The EU needs to act smarter and not repeat past mistakes
The EU move to generating electricity from renewable sources has been impressive. In 2025 over 47% of the EU’s electricity was generated from renewable sources. In the third quarter of the year that figure rose to 49.3%. For the first time more electricity was produced across the EU from wind and solar than from fossil fuels: 30% EU electricity was wind or solar generated. Fossil fuel plants produced just over 29%, writes Dick Roche.
Wind which accounted 37.5% was the primary source of renewable energy. Solar which has been growing rapidly - came in second with 27.5 %, followed by hydro 25.9%, combustible renewable fuels, geothermal and other energy sources made up the balance.
While EU performance in the generation of electricity from wind and solar has been impressive, it still has a huge amount of untapped potential. Some predict that onshore wind energy in rural areas could if, fully developed, produce four times more electricity than is currently the case. Fully developing the EU’s offshore capacity could see that sector meeting 30% of Europe’s total electricity requirement by 2050. In solar energy, research suggests that if the potential in rural zones were fully tapped 60 more electricity could be produced than at present.
Unleashing that capacity is challenging. Within the EU wind is abundant in the west and northwest. Solar is the abundant clean energy source in the south and southwest. Wind is more available in winter and solar in summer. Demand and supply do not align. Smart networks are critical in connecting the energy generation points to the end customers.
Europe’s aging electricity grid
The European Union has one of the most extensive and interconnected electricity grids in the world. It contains over 11 million kilometres of powerlines.
However there are problems. Nearly 40 percent of the EU electricity network is over 40 years old and faces difficulties in meeting rising electricity consumption – which is expected to increase by around 60% between 2023 and 2030. Most importantly the EU network is ill-equipped to handle a rapid growth in renewable energy.
The EU Commission has identified Europe’s electricity grid as a major obstacle to achieving energy transition estimating that a breathtaking €1.2 trillion in total investment will be needed to upgrade and expand EU electricity grids by 2040.
The Commission’s Grid Action Plan published in 2023 emphasises that Europe’s electricity networks needed to become more digitalised, decentralised and flexible.
The EU strategy, which aims to maximise the use of existing infrastructure, envisages approximately
€584 billion being invested across a range of measures by 2030. The bulk of the funding will be channelled into digitalisation of the grid, AI driven grid management and improved security.
Converting Europe’s aging electricity networks into a network of smart grids is seen as delivering multiple benefits. Upgrading the networks has the potential to save € billions in annual energy costs, improve energy security, reduce dependence on imported fossil fuels, and contribute to meeting EU climate change objectives.
Smart grids are critical to incorporating more solar and wind generated energy into the EU’s energy mix. They are critical to addressing supply variability that arises from the intermittent nature of wind and solar as energy sources.
Unlike traditional grids where power flows from the generation plant to the customer, smart grids accommodate ‘two way’ traffic fundamentally altering the way electricity networks operate. This allows the integration of small scale energy providers into the energy chain. Customers who generate their own electricity to sell their surplus back into the system.
Supporting "demand-side flexibility:" smart grid development is key achieving the EU’s ambitious target of 92% penetration of smart meters by 2030. Smart meters support dynamic pricing that incentivises customers to defer energy-intensive tasks to off peak times and allow customers to monitor & reduce electricity costs.
Excluding Chinese technology
In January the EU Commission announced plans to revise the EU Cybersecurity Act. The plans include proposals to ban components and equipment from “high-risk suppliers” from critical infrastructure including electricity networks.
This looks like an uncomfortable case of history repeating itself. During his first term in the White House, President Trump banned Chinese equipment from the US telecoms sector on the basis that it could be used by Beijing for spying.
That was a sovereign decision for the US. However not happy with removing Chinese equipment suppliers from the US telecoms sector the Trump administration also determined that Chinese suppliers should be removed from Europe’s networks.
In spite of resistance from European mobile network operators, the EU capitulated to the Trump administration’s diplomatic pressure, warnings regarding intelligence-sharing risks and threats of sanctions. EU operators were forced to move to the exclude Chinese 5G equipment from their networks.
In addition to excluding the most advanced equipment this move cut competition on the supply of equipment, limited equipment choice and imposed massive costs. At the time GSMA estimated that excluding Chinese suppliers would cost €55billion with further costs to be met for stripping out existing equipment. In addition to imposing increasing costs appeasing President Trump caused delays in 5G rollout.
Some commentators suggested that, rather ironically, that limiting the range of equipment choice increased potential long term network vulnerability.
Arguments that originated in the US against the use of Chinese equipment in the rollout of 5G have been recycled in the in the debate on smart grids.
As in the case of 5G China has been to the fore in developing smart grids. In 2020 China - the world’s largest consumer of fossil fuels -announced it intended to be carbon neutral by 2060, a particularly ambitious target given that China was experiencing increased urbanisation, further industrialisation, and demand for further electrification, arising in part from its move towards electric vehicles.
To meet its targets China recognised the need to rapidly grow the share of energy it consumed from generated from non-fossil fuels. It planned to reach the 20 percent point by 2025, 25 percent by 2030 and 80 percent by 2060. Solar and wind power were planned to play the lead role. With that recognition China committed to the modernisation of its electricity grids more quickly that other nations. Financial resources were allocated to rolling out smart grids on scale. China’s highly centralised administrative structure and unified planning system facilitated the rapid move to building out smart grids. All of this created technological momentum providing Chinese equipment producers the opportunity to engage in R&D and scale up production. China had one other advantage it had the capacity to rapidly integrate its advanced digital technologies into the grid development.
The confluence of these factors has put China in a commanding position as a leader in the technologies needed to produce world class smart grids. China operates one of the most sophisticated grid systems in the world. Those grids carry vast amounts of renewable energy across long distances. Chinese firms have pioneered innovations in areas such as advanced metering infrastructure ( smart meters) ultra-high-voltage transmission, inverters, digital grid management, and energy storage integration.
While Europe has the capacity to produce similar equipment it could not fill the gap that would arise from the exclusion of Chine suppliers.
Chinese manufactured equipment is already a significant part of Europe’s move to solar power: 90% of solar panels installed in the EU are Chines manufactured. As of 2023 70% of solar power generated in the EU used Chinese manufactured inverters. Replacing Chinese manufactured equipment that is already installed in Europe would cost €billions.
Shutting out Chinese suppliers on the basis of nationality will force the EU to effectively ‘reinvent the wheel’ and expend resources unnecessarily in recreating what has already been achieved - rather than investing the resources in innovation and development.
Paranoia comes with costs
As in the decision to shut out Chinese equipment in the telecoms sector excluding Chinese equipment from the EU’s planned smart grid network will come with costs. Excluding Chinese suppliers closes access to the technology and experience needed to accelerate the creation of the smart grids that Europe needs. It will impact on the pace and the cost of infrastructure development. The downside of technological isolationist policies deserves rather more consideration than they are receiving at present.
Cooperation brings more benefits than exclusion. Participation in global innovation in smart networks need not be a zero sum game. All partners can benefit. Cooperation with China would allow Europe to influence the direction of emerging technologies and help the EU to determine global standards, including standards relating to security.
Cooperation would also open opportunities for European firms. The Chinese market although well served by domestic players remains a significant market for EU based companies. A cooperative relationship between Europe and China is more likely to facilitate market access and create mutually beneficial commercial opportunities for EU companies than a hostile relationship based on closed doors.
Concerns that have been expressed about deepening cooperation with China on smart electricity networks reflects a complex mix of geopolitical caution and security concerns. It would be wrong to dismiss those concerns. It is important however not to be paralysed by them. Paranoia, especially induced paranoia as happened in relation to 5G should not be allowed to overrule common-sense, logic or EU determination to decide the policies that best address its interests.
The EU has demonstrated its ability navigate its way through choppy waters in other areas. It should have the self-confidence to sit down with China, to set out its concerns and negotiate objective ground rules and standards that address the concerns that exist. Bona fide concerns could be addressed through strong regulatory frameworks, technical standards, and robust oversight mechanisms. In the long run the EU and China would benefit more from that approach than from building a trade wall.
Dick Roche is a former Irish Minister for the Environment who served on a number of occasions as Ireland’s Minister for European Affairs.
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