2022 Outlook

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2022 Outlook

Strongly committed to the energy transition

As a company that comprises two system operators, we work in close collaboration with local governments and regulators, who create the conditions we need to deliver what society expects from us: a reliable, sustainable and affordable energy system. As outlined in our ‘Roadmap to net zero’ publication last year, in addition to energy saving, direct electrification (of both households and industry) is the most efficient way to decarbonise society. Accordingly, we are doing our utmost to develop high-quality infrastructure on time and within budget. Additionally, we are encouraging changes in electricity market design and - by harnessing digitalisation - are facilitating the participation of many kinds of market players.

However, there is a mismatch between European climate targets and the current pace at which developments are occurring. To reach climate neutrality by 2050, RES development needs to be sped up by a factor of three. We are therefore at an important turning point: the next ten years will be crucial in terms of reaching net zero. Policymakers at all institutional levels need to focus on measures that create the right investment framework and reduce the throughput time of RES expansion projects and the realisation of the necessary grid infrastructure.

CAPEX plan of €9.6 billion for the next 5 years

In Belgium, our CAPEX plan amounts to €4.0 billion for the next 5 years. The stable basis for this plan is formed by annual investments dedicated to the replacement or reinforcement of existing infrastructure to absorb the higher infeed of renewable energy. From 2023 onwards, the further integration of the European electricity system and the decarbonisation of society will drive a second wave of important investments marked by higher CAPEX, mainly driven by the following projects: the Energy Island; Nautilus; Ventilus; and Boucle du Hainaut.

In Germany, our CAPEX amounts to €5.6 billion over the next 5 years. The main drivers of this are the construction of new substations, upgrades to several 400 kV overhead lines, the construction of an HVDC corridor (the SuedOstLink) and additional connections to offshore wind farms (including Ostwind 2, Ostwind 3 and Gennaker).

Electrification will unlock flexibility to facilitate further RES integration

As RES expansion continues and electrification spreads across society, there is a growing need for additional flexible assets which can help to match the demand for electricity with production patterns.

Today, industry is the provider of such flexibility (by increasing or decreasing energy consumption or providing battery technologies, for example). As outlined in our 2021 white paper, a consumer-centric market design will open the door for consumers to provide some of the flexibility the grid increasingly needs. Such a design will allow more renewable energy to be efficiently integrated into the system at the same time as allowing consumers to reap the benefits of their investments in flexible assets (such as EVs, heat pumps and home batteries), so furthering the decarbonisation of society.

Digitalisation in the name of efficiency and decarbonisation

Enabling consumers to play a leading role in providing the grid with flexibility can only be carried out through the widespread digitalisation of flexible assets and different activities along our grid. This will encourage the development of consumer-centric services, which will deliver increased comfort to consumers and enable them to optimise their energy costs whilst also encouraging a shift to a system under which the consumption of electricity is aligned with its production (rather than the other way round).

If we are able to develop a digital electricity system and encourage an adapted market mechanism which is in sync with the arrival of additional grid infrastructure, we will be building an industrial concept that is very future-oriented and a stepping stone to the realisation of the Green Deal. This stepping stone will strengthen our strong position in offshore wind and the development of a new market design for the balancing market.

A sea of opportunities

In addition to the massive growth in offshore wind development (both close and far offshore), additional subsea interconnectors which will contribute to the further integration of the European electricity grid will have to be built. Moreover, the development of major projects in our control areas will be complemented by many opportunities that will appear outside of our captive markets.

This is why we decided to establish a new subsidiary: WindGrid. Its creation is a logical step in the further expansion of Elia Group as an international energy company. WindGrid will be a reliable partner for policymakers and authorities that want to proactively build offshore grid infrastructure and for renewable energy developers that are looking for solutions which will allow them to connect their offshore energy assets to onshore electricity networks. By building on the experience and know-how of the Elia group and co-investing in international offshore grid infrastructure, WindGrid will make a key contribution to accelerating the energy transition.

Challenges brought about by the energy transition

Whilst uncertainty regarding the necessary policies and roadmap for reaching net zero remains, some of the challenges we are facing are clear. These must be addressed in time to ensure decarbonisation is a success. In addition to securing sufficient investment capital, speeding up our activities and transforming into a truly digital company, we must attract and retain the best talent with the right skills and expertise. Failure to secure each of these could affect the speed at which we execute our strategy and so the acceleration of the energy transition.