Energy Transition

Europe's clean energy future can only be delivered through unified action

Two cyclists ride along a dyke where a high-voltage power line crosses the river Ems in Weener close to the Meyer shipyard in Papenburg November 6, 2006. Europe's electrical grid needs to be upgraded if the continent is to remain competitive and meet its energy transition targets.

Europe's electrical grid needs to be upgraded if the continent is to remain competitive and meet its energy transition targets. Image: REUTERS/Christian Charisius

Kristen Panerali
Head, Clean Power and Electrification, World Economic Forum
Miguel G. Torreira
Global Utilities Strategy Lead, Accenture
Keisuke Sadamori
Director, Energy Markets and Security, International Energy Agency
Damian Cortinas
Chair of the Board at ENTSO-E, European Network of Transmission System Operators for Electricity (ENTSO-E)
This article is part of: Centre for Energy and Materials
  • Upgrading Europe's electricity grid is fundamental to the continent's energy transition and to keep it competitive.
  • More than €584 billion of investment is needed this decade to achieve Europe's energy transition goals.
  • Given the level of investment needed, public funds alone won’t be sufficient. The private sector must play a role.

As Europe races toward a clean energy future, modernizing power grids is a critical challenge. The EU Grid Action Plan, published last year and targeting almost €600 billion in investments in the next six years, is an important step. However, delivering a clean energy future requires more than financial commitment.

Unprecedented collaboration across borders, sectors and stakeholders is essential to enable increased levels of renewable energy deployment, decarbonization and economic growth.

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Grid modernization: Key to Europe's future

Electricity grids are essential for the uptake of clean energy as well as for facilitating the electrification of our societies and industries. Europe’s electricity grids are evolving into the backbone that supports not only energy security, but also economic competitiveness and innovation.

In Europe, more than €584 billion of investment is needed this decade to achieve the Fit for 55 target of deploying 42.5% renewable power into the grid by 2030, according to the European Commission.

Furthermore, the report prepared by former Italian Prime Minister Mario Draghi, The Future of European Competitiveness, stated that to remain competitive, Europe must significantly increase its investment in key sectors, including energy innovation, flexibility and infrastructure. The report highlighted that the EU’s general investment-to-GDP ratio needs to rise by 5% annually — levels not seen since the 1960s and 1970s — to meet decarbonization and digitalization needs​.

Grid modernization is a cornerstone of this effort to establish Europe as a competitive and sustainable place to do business. The good news is that this work is already underway, with organizations like ENTSO-E, the European Network of Transmission System Operators, coordinating large-scale grid investments in the European grid.

Investing in the energy grid delivers significant societal benefits, according to key findings from ENTSO-E. Annual investments of €6 billion in cross-border infrastructure through 2040 are projected to yield €9 billion per year in generation cost savings. Additionally, the investment will help avoid 42 TWh of renewable energy curtailment each year, optimizing renewable energy usage. This process will cut CO₂ emissions by 31 million tons annually, supporting climate goals and enhancing environmental sustainability.

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How is the World Economic Forum facilitating the transition to clean energy?

Building a business case for grid expansion

Governments can strengthen the case for the significant investment required to build out the continent’s grids by building a strong economic rationale. This includes considering the direct impact of more clean energy deployment as well as the indirect benefits including economic, technical, societal, and environmental benefits. Examples include job creation, skill development, health improvements, higher economic growth and resilience against extreme weather events.

Governments must also consider the opportunity cost and estimate the impact of taking no action. This could include the cost of renewables curtailment due to grid congestion and the annual cost of delayed electrification in terms of fossil fuel imports.

Given the level of investment needed, public funds alone won’t be sufficient. Thus, focusing on building the business case for grid investment is also key.

Private companies will only invest if the expected returns are at least comparable to alternatives. The public and private sectors can work together to ensure a strong economic case propels strategies to strengthen the business case.

Collaboration for grid investments

Delivering on Europe’s clean energy future demands more than capital and investment. It requires a united front from European economies, aligning regulatory frameworks and showing unwavering political support for an integrated energy market.

According to IEA analysis, harmonizing regulations, aligning investment strategies and acknowledging interdependencies between countries and sectors is crucial to accelerate progress and avoid bottlenecks. Only through a coordinated approach can truly informed decisions be made about where, when and how to invest in Europe’s energy infrastructure. Imagine planning for power transmission, distribution, transport and industry in concert, across geographical boundaries. This isn't just efficient — it is necessary. As European and the global energy landscapes evolves, with electrification driving demand and clean hydrogen on the horizon, planning must evolve too.

One case study in how collaborative efforts can deliver impact is the work of ENTSO-E, the EU DSO Entity (the European association of Distribution System Operations), Europacable (an industry association representing wire, cables and accessories producers) and T&D Europe (an industry association representing Europe’s grid technology providers). Together, they aim to streamline supply chain processes and enhance investment visibility for critical infrastructure projects both onshore and offshore. This collaboration ensures that Europe is not only prepared for the energy transition but is actively leading it.

Innovation in collaborative models

Many more areas demand attention. We need flexible financing models that allow for shared investment risks and encourage innovation in funding energy projects. We need to rethink energy tariffs to keep energy accessible and affordable, given the significant infrastructure investments ahead. We need to leverage fast-developing digital technologies to enhance collaboration across sectors and stakeholders to accelerate infrastructure delivery. Breaking down silos and bridging divides into new collaborations will be critical to a clean and equitable future.

The energy transformation is more than wires and pylons; it is the creation of a stable, supportive environment for investments that will shape Europe's energy future. Grid operators, regulators, consumer advocates and tech innovators must align their perspectives towards a common goal: a grid fit for now and for the future.

For further information visit the Clean Power, Grids and Electrification Initiative. For an in-depth analysis, read the World Economic Forum's latest briefing paper on this topic.

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