Improvement of Grid Infrastructure
Energy networks connect energy supply and demand, for example for electricity. They are usually considered natural monopolies due to the combination of high fixed cost and low variable cost of operating them, which gives rise to the need for regulation. Decarbonisation and the energy transition have a particularly large impact on electricity networks. Renewable generation is more volatile than fossil fuel-based generation and the increasing electrification of sectors such as transport and heating will likely increase electricity demand further, creating a need for investments into the existing networks and a changing role and tasks of network operators. While the expansion of physical network capacity will be necessary in parts of the network, other “smart” solutions can also help facilitate the energy transition in a cost-efficient way. For example, smart grid operation can smoothen consumption patterns and reduce peak demand, whereas increased interconnection capacity throughout Europe can help distribute renewable energy from regions where it is abundant to regions where it is scarce. The changing role of network operators likely requires changes to the regulatory framework, while questions arise around the financing of the necessary investments.
Haug, T., P. Hiemann and L. Wieshammer (2025), Improvement of Grid Infrastructure. In Jörg Böttcher (Hrsg.), Carbon Free: The Way Forward. Berlin: De Gruyter, 607-640.