Major trends reshaping the power sector

The European electricity system undergoes significant changes driven by a strong climate action agenda and related development of renewable energies. These changes take place at unprecedented speed and add further complexity to system operation and electricity markets, while also offering new opportunities.

New political framework and targets

2019 could well be a landmark for climate action with civil society movements and international reports¹ fuelling a new sense of urgency to reduce global greenhouse gases emissions. This is now reflected in public discourse as ‘climate crisis’ instead of ‘climate change’.

The European Union (EU) has taken a leading role in the energy transition. The European Commission has proposed in 2018 a long-term strategy to achieve climate neutrality by 2050. Most Member States now support this objective in the run-up to the next United Nations’ Climate Change Conference. The new president of the European Commission, Ursula van der Leyen, has even proposed to increase the 2030 greenhouse gas (GHG) reduction target up to 55 %, compared to the currently agreed 40 %.

The Clean Energy for All Europeans Package (CEP) is an important stepping stone towards a decarbonised energy system. It sets ambitious targets for 2030 related to energy efficiency (32.5 %) and renewable energy sources (32 %). The latter translates in a 57 %² share of renewables in the power sector provided that National Energy and Climate Plans will be living up to this objective. A revision clause in 2023 could further increase these targets if it is needed to meet the EU’s interntional commitments for decarbonisation.

The CEP also introduces new rules and institutional arrangements to address coordination needs in an increasingly complex power system. Coordination between TSOs at regional, synchronous area and pan-EU level has historically been developed in a proactive and successful way by TSOs. The establishment of Regional Coordination Centres (RCC) will enhance its effectiveness and extend its scope. In parallel, the creation of an EU DSO entity will strengthen coordination between TSOs and DSOs to integrate large shares of distributed energy resources.

The Clean Energy Package is an important milestone for Europe’s green energy transition. Its timely implementation is the priority for ENTSO-E and TSOs.

1 Intergovernmental Panel on Climate Change (IPPC), Special report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, 2019. Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), Global assessment report on biodiversity and ecosystem services, 2019
2 Agora Energiewende, European Energy Transition 2030: The Big Picture, 2019

Underlying assumptions and trends

This Vision builds on scenarios co-developed with stakeholders under the Ten-Year Network Development Plan 2018³ (TYNDP). All figures mentioned hereafter are based on 2030 assumptions for the Distributed Generation scenario but all scenarios point to the same fundamental trends.

The advent of renewables is central in all underlying scenarios. Wind and solar energy will play a major role in the system by the end of the next decade with a total installed capacity of almost 500 GW for solar PV and more than 300 GW for onshore and offshore wind. Therefore, electricity flows are expected to increase and becoming more variable, requiring network development and efficient congestion management. Also, in most countries, the largest share of new renewable installations will be connected to the distribution network which stresses the need for a proper coordination between TSOs and DSOs to integrate these resources in efficient and safe conditions.

Higher renewables’ penetration and underlying decrease of carbon intensity of power generation goes along with further electrification of applications in industry, transport, and heating and cooling. Electricity demand will increase by almost 20 %⁵ compared to 2018 driven by the market uptake of technologies such as electric vehicles and heat pumps, and in spite of huge increase in energy efficiency.

These developments will lead to an increased decentralisation of energy resources. Residential consumers will become more active in the market, for instance as ‘prosumers’ or via aggregators. Innovative business models such as local energy communities will develop and the large-scale deployment of smart meters, connected devices and battery storage⁶ will magnify this trend, making coordination between system operators crucial e.g. for exchange of grid and system services.

Figure 1: Major trends in the power system

Digitalisation will help to unleash the potential of distributed flexibilities. The electricity system evolves towards a cyber-physical system where the development of an Information and Communication Technologies layer will enhance physical grid utilisation and provide an architecture that can manage the complexity of a system integrating different geographical scales, functional processes and technologies⁷. This ‘Digital Grid’ already translates today into pan-EU IT platforms that foster coordination between TSOs.

Sector coupling of end-use sectors and supply networks via the conversion of electricity in other energy carriers and vice-versa⁸ could also provide flexibility to the electricity system on a large scale and at different timeframes. For instance, vehicle-to-grid solutions can deliver peak shaving or frequency support within hours, minutes or seconds, while district heating networks equipped with electric boilers or heat pumps can offer storage capacity to convert wind energy into heat when demand is low.

A recent survey of 26 CEOs of European TSOs confirms that most of these trends are critical uncertainties and action priorities for their companies⁹.

Europe’s energy sector is shifting from a fossil fuel dominated and supply-centric model to a clean, digitalised and electrified consumer centric system with many distributed resources. ENTSO-E’s Vision aims to contribute to this overarching goal.

4 50 % of average of total installed renewables capacity in 16 countries of Continental Europe expected in 2030.report on biodiversity and ecosystem services, 2019
5 Many third-party studies foresee a sharp increase of electrification towards 2050: 53 % for the European Commission (A Clean Planet for all, 2018), 60 % for Eurelectric (Decarbonisation pathways for the European economy, 2018)
6 DG scenario shows that in 2030 battery storage capacity (utility scale) is expected to reach almost 18 GW in Continental Europe.
7 For more details, you can refer to ENTSO-E, Cyberphysical grid, 2019
8 e.g. power-to-gas, power-to-heat, power-to-hydrogen
9 World Energy Issues Monitor – Europe – TSO, World Energy Council, 2019

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