Rising Share of Renewable Electricity Increases the Pressure to Strengthen Grid Infrastructure in Europe London, England, United Kingdom October 15, 2009 Europe's transmission and distribution (T&D) infrastructure is more than 50 years old and in urgent need of an upgrade, especially with the increasing share of electricity generation from renewable sources such as wind, solar and biomass. Further, these transmission networks were built without considering the impact of generation from renewable sources, and there is mounting pressure to build new lines as well as upgrade old ones. New analysis from Frost & Sullivan, Strategic Analysis of Transmission and Distribution of Electricity from Renewable Sources offers insights on the T&D infrastructure in Europe, legislations influencing the integration of renewables into the grid, examples of new and upcoming projects and an overview of the energy and power market in Europe. "Increasing pressure on promoting generation from renewable sources is driving the need to upgrade existing T&D infrastructure as well as undertake the construction of new and efficient ones," notes Frost & Sullivan Research Manager Malavika Tohani. "Around €4 billion investment is forecasted by European transmission system operators (TSOs) per annum." The European Commission's (EC) 20-20 directive specifies 20 per cent energy generation from renewable sources by 2020. This implies that renewables would have to contribute to 34 per cent of electricity generation in 2020. The grid infrastructure put in place in Europe over 50 years back merely considered the inclusion of large-scale conventional power generation plants. However, the future will witness the increased penetration of large- and small-scale renewable and other forms of distributed generation such as combined heat and power (CHP). This warrants the need for upgrade and new construction. However, it is unclear about who should bear the costs of connection to the grid, renovations or extensions and reinforcements. The distribution of benefits arising from connecting renewables and other forms of distributed generation to the grid and allocation of profits is also a matter of contention. With stakeholders involved across the value chain, it is difficult to determine the allocation of profits. "It is difficult to quantify the benefits accruing to each party due to the new connection or upgrade," explains Tohani. "Hence, the allocation of costs also becomes complicated." For example, Belgium, Bulgaria, Hungary, Slovenia and Denmark follow 'shallow' connection charges, where the generator only pays for the cost of physical connection to the grid and reinforcement expenses are borne by the distribution network operators. On the other hand, countries such as Spain, Greece, Luxembourg, Sweden and Romania have 'deep' connection charges, where the generators pay for the connection to the grid as well as any upstream reinforcement costs. There should be greater transparency regarding various charges and equitable distribution of costs after considering different criteria such as geographic location and network faults. "Transparency in the charging system is a prerequisite for driving the connection of renewables to the grid," concludes Tohani. "A cost-benefit analysis on each stakeholder group involved is necessary to develop a fair charging system." If you are interested in a virtual brochure, which provides a brief synopsis of the research and a table of contents, then send an e-mail to Chiara Carella, Corporate Communications, at chiara.carella@frost.com, with your full name, company name, title, telephone number, company e-mail address, company website, city, state and country. Upon receipt of the above information, a brochure will be sent to you by e-mail. Strategic Analysis of Transmission and Distribution of Electricity from Renewable Sources is part of the Energy & Power Growth Partnership Services programme, which also includes research in the following markets: United States Smart Meter Market, Asia Pacific Medium and High Voltage Switchgear Markets, and South African Transformer Markets. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants. Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best in class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 35 offices on six continents.