The report by the Joint Research Centre of the European Commission, 2024, “Future-Proofing the European Power Market: Redispatch and Congestion Management”, examines the emerging challenges in Europe’s power system toward a climate-neutral economy. With the EU’s 2040 climate target set at a 90% reduction in emissions, massive deployment of renewables is anticipated—especially wind and solar power. However, this decentralised expansion risks overloading transmission infrastructure, particularly when generation is far from consumption hubs.
Key Findings:
- Soaring Redispatch Needs: Even with the most aggressive grid expansion scenario (XGE), redispatch grows from 50 TWh in 2022 to 274 TWh by 2040. In the business-as-usual scenario (BAU), it could reach an unsustainable 809 TWh—comparable to France or Germany’s total annual electricity consumption.
- High Costs: The cost of remedial actions needed to manage congestion may rise from €5 billion in 2022 to €34–103 billion in 2040 if systemic changes are not made.
- Massive Curtailment of Renewables: Up to 310 TWh of renewable electricity could be curtailed annually by 2040 in the BAU scenario due to insufficient grid capacity.
- Hydrogen as a Congestion Driver: Electrolysers installed without considering grid capacity contribute to rising redispatch volumes—at least 78 TWh in 2040, with likely more when including indirect effects.
Policy Recommendations:
- Locational Signals in Investment Instruments: Auctions and capacity mechanisms should integrate locational criteria that reflect grid constraints and support deployment in suitable areas.
- Market Reform: The EU should consider more granular market structures, such as locational marginal pricing (LMP), to better align dispatch decisions with grid conditions.
- Coordinated Planning: Renewable rollout and hydrogen production must be closely coordinated with grid development to avoid systemic inefficiencies.
Conclusion:
Without reform, Europe’s power system could face untenable costs and significant underutilisation of clean energy. Aligning infrastructure planning, market design, and policy tools is essential to delivering a reliable, affordable, and climate-resilient electricity system by 2040.
