Orchestrating the Grid: Why Energy Policy Is Now Europe's Core Industrial Strategy

Diederik Peereboom: As technology providers T&D Europe members depend on concrete demand signals from grid operators. For Europe’s clean electricity technology sector it is important to have visibility on the future demand for their products and services. Without such visibility it is very difficult to start planning investments in manufacturing for hardware and development capacity for digital products. Network development plans should be clearly aligned with the National Energy and Climate Plans for all voltage levels and accompanied by industrial plans, specifying the demand from network operators for grid technology. This will enable the industry to make the business case with a competitive return on equity to add capacity, to organise its supply chain and to recruit and develop the necessary skills. Over the past 2 years, the 12 corporate members of T&D Europe alone have publicly announced EUR 12 billion in investments to expand their manufacturing capacity globally.

Diederik Peereboom: Electricity networks are a critical infrastructure and, as such, the backbone of Europe’s economy. This will be even more the case with the EU’s ambition to double the rate of electrification by 2040. To build, modernise and maintain this infrastructure, a strong domestic industry is critical. Therefore, European Parliament, Governments, and the European Commission should qualify Europe’s grid technology sector as a vital European and national interest. Europe needs to have a strong industrial base that can supply and support the electricity system as a critical infrastructure. It should thus take the right measures to enable the sector to continue to operate, deliver, innovate for a secure, reliable, flexible, and resilient electricity network.

This means on the one hand avoiding additional new barriers to the competitiveness of the sector. An example is the provisional safeguard measures that the Commission recently adopted on the imports of transformer steel (GOES), which results in higher costs for EU manufacturers, while providing for additional revenue to Asian steel manufacturers. Such measures not only reduce the competitiveness of European companies in the internal market, they also weaken the European position in export markets. On the other hand, the EU needs to support Europe’s strong technology sector by for example adding grid technologies to the scope of the Industrial Accelerator Act and by ensuring that under the Public Procurement Act long-term contracts remain possible for transmission and distribution technologies.

This also requires policymakers to ensure that the ambitions and the pace of the transition is in line with Europe’s industrial manufacturing and software development capacities to avoid the creation of new, undesirable external dependencies. Europe needs to support Europe-based manufactures and software developers in strengthening the domestic production of strategic grid technologies.

Diederik Peereboom: What we need is a value chain approach for electricity infrastructure. The entire chain from the political ambitions to electrify and decarbonise, through distribution and transmission system operators into the supply chain, together with the current and future users of the infrastructure, need to work together to give as much visibility and certainty as possible.

A lot of progress has been made. The Grids Action Plan has resulted in much closer cooperation among TSOs, DSOs and manufacturers. More can and needs to be done. Making better use of existing frameworks, such as NECPs, is one way. Insisting on getting more out of existing infrastructure by making more and better use of digitalisation is another. Moreover, we need to approach the electricity system as a system, including transmission and distribution, and involving the users more closely. It is important to make sure that some of the major Commission initiatives, such as the IAA and the Public Procurement Act, reflect on their impact on the business case for actors in the electricity eco-system. Energy policy has become industry policy and now it is also becoming an important part of security policy. To successfully deliver, we need the European ecosystem to ensure that it gets better and better at the orchestration.