“Science and Technology Innovation Board Daily”, April 20 — Under the new energy transformation process, demand for grid connections has increased, but looking at many regions around the world, it is difficult for old grid infrastructure to carry the demand for new energy grids. As a result, it has become a major obstacle to the clean energy transition — the burning fire of clean energy grid-connected has already spread all over Europe and the US.

The capacity of power grids in many regions of Europe has reached its limit, or for the first time, putting power grids at the center of the political agenda; the US Department of Energy also released two documents this week, pointing directly to grid optimization and upgrading.

▌America's first clean energy grid road map released

Recently, the US Department of Energy released two documents: the “Innovative Grid Deployment Launch Report” and a new road map for connecting clean energy to the grid, both directly pointing to grid optimization and upgrading.

Among them, the road map aims to speed up the integration of clean energy into the national grid and clear the backlog of related projects. Some industry sources pointed out that this is the first clean energy grid road map released by US Energy.

Over the past 10 years, the number of new grid connection requests in the US has increased to 2500-3000 each year, an increase of 300%-500%. US Secretary of Energy Jennifer M. Granholm said, “Clearing the backlog of nearly 12,000 solar, wind, and energy storage projects waiting to be connected to the grid is critical to expanding the supply of clean electricity.” The US Department of Energy said the grid-connected process needs to be continuously evolved to handle today's and future high volume of requests. Furthermore, technological innovations in data collection, analysis, and software management systems have created new opportunities for automating elements of grid-connected processes.

As for the “Innovative Grid Deployment Launch Report”, the focus is on “speeding up the deployment of critical, commercialized but underutilized advanced power grid solutions in existing transmission and distribution systems”, promoting grid modernization, upgrading infrastructure, and increasing the capacity of existing power grids. When installed separately, these solutions can support incremental peak requirements of 20GW-100GW.

The US Department of Energy said that many of the technologies highlighted in the report can be deployed on existing power grids within 3-5 years, and may be cheaper and more valuable than existing technology and methods.

Figure: 4 categories and 20 advanced solutions listed by the US Department of Energy

It is worth mentioning that the California Electric Power Company and Energy Agency have also applied for $2 billion in federal funding this week to upgrade the grid to increase grid capacity and provide renewable energy; New York Governor Kathy Hochul announced in early April that it will allocate 3.5 million US dollars to develop grid modernization projects.

▌Grid capacity in some parts of the EU has reached its limit

In the European Union, the share of renewable energy in electricity reached a record high of 44% in 2023, but deployment challenges have also arisen, one of which is insufficient grid capacity.

FOX pointed out 8 days ago that due to insufficient expansion, aging infrastructure, and lack of flexibility, power grid capacity in some regions of the European Union has reached its limit. Signs such as long queues to be connected to the grid and the gradual increase in renewable electricity cuts have made people pay attention to the central role of power grids in Europe's decarbonization process. This is probably also the first time that Europe has pushed the grid to an important position on the political agenda.

The European Investment Bank (EIB) provided a loan of 400 million euros (US$425.2 million) to German energy company Thüringer Energie AG this week to upgrade and digitize the power grid in Thuringia, Germany. “Grids need to be prepared to handle massive electricity access from wind and solar energy.” Nicola Beer, the bank's deputy governor, said.

▌“ Long queues” for grid-connected projects

“Backlog,” “congestion,” and “long queues” — a recent report from Lawrence Berkeley National Laboratory (Lawrence Berkeley National Laboratory, a national laboratory belonging to the US Department of Energy) describes projects in the US waiting to be connected to the power grid in this way.

According to the report, the backlog of new energy generation and energy storage projects across the US has further worsened. By the end of 2023, nearly 2,600 GW of power generation and energy storage capacity is seeking access to the grid, which is more than double the total installed capacity of existing US power plants. More than 95% of the capacity comes from clean energy projects.

Figure: By the end of 2023, the US is seeking to connect to the grid's energy capacity

Figure: Comparison of installed capacity and waiting to be connected to the grid in the US in 2010 and 2023

Today, demand for grid-connected energy from overseas has surged, bringing huge demand for grid investment. According to data from the April 15 research report of Cathay Pacific Junan, the United States, Spain, Brazil, Italy, Japan, the United Kingdom, Germany, Australia, Mexico, Chile, India, and Colombia have a total of nearly 3 TW of new energy grid-connected requests, of which 500 GW is already in the final stage of grid-connected connections.

However, it can also be seen from the above that the European region's grid connection is progressing slowly, which has become a major problem hindering the transformation of new energy sources.

Analysts believe that an important reason for the delay in connecting to the grid is that major overseas economies have old infrastructure and are unable to adapt to rising renewable energy generation. Currently, Europe and America are facing problems such as small power grids, old infrastructure, and insufficient connectivity.

Among them, the US side, according to PTR disclosure, the US high voltage power grid has more than 3,500 substations, of which more than 33% of transformers have a service life of more than 50 years; the AEP indicates that within the next ten years, 30% of existing transmission wires will reach or exceed 70 years.

On the European side, according to Deloitte's forecast, 40-55% of Europe's existing power grids will have a lifespan greater than 40 years in 2030.

Guotai Junan pointed out that electrification in the end-use sector, distributed renewable energy, and replacement of existing power grids will drive increased investment in overseas power grids. Global grid investment is expected to increase significantly by 2030, with an average annual grid investment of around US$500 billion between 2023 and 2030. It is estimated that by 2030, the average annual investment amount in Europe, the US, China, and the world will be US$914/1180/893/487.3 billion, with a compound annual growth rate of 7.9%/5.9%/5.9%/8.0%.

China's power equipment sector has made significant progress in recent years. According to the April 17 report of Shanghai Securities, the country has now built the world's largest super (extra) high voltage power grid, creating many “world firsts” in transmission technology, power equipment, etc., and there is great potential for domestic power equipment companies to go overseas in the future.

It is worth noting that this week, many individual stocks of electrical equipment hit historical/range-high prices.