Europe: Weak on gas (and getting weaker), strong on electricity (and getting stronger).

Source: www.acer.europa.eu/monitoring/M...

The challenge isn’t just spending more on grids—it’s also about spending smarter. Independent planning, innovative regulation, and fair cost distribution will determine if Europe efficiently delivers an grid ready for net-zero.

Full policy brief: www.bruegel.org/policy-brief...

Fair cost recovery ⚖️

Electricity affordability is required to ensure public support. National funds could smooth cost recovery over time. However, common EU rules should be applied to avoid preferential treatment for national industries. See figure for a sketch of how such state funds could work.

Network layers 🔌

The majority of grid investment will happen at the distribution layer, although transmission, offshore and cross-border are still significant. Appropriate financing sources and cost recovery approaches depend on the network type.

Investment needs and current levels 💰

While huge grid investment over a sustained period is required, tens of billions of euros are flowing into electricity transmission and distribution in the EU and neighbouring countries.

🆕 Policy Brief @bruegel.bsky.social with @gzachmann.bsky.social on upgrading Europe's grid.

A few key messages:
- big share of investment needs at distribution level
- cost recovery of investments is as challenging as financing
- EU funds should further accelerate cross border inter connections

ENTSO-E's Infrastructure Gaps Report for the TYNDP 2024 makes the strong case that for every euro invested in the electricity grid, nearly two euro will saved in system costs, in addition to GDP, employment and tax revenue gains.

Can grids pay for themselves?

www.entsoe.eu/outlooks/tyn...

The right policy choices can bend down energy costs. Decarbonising isn't just about climate—with Europe dependent on expensive fossil fuel imports, it’s about competitiveness and cost of living too.

Full policy brief here: www.bruegel.org/policy-brief...

📉 The energy transition will shift final bill cost components. Near-zero-marginal-cost renewables will lower energy costs, but investments in grids, renewables and backup capacity will raise fixed costs via network charges and levies. Policy choices will determine how far costs fall in the future.

1️⃣ In the short-term, cost allocation across consumers can be changed even if overall system costs are not reduced.

⚖️ The challenge is to balance industrial competitiveness with cost of living. Households already pay more per unit than industry—can we afford to shift the scales even further?

💶 Final energy bills include four parts: energy costs, involving short-term wholesale market supply costs like fuel and carbon, network costs, covering grid investment and maintenance, consumption taxes, and levies & charges that support renewables and backup capacity.

💡 Europe's energy challenge:
98% of natural gas is imported—much as LNG—costing 5x more than domestic US gas. This dependency drives high electricity prices, with fossil fuels still central to the power mix.
To make energy affordable, Europe must decarbonise. Here's four ways to reduce prices: 🧵

Neat illustration of how, a decade ago, the EU made up the majority of global PV capacity. China caught up in 2017 and have not looked back in the years since.

From the JRC's Clean Energy Technology Observatory: setis.ec.europa.eu/document/dow...