Distribution grid access major bottleneck for European renewable energy and storage projects – report
Clean Energy Wire / Tagesspiegel Background
Insufficient distribution grid capacity and faulty regulatory processes are holding back the roll-out of renewable energy and storage projects across Europe, according to a report commissioned by environmental NGO Beyond Fossil Fuels. The report found that 375 gigawatts (GW) of renewable energy projects and 455 GW of battery storage projects across eight European countries have submitted a distribution grid connection request, but are currently awaiting approval. The estimated capital value of these planned projects amounts to approximately 100 billion euros, the report said.
The report’s analysis of grid connection queues in eight European countries – Bulgaria, Czechia, Great Britain, Germany, Greece, Italy, Poland, Spain – highlighted that electricity distribution grids are constrained by both physical hosting capacity and the inability of grid operators to “run connection processes quickly, consistently, and at an industrial scale”.
These bottlenecks risk hampering the energy transition and undermining Europe's competitiveness, resilience, and energy security, the report warned. It called on decision-makers to “reform governance structures and grid connection processes to remove barriers and enable faster grid access for renewable energy and storage projects.”
The European Commission recently proposed a "Grids Package", which includes reform proposals to speed up planning and permitting, boost investments, and ultimately support the electrification of sectors that currently rely on fossil fuels. The proposals have yet to be debated in the European Parliament and by EU country governments.
In Germany, an estimated 140 GW of renewable energy projects and 130 GW of battery storage projects are awaiting a grid connection. “Delays in distribution grid connections are blocking investment in key future technologies and preventing a faster move away from fossil fuel dependencies – this is twice as costly in the current crisis,” said Henri Schmitz, energy policy analyst at NGO Germanwatch. “Instead of the German government’s counterproductive grid connection package, what is needed now is a grid connection booster.”
Germany’s coalition government is currently discussing a law reform to better align new renewable power projects with the grid’s capacity to transport the electricity. An early draft proposed scaling back grid connection priority for new projects, for example by limiting curtailment compensation payments in areas experiencing grid bottlenecks, and partially allowing grid operators to charge renewable investors for grid upgrades. The renewables industry warned that the changes, especially the proposal to forgo compensation payments for curtailments, could impact the financial viability of many projects, making it much more difficult to assess their risk profile – and ultimately risk slowing down the energy transition.
The German grid connection package is still being debated within the coalition government, as several disagreements remain between the conservative CDU/CSU alliance and the Social Democratic Party (SPD), especially related to the proposed provision to limit connection in regions that often face grid bottlenecks, reported Tagesspiegel Background. A cabinet decision is pencilled in for 10 June, but it is unclear whether the differences can be resolved by that time.