European grid investment plans face 250 billion euro shortfall
At the end of April, Spain and Portugal lost power in their worst blackout. Last week there was a power outage in large parts of the Czech Republic. Such incidents have added to concerns about the resilience of Europe's electricity system.
Increased electrification, power demand growth from AI and data centres, renewables integration and ageing infrastructure mean that Europe's grids need a massive overhaul.
The report did not provide detail on subsidies some grid operators might receive. Some TSOs can receive subsidies through EU funding programmes or member state initiatives.
Europe's 15 largest TSOs are expected to increase operating cash flow to 120 billion euros from 2025-2029, up from 57 billion euros for 2020-2024, the report said.
They plan to triple capital investment to 345 billion euros over the next five years.
Assuming dividends between 25 billion and 30 billion euros would also need to be paid, this would leave a funding gap of about 250 billion euros, the report said.
This would need to be plugged through debt, equity, divestitures or lower dividends, the report added.
Europe needs to build more grid infrastructure over the next five years than it has over the past two decades, the report said.
Balance sheets of TSOs are under strain. Many are operating with high debt and publicly traded TSOs are struggling to raise equity in the face of fierce competition.
"Without rapid innovation in how we finance grid infrastructure, Europe risks having world-class renewable generation that can't reach consumers because the grid hasn't kept pace," said Tom Brijs, BCG partner and co-author of the report.
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