Power Shifts: Grid Bound - Modernising Grid Infrastructure

Transcript

Power Shifts: Grid Bound - Modernising Grid Infrastructure

Jose (00:03):
The consensus is clear. For instance, estimates that we need to invest around the 67 billion euros on a yearly base until 2050, but we are already excluding that investment.

Alice (00:19):
Those software allowed us to reduce by 10, 15%. The losses reduced by 20% DOTGs, also allowing a lot of flexibility.

Jean (00:29):
The development now of AI models, digital twins, and that can use physics and run multiple thousands of scenarios simultaneously is really creating a different ability to find latent capacity in the grids in a way that we simply couldn't do before without that compute power.

Tom (00:52):
Imagine it's a hot afternoon in July. You are at home and the sun is beating down on your roof. Your solar panels are working overtime, generating more clean, free energy than your house can possibly use. In a perfect world, that excess power would be flowing back into the grid, charging your neighbor's electric car or powering a local hospital. But you look at your smart metre and you see a red warning light. The grid in your area is congested. It's full. Instead of that green energy being used, it's being curtailed, essentially thrown away. Somewhere else, a gas-fired power station is being paid to fire up because your clean energy simply can't reach the people who need it. This is the grid gap. We've been building wind farms and solar parks at record speed over the last decade, but for all the good they bring, we are still trying to plug them into a nervous system designed for the 1950s.

(01:56):
And right now it's creaking under the weight. Welcome to the Next five podcast. I'm Tom Parker, and today we are opening the second chapter of our miniseries, Power Shifts. Today's episode is called Grid Bound, and it's all about modernising grid infrastructure. To help us rewire our thinking, I'm joined by three titans of the industry. First, Ferrari Coreto, CEO of A Ridge and head of Global Networks Platform at EDP and chair of EDSO, the association that represents Europe's leading electricity distribution system operators. Ferrari, welcome.

Jose (02:40):
Hi, Tom. It's my pleasure.

Tom (02:42):
Next we have Jean-Christophe Moro, senior vice president of operations at Schneider Electric.

Alice (02:48):
Tom, delighted to be with you.

Tom (02:50):
And finally, Alice Delahunty, chief technology and innovation officer at National Grid.

Jean (02:56):
Hi, Tom. Really pleased to be here today.

Tom (02:58):
Well, Alice, I'm going to start with you. Last year on a previous episode of The Next Five, I interviewed Seb Henbest, group head of climate transition at HSBC, and he said that if Thomas Edison were alive today, he would recognise most of the grid. In other words, we are dealing with an incredibly old system, and I mentioned in my intro the issues of congestion and curtailing power. This seems to be an issue globally, but I want to focus on Europe and the UK here, and I want to start with hard truth. The EU spent 4.3 billion euros in 2024 on managing grid congestion by doing things like re-dispatching. This is part of a broader fragmented approach to electricity security that costs the block nearly 11 billion euros in the same year. In the UK, we are seeing a similar story with constrained payments where we paid one and a half billion pounds to wind farms in 2025 to stop spinning and fired up gas plants to take over.

(04:07):
Can you explain why we do things like re-dispatching and curtailing, and how do we explain to the average consumer that their bills include a sort of hidden tax for clean energy that we aren't even using?

Jean (04:22):
Yeah, thank you. So re-dispatch curtailment are inherent parts of balancing a system and a grid. And as you described, it comes from the situation where you're generating more electricity in one part of the country and the demand for it is in another part, and there's a limitation to what the network can carry. The thing that we have to work really closely on with the system operators across Great Britain and across Europe is where is the right balance there between investing in networks and curtailing and getting that optimum cost flowing through to consumers? And so as we build out more renewables in different locations to where the conventional power stations were, and as new demand centres emerge, that triggers the need for further network investment. And I guess this is about building more infrastructure to enable economic growth, to enable decarbonization, to enable modernization, but it's also about getting more out of the strong existing grids that we have.

(05:21):
And the thing that Edison probably wouldn't recognise is all the smart power electronics, the dynamic line ratings, the new technologies that have already been installed on the grid that really allow us to get much more out of that existing infrastructure while we build out new infrastructure for the future.

Tom (05:38):
Yeah, absolutely. Thank you, Anis. Ferrari, I want to get stuck into some more data here about the mess we're in with our grid in the EU. In 2024, 72 terawatt hours of mainly renewable energy was curtailed in the EU, roughly the energy use of Austria. Now that's pretty poor already, but according to a European commission communique in December last year titled European Grids Package, if we continue within action, unused renewable energy could reach up to 310 terawatt hours by 2040. That's half of Europe's energy consumption in 2023. These are some terrifying numbers, but could you offer some data and shed some positive light on what happens if we take action and start to upgrade our grid systems?

Jose (06:30):
Thank you, Tom. I believe that those figures show well the scale of the challenge, and we recognise that this is a huge challenge associated to the energy transition and the grid operators are aware of that and they're doing their best in order to overcome that challenge. Being positive, I'll say two things. First is that nowadays grids all around Europe are already facilitating the consumption of more green energy and connecting generators to consumers, and this is happening as we speak. The second positive aspect is that I believe that nowadays we have a large consensus regarding the need of more investment and that investment is already happening. The consensus is clear. Eurotic, for instance, estimates that we need to invest around 67 billion euros on a yearly base until 2050, but we are already excluding that investment. I give you just an example of Portugal. We have an approved plan to invest 3B between 2026 and 2030, and this year 2026, we'll invest more than 500 million euros.

(07:47):
And in 2020, we invested around 250 million euros. So huge increase in investment that is already happening, and I believe that will contribute to have grids more aligned with the needs of the market. However, there are other components that will be useful in this context, the tools in our toolkit and the flexibility is one of them. The smart metres and information they are producing is a very important component in this process and as it is dynamic line rating and other non-physical assets that we can use in order to streamline all this process.

Tom (08:28):
Brilliant. Thank you, Ferrari. I'm actually going to stay with you, Ferrari, on this. The EU can't be alone here when it comes to grid congestion and bottlenecks. Are the same issues in the US and China? Are they struggling more or are they doing better than Europe?

Jose (08:43):
I'll say that this is a global challenge. So physics is the same in every city market, so we all are facing the same kind of challenge. We need to learn from each other. We need to follow what China is doing, and we need also to follow what United States is doing. I believe that nobody solved already this problem that is a technical problem, I would say, but we need to bet on different plans in order to overcome it. One of them is to modernise the construction of the networks, and I believe that here we need to standardise more. We need to have more modular substations, we need to have prefabricated components, and we need to reduce the complexity of all the construction process. Digitalization is also important in order to foster all this congestion problem. And again, we need to follow what China and the United States are doing in order to overcome this relevant challenge we have in Europe.

Tom (09:49):
Brilliant. And Jean-Christophe, I'm going to bring you in here. Ferrari just laid out some of the solutions here, including the sort of modernising the construction of networks. How do we actually fix this? What are the tools in the toolkit, as it were, for modernising a grid that's already live? That's a challenge in itself.

Alice (10:10):
Thanks, Tom. That's a very good question because this is the problem we face everywhere looking at everywhere in all the region, all geographies, is how do we modernise the existing infrastructures? Of course, not jeopardising the current operations. This is first about getting visibility, visibility on what's going on on the network and the visibility, you can have it through digital substations, connected equipment. Step by step, we build the model of the network. We did this in many countries, again, like Egypt, Serbia, and many others. Then we use the software platforms like your EDMS derms, that kind of stuff, where we can have a real visibility on what to do, where to invest, where are the positions, especially when you have more and more green energies or energies coming from buildings or EVs or whatever. We can identify where to invest, remove the congestions. And for instance, in Serbia, those software allowed us to reduce by 10, 15% the losses, reduce by 20% the outages, also allowing a lot of flexibility or more flexibility on the network as there are more and more connection of members.

(11:33):
So this is really true digital that we have visibility, that we understand what are the issues, where to invest, and where we bring actually in the end, the flexibility, which is very key for today and the future and resilience of the grid.

Tom (11:51):
Yeah, thank you so much. Alex, I wonder whether you want to come in here.

Jean (11:54):
So Ferrari mentioned flexibility. Flexibility is, on the demand side, has been a really growing topic in recent years with domestic users and businesses able to offer much more flexibility. But as we now move into a world of new demands like decarbonization of industry or data centres, how they can become participants in the system and flex to match generation and what's going on will really be a big unlock in terms of how we connect new energy. There's some incredibly exciting trials happening in that space where data centres have been able to reduce their demand by up to a third without impacting their compute load. So you can immediately see how that creates opportunity for more connections. The next big theme that came out there was around the use of digital, and I fully agree, digital and AI is becoming core to a number of the processes that unlock capacity and unlock how we operate the grid through from planning and managing outages, modernising the construction, and then the delivery of that construction, as mentioned, is also really, really key, that modular piece and standardisation.

(13:09):
So when you put all of these together, you can see a world where you're using the grid more flexibly, you're operating it in a much more smart way so that you're getting absolutely the most out of the existing assets, and then where you need to add capacity, you're adding that with modern techniques that really speed up that delivery.

Jose (13:28):
So Tom, can I jump in just to add a comment on digital and how digital is important in this process? So to speed up the construction process, we have some tools that are very relevant. Use of drones is one of them. Nowadays we are massively using drones in order to help the construction process, the maintenance process, and the inspection lines, so this is important. And regarding also construction and where we do need to reinforce the grids, we are using more and more digital tools as digital twins in order to know precisely where we need to reinforce the grids, where the demand is appearing, and how we should match the grid's capacity increase with the demand increase. So digital is a cornerstone in all this process.

Jean (14:16):
And I might just add on that as well. I think one of the very exciting developments is that in general, the planning of grids and how capacity use tends to be enshrined in quite deterministic codes as they were developed over time. But the development now of AI models, digital twins, and that can use physics and run multiple thousands of scenarios simultaneously is really creating a different ability to find latent capacity in the grids in a way that we simply couldn't do before without that compute power. And that's developed rapidly even over the last few months, that ability. So some extraordinary exciting developments there.

Tom (14:54):
Brilliant. Thank you. Well, Jean-Christopher, I'm going to come back to you because we've just discussed some of the benefits that AI can bring to, say, modernising our grid infrastructure. But we touched on this a little bit in our first episode of the PowerShift series, and I want to get your take on it when it comes to the grid, because AI is predicted to put an unprecedented demand on our power grids. The IEA projects up to 1200 terawatt hours of energy demand for data centres by 2035, which is more than Russia consumes per year. That's a prediction that is nine years away. In our first episode, Mo Gordat, who's former chief business officer at Google X, said that thinking that AI is going to completely consume energy assumes a very interesting conviction that we are all still using mainframes. He also goes on to say that AI on your phone next year will be as good as the last version of Claude, or I should say any other version of frontier model.

(15:55):
And how many of us need something that's much more powerful than that is questionable. So in short, what he means is the demand may not be as big as everyone is predicting. So yes, the grid needs upgrading, it's a given, but how can we even start to work out models or raise capital and start constructing a modern grid when the future of AI and its demand is still unpredictable? In your opinion, what is AI's best and worst case demand scenario in five years time, and can our European grid update quickly enough to either case? It's a big question, but yeah, let's have a go.

Alice (16:33):
It's a big and difficult question because you said this is totally unpredictable. What we advise to our customers, by the way, is to use the digital twins to create some scenarios, the lower, medium, and best case scenarios. What I can tell you, once again, predicting this, this is just mission impossible. So it's a good reason why we need flexibility on the grid because it is changing every day. You were talking about clone. Three weeks ago, I was impressed with clone. Now there is a new ChatGPT, which is even better now they're talking about a new version. I mean, he doesn't talk. But to answer the question, how do we predict this? Uncertainties, scenarios, flexibility, trying to be as fast as possible in the scaling up of extensions or most capacities on the grid. And yeah, we are trying to adjust, adapt as much as we can.

Tom (17:33):
I'd like to open up the floor. Alice or Ferrari, would you like to jump in here very quickly on this because it's a big topic?

Jose (17:39):
Very quickly from my side, just to have the artificial intelligence is for sure a challenge, but it's a huge opportunity for grid operators, and we need to look to the bright side of the moon as well. I believe we are more and more using AI at scale in our operations, utilising the network, running different scenarios, knowing better the consumption pattern, and this helps a lot to reduce the time to market of some of our investments. And this is a huge opportunity that we are exploring in order to speed up all this process because Jean-Christopher mentioned speed, and I do believe that speed is essential in this process.

Tom (18:27):
Alex?

Jean (18:28):
Yeah, I mean, the phrase of the moment is the grid needs AI and AI needs the grid, and I think that kind of symbiotic relationship between the two is probably the key to this. I mean, planning out a grid is an important job that historically was done on investment signals that moved much more slowly, and so you built it up over time. I think the real challenge we have now is that there's a lot of conflicting investment signals, and as you said, nobody really knows how much is going to be at the edge and how much is going to be in hyperscaled data centres, how much will be distributed, and that's changing really quickly. But the one thing that AI is fantastic at is running multiple scenarios and bringing parties together across silos and helping them understand these scenarios and visualise them and make bigger decisions.

(19:15):
And so I think when we start to look at this as a full ecosystem with policymakers, with market solutions, with investment planning, with the developers, and bring together that massive data and scenarios, there will be real opportunities here to find ways forward that support both the grid and the expansion of this new technology that creates great growth opportunities for the countries it's in and opportunities for industries and for further prosperity. So I think really looking at it, as you say, on the bright side and the symbiotic and positive relationship between the two is going to be key here.

Tom (19:50):
Priory, I want to look at the world of policy. We have the technology and we know how to fix it, but what's stopping us? Is there a permitting paradox or are there some policy issues here that we can sort out?

Jose (20:05):
Permitting is important and is relevant, but it's just one of the components of a complex process. So in order to have, for instance, a substation in place, we need to have it approved, we need to have licencing and permitting, we need to buy the equipments, we need to exclude the investments. So this is a very complex process. Of course, that permitting is important and is under discussion and we are trying to make it easier, but there are other components in this process. From the policy point of view, there is an aspect that I believe that is very relevant that I'd like to underline here, which is anticipatory investments. In the past, we have been reacting to the demands. Once that we know that demand is in place, we were planning and is putting CapEx in order to cope with that demand. We need to change this approach, and this is where anticipatory investment comes.

(21:01):
So we need to anticipate the demands. We need to put in place the increase of capacity needed for that demand in order to smooth all the process. This is very relevant. The good news is that nowadays the commission providers are aware of this, and we are even slowly changing from this reactive kind of approach to this anticipatory regime that will make things very much easier in the future.

Tom (21:32):
Thank you, Ferrari. A question for Alice and Jean-Christophe. Are you seeing any shifts in policy that give you hope for 2030? Let's start with you, Alice.

Jean (21:42):
Yeah, I mean, building off what Ferrari's just said, I think what does give me hope, there is now recognition that grids and infrastructure need to be strategically planned and strategically planned for what they hope to enable for the country, whether that is economic growth or decarbonization or modernization of industry. And so that recognition and that desire to plan ahead rather than reactively after the load or the generation has connected is hugely positive. I think my real hope for the future is that collectively as a society, we move into a place of really understanding that we're not building infrastructure for the sake of it, we are building infrastructure for what it enables and what it enables for society and the future that it creates. And with that sort of shared understanding, that builds a shared understanding that the delivery challenge is also shared. And so working with communities, working with planning authorities, working deep into the supply chain, that we get the right policies and the right environment to create that really shared endeavour approach to strategically planning ahead our infrastructure and our grid.

Tom (22:48):
Thank you, Anis. Jean-Kristnoff,

Alice (22:50):
Over to you. I have a bit of hope, to be frank with you, because one more what we can see in Europe is that the grid is step by step considered as a strategic asset for lot of things, energy security, decarbonization, conversiveness, et cetera, et cetera. And for me, the policies of course are always too slow, but they are allowing some countries in Europe to make investments to facilitate, to accelerate some permits, for instance, permitting, that kind of thing. What's encouraging to your question is that we see the energy transformation, the electrification a little bit everywhere, and strategy. So hope yes, more and more electricity, more and more capacity, less and less carbon for size energies, which is a nice thing. But let's speed up even more because I think the main roadblock is speed everywhere.

Tom (23:54):
Well, look, we're coming towards the end of the show, and each time we do a quick fire round with all three of you, if you could try and keep your answers to under 60 seconds. I know it's a big ask, but that would be fantastic. Okay. First up, as we look out at the next five years, what is the one roadblock? Is it regulatory, technical, or social that could stall this grid upgrade, and how do we get past that? Ferrari, let's start with you.

Jose (24:19):
Well, skilled labour is one of the most important topics we have in Europe and that we have in different countries, so this is something that you should look at.

Tom (24:30):
Brilliant. That was way under 60 seconds. Marvellous. Alice, to you.

Jean (24:34):
Look, for me, there is no doubt this is a shared challenge across multiple parts of this ecosystem, and so I don't think there's one roadblock, but if I was to call it one, it is the ability to work together across those parts of the ecosystem, planning, skills, supply chain, grids, users, the whole works working together is a big task for us.

Tom (24:57):
Brilliant. Thank you. Jean-Christoph.

Alice (24:59):
For me, the main roadblock is not technology, it's more speed. The speed because the AI is going faster than we can extend the capacity on the grid. So it's all about permitting, interconnection, investment cycle, and so on with a lot of speed.

Tom (25:17):
Well, you talk about the speed of adoption there. In 2030, will the average listener have noticed that we are further along when it comes to the grid? Jean-Christophe, we'll go back to you.

Alice (25:28):
The next 20 years, the people will see much more quality of energy, less energies, faster connections, more integration of renewable. Now, in five years, we will still be in the same challenge to be better, but it'll be the same challenge and to modalize more and more. The journey won't be finished. It's, for me, a permanent challenge where people need to have their comfort in using the energy through the grid without any disruptions.

Tom (26:08):
Perfect. Ferrari?

Jose (26:09):
Well, the electricity system is complex. We need to balance always demands and supply through grids. It's a complex system, but I'm very optimistic that in 2030 will be much better than we are now. We have a consensus. Everybody's aligned regarding the need of more investment. Anticipatory investment is making its way. The investment is already in place. We are putting CapEx at speed. We have different tools in our toolkits in order to foster the answer of the networks. So I'm very optimistic that we'll be better off in 2030.

Tom (26:48):
Brilliant. And Alice?

Jose (26:48):
Yes.

Jean (26:50):
I mean, I also believe we'll see a big change. I mean, not everything will be solved. We'll still have constraints, but we will have connected a lot more green energy. We will have connected a lot of major demand. There will be much more digital and flexibility within the system. But to the spirits of, it's not just about the assets and the infrastructure, it's about what it enables. We expect to support about 55,000 jobs by 2030 in the growth of this sector. And then of course, there is the comfort of everyday life, the energy security, and the broader... Everything that electricity and energy enables for businesses, homes, hospitals, schools. So it really is about what it does for society, and I'm sure by 2030, we'll be really feeling that.

Tom (27:32):
Brilliant. And we may have already kind of touched on it a little bit, but if I had to ask, what is your one hope for where we will be in five years time, what would it be where we have this modern grid that's fit for purpose, for a future purpose? Alex, I'll come straight back to you.

Jean (27:47):
Yeah, I think we have sort of touched on this through the conversation. For me, the real hope is that we do have that universal recognition about the strategic assets that networks and grids are and what they truly enable, and that we have moved firmly into that strategic planning, anticipated reinvestment space, and that we are really working together on that modernization, digitization, getting the absolute most out of the grid we have while making real focused progress on the delivery of the build out of the future grid.

Tom (28:20):
Brilliant. Jean-Christoph?

Alice (28:21):
Our main hope for 2030 is to make sure we stop talking about the grid as a constraint, but on contrary, as an enabler for goals, enabler for decarbonizations, as enabler for many things. And frankly, my hope is that we will be able to bring the flexibility we need to reach this objective.

Tom (28:46):
Brilliant. And finally, Ferrari.

Jose (28:49):
I believe that we should also acknowledge that grids nowadays are very different when compared to what they were five or 10 years ago. Nowadays, we have a lot of distributed generation connected to grids. We have a lot of EV charging points connected to grids. The electrification is growing. So things changed dramatically in the last five years, and the grids cope with that. So we know that we have curtailment, but look to the full glass that we have here and trying to project the next five years. I'm very confident that we'll cope with the challenges we have ahead.

Tom (29:27):
Brilliant. Thank you very much. Well, it's been a fascinating discussion, but one that Alas must come to an end. So many thanks to my guests, Ferrari Coreto.

Jose (29:36):
Thank you very much, Tom. It was my pleasure.

Tom (29:38):
Alesta Lahunty.

Jean (29:38):
Thank you. It's been a wonderful discussion.

Tom (29:41):
And Jean-Christoph Morrow.

Alice (29:43):
Oh, thank you. It was a great talking, great discussion. It was really my pleasure. Thank you very much, Tom.

Tom (29:51):
Well, as we close this second chapter of the PowerShift series, it's clear that our relationship with electricity is changing. It's no longer just Something that arrives at a plug. It's a living, breathing system that we're all a part of. And it's easy to feel a sense of infrastructure fatigue when we hear about billion pound projects and decades long timelines. But there's something deeply compassionate about this work. We've heard our guests today talking about consensus and collaboration. Modernising the grid is about energy justice. It's about ensuring that the clean, cheap power being generated in the highlands or the North Sea can actually reach the family struggling with bills in London or Lisbon. It requires more than just new pylons. It requires a radical re-imagining of how we coordinate data, molecules, and electrons across borders. It isn't just about supporting local projects. It's about systemic integration. It's about ensuring that every industrial plant, every data centre, every regional network acts as a flexible, intelligent node in a larger unified whole.

(31:01):
We are all grid bound, not by choice, but by the physical reality of our shared energy future. If we get this right, that connection becomes our greatest strength, finally decoupling our economies from the volatility of fossil fuels. Next time on our PowerShifts miniseries, we're moving from the wires to what's creating the electricity in them. Join us for episode three, emerging technologies where we glimpse into the future techs needed to hit net zero goals. I'm Tom Parker and this is the Next five podcast.