Europe’s grids package and the post Russian gas shift

Key takeaways:

• Europe’s grid is being pushed beyond its original design as electricity demand rises across transport, heating, and industry.

• A more renewables heavy system makes supply more dispersed and variable, which raises the need for flexibility and stronger system management.

• The Spain and Portugal blackout earlier this year highlighted how ageing infrastructure and weak interconnections can become a systemic risk.

• Grid modernisation is about digitising and reinforcing existing networks using smart technologies, real time monitoring, and cyber secure systems.

• Grid expansion means building more physical connections, especially cross border interconnectors, so power can flow from surplus regions to deficit regions.

• Delivery will depend on faster permitting, stronger coordination across countries, and large scale investment in grids, storage, and flexibility.

• The EU’s grids push aims to turn electricity networks from a bottleneck into an enabler of a greener, electrified economy.

• The move away from Russian gas is structural, shifting Europe from reliance on one dominant supplier to a more diversified mix.

• Europe now combines pipeline gas from Norway with LNG imports, mainly from the United States and Qatar, which strengthens security of supply.

• This diversification can come with higher costs at times and greater price volatility, depending on market conditions.

• A new wave of LNG supply expected in coming years could ease pressure on prices over time.