (million; 2030)
1.8%
50-70
+360
3.2%
10-24.3
+91
0.8%
6.0
+55
10
0.7%
6.0
+35
Poland
9
1.3%
1.5
+10
Spain
9
1.8%
4.0
+16
Sweden
6
1.6%
1.0
+3
Ireland
3
3.0%
0.9
+4
Denmark
2
6.1%
1.5
+6
Hungary
1
2.1%
0.2
+6
Portugal
1
1.2%
0.6
+8
180-210
EU27+UK Germany
69-71
France
25
Italy
Examples
1.
Electrification in commercial and residential sectors (+ 400 000 new customers /year in France) , is mainly driven by heat pumps ( : 600 000 domestic heat Source: DSOs andex national associations; Monitor Deloitte pumps in Ireland) and renovations
2.
Renewable capacity will increase by x6 in Hungary by 2030; strong development needs for rural grids in Germany to integrate renewable generation
3.
RES connected to distribution grid (GW; 2017-2030)
The grid has the capacity to integrate the majority of the charging needs by 2030 coming from strong penetration of electric vehicles
Investment needs to increase by 50-70% to €34-39bn/year EU27+UK annual investments in power distribution grids and key drivers (nominal €bn; 2015-2030)
34-39
23
21
22
22
+11-16 €bn (+50-70%) 26 25
2015-19
Energy Transition
8-11
Digitalisation & Others)
3-5
2020-30 2015
2016
2017
2018
2019 Avg. annual investments 2020-2030
Source: Eurelectric; Eurostat; iea; DSOs and national associations; Monitor Deloitte
~23
34-39
Grid investments have major societal benefits SUSTAINABILITY
ECONOMY
€17-22bn annual CO2 savings €40-140bn annual savings in health
€ 30-35 bn of annual revenues for EU companies (e.g. manufacturers & service providers)
440-620k quality jobs per year related to DSO grids
58,000 premature deaths avoided
460 Mtoe less of final energy
€30-35bn annual sales in
consumption by 2030, achieving 32.5% of efficiency target
equipment (~90%
of total investment)
€34-39bn
of annual DSO investments in power grids
CUSTOMER EMPOWERMENT
COMPETITIVENESS
~40 GW self-consumption capacity added
Territorial cohesion and promotion of local economies
50-70m EVs with smart charging
€28-37bn average electricity cost
New services: storage, electric heating, smart appliances, aggregators
reduction (thanks to 50-65% lower RES than fossil generation cost)
+€175bn annual savings in fuel imports
~0.2-0.3% of current EU GDP in annual investments in power distribution grids
Investments will marginally impact electricity costs
Impact of DSO investment on electricity cost per electricity unit (€nominal/MWh; EU27+UK)
~1.5%
30
This investment will ultimately help lower the total energy bill
• DSO investment will result in an increased cost of electricity (CAGR~1.5%), but EU inflation rates will also be rising by 2% • Investment in distribution grids has no downside, bringing long and short term benefits:
20
− Long term reductions of incremental investment needs and tariff impact, especially with the efficiency of grid modernisation and digitalisation, − Enable RES deployment and electrification that will ultimately reduce the total energy bill
10
− Enable flexibility measures that increase costeffectiveness and may also help reduce tariff impact 0
2019
Source: Eurelectric; DSOs and associations; Monitor Deloitte
2030
Grid investments growth is limited compared to other decarbonisation needs
Annual investment in DSO grids (nominal â&#x201A;Źbn)
Investments for EU decarbonisation according to EC existing targets, excluding transport (nominal â&#x201A;Źbn)
~385
% Growth
~50-70%
~100% ~34-39
~22-23
2011-2019
~191
2020-2030
2011-2020
2021-2030
Annual investments in DSO grids will grow ~60% by 2030, less than the expected investment growth ~100% for decarbonisation
Source: European Commission; Eurelectric; Eurostat; European Central Bank; DSOs and associations; Monitor Deloitte
Regulatory actions to boost investments EU level
Challenges
Plan & execute investments
Improve security of supply & automation
Enable the energy transition
Policy issues
Regulatory actions
Planning
Low long-term visibility and lack of planning
Facilitate flexible national planning frameworks aligned with the energy transition and remove regulated investment limits
Funding
Barriers for DSOs to apply for EU funds
Facilitate access of DSOs to EU funds and prioritise investments in DSO grids in EU post-COVID recovery plans
Execution
Bureaucratic delays in permits & environmental authorisations
Simplify and accelerate authorisation and permit processes, facilitating proper involvement of local communities
DSO role
Little clarity on principles of enhanced role of DSOs
Facilitate a EU general framework for cybersecurity and data management. Speed-up CEP implementation, including DSO/TSO roles and responsibilities
Remuneration
Historic costs and low exposure to disruptions are intrinsic features of current remuneration models
Enable cost-reflective remuneration and incentive models to enable grid transformation and the energy transition
Flexibility
Lack of comprehensive regulation on flexibility
Develop roles, smart infrastructure, economic signals and information exchange procedures
Tariffs
Electricity tariffs should be more cost-reflective
Enable tariff structures that optimise long-term power investments and facilitate economic sustainability
Source: Eurelectric; DSOs and national associations; Monitor Deloitte
National level
Policy level
An increased GHG reduction target would result in a marginal impact on grid investments (~8%) Impact on EU27+UK due to increasing the ambition towards 2030 46%
Electrification of buildings & industry Electrification of mobility Emission-free generation Modernisation, digitalisation and automation Smart meters Resilience
GHG reduction Up to additional 150 TWh Up to additional 10 mn electric vehicles +110-120 GW
Investment drivers not affected by an increase in emissions reduction targets
Storage and others
EU27+UK power grid investments 2020-2030 (â&#x201A;Ź nominal billion)
50-55%
500
+8,0%
400 300 200 100 0
Current scenario (-46%)
New ambition (-50-55%)
50-55% GHG reduction ambition would require an additional 25-30 bnâ&#x201A;Ź of investment (+8% relative to current ambition) which is primarily driven by the increase of renewables
Source: European Commission; Eurelectric; DSOs and associations; Monitor Deloitte
Peak demand will grow at different pace Countries should deploy flexibility through load, generation, or storage related measures depending on technical (e.g. ramp response), economical, and regulatory conditions (e.g. saving potential, conducive framework)
Peak demand (GW; 2017-2030)
2017
2017-2030 increase
79
Germany
44 ~100
France
57
Italy
41
Spain
~100 5 62
8 49
123
Peak demand (CAGR; 2017-2030)
Electricity demand (CAGR; 2017-2030)
3.5%
3.2%
~0%
0.8%
0.6%
0.7%
1.4%
1.8%
Poland
24
4 28
1.2%
1.3%
Sweden
26
2 28
0.6%
1.6%
5.8%
6.1%
Denmark
6 7 13
Hungary 6.6
2.8 9.4
2.7%
2.1%
Portugal 8.5
0.5 9
0.4%
1.2%
1.9%
3.0%
Ireland 4.9
1.5 6.4