Electricity cannot be delivered! Europe loses 7.2 billion annually on green energy: Power generation has entered the AI era, so why is the grid still stuck in the "old century"?
Europe is caught in an energy paradox: Installed capacity of renewable energy is growing rapidly, but outdated grid infrastructure cannot efficiently transmit clean electricity. Grid bottlenecks between and within countries are undermining the continent’s competitiveness and energy security.
According to Bloomberg on the 9th, the European Commission recently launched a new package for the European grid, aiming to strengthen grid planning at the EU level, accelerate approval processes, and promote cost sharing for cross-border interconnection lines. This is Brussels’ latest move to address the increasingly severe grid crisis.
The economic cost of grid congestion is accumulating. Bloomberg reports that transmission operators will spend €4.3 billion in 2024 managing grid congestion, essentially patching structural defects. According to estimates from the European Agency for the Cooperation of Energy Regulators, core member states in 2024 are making less than half of their transmission capacity available for cross-border trade, far below the minimum threshold of 70%. Among a group of countries including France, Germany, and Poland, this shortfall translates into hundreds of millions of euros in economic losses.
By 2040, Europe will need to invest €1.2 trillion to modernize its grid. Although consumers will bear some of the costs through electricity bills, member states clearly need to ramp up their own investments and establish frameworks to attract private investors.
Surge in Clean Energy Capacity Meets Transmission Bottlenecks
On sunny afternoons, Spanish solar power plants produce electricity far exceeding local consumer demand. But only a portion of the surplus electricity can flow to other parts of northern Europe, due to the limited capacity of transmission connections known as interconnectors. The rest is wasted.
Bloomberg notes that EU member states are building renewable energy capacity at an astonishing rate: low-carbon energy—renewable, hydro, and nuclear—now provides most of Europe’s electricity. In 2025, wind and solar will make up a bigger share of generation than fossil fuels. However, grid bottlenecks within and between countries frequently hinder efficient use of clean power.
Under EU treaties, Brussels can promote interconnectivity and internal market rules, but member states retain sovereignty over their energy mix. Governments continue to prioritize domestic concerns—including grid operators’ preferences—over systemic efficiency. Meanwhile, aging infrastructure is not being upgraded fast enough, and permits for new transmission lines and substations can take years to obtain. In just seven EU countries, grid bottlenecks in 2024 forced around €7.2 billion worth of renewable power curtailment.
Cross-Border Project Dilemma: High Costs, Uneven Benefits
The challenges for cross-border projects are particularly acute. While interconnectors can reduce costs and enhance supply security, building them is expensive, and the price effects are distributed unevenly.
Take Sweden, for example: the north has abundant hydro and nuclear resources, but internal grid constraints prevent these resources from flowing freely to the south during peak demand. As a result, southern Sweden is exposed to neighboring market prices through interconnectors, with German producers often setting the marginal price paid by consumers.
This uneven distribution of costs and benefits makes investments in cross-border infrastructure politically difficult, even though such projects would bring economic and security gains from an overall EU perspective.
New Policy Framework and Transparency Challenges
Against this backdrop, the European Commission’s new grid package is welcome. It includes stronger EU-level grid planning, faster permit approvals, and closer connection of interconnectors to promote cost sharing.
But much more needs to be done. Bloomberg argues that coordinated grid investments depend on shared assumptions about future demand, generation, and cross-border flows. Improving transparency around the EU’s “reference model” underpinning these assumptions will help ensure appropriate scrutiny and trust.
Currently, a lack of data makes it hard to judge whether delays, congestion, and cost overruns are inevitable as operators claim, or can be prevented. Clearer disclosure rules would help regulators ensure consumers get the best value.
Investment Gap in Grids as Strategic Assets
EU funds can cover only a small part of the €1.2 trillion investment needed to modernize the grids by 2040. According to Aurora Energy Research data, current investments in transmission and distribution are still 49% below the level needed to achieve net zero goals.
Although consumers will bear part of the cost through electricity bills, member states clearly need to increase their own investment and create frameworks to attract private investors.
European leaders need to start treating grid infrastructure as shared strategic capital. Europe established the single market by coordinating rules and eliminating cross-border trade barriers. Its power system urgently needs similar treatment. The experience of building the single market shows that only by breaking down national thinking, and treating the grid as a unified system for planning and investment, can the true potential of clean energy be unleashed and the continent’s long-term competitiveness ensured.
Risk Warning and DisclaimerThe market has risks; investing requires caution. This article does not constitute personal investment advice, nor does it consider the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, viewpoints, or conclusions in this article fit their particular circumstances. Investing based on this article is at one’s own risk.