Europe’s battle for power leads to evolution of new power ecosystem

The boom of artificial intelligence, a pressing need for more data centers and the history of the energy transition – in particular in transport – all stimulate the demand for electricity, and the existing electrical infrastructure has difficulty following.

Companies are faced with waiting times from five to eight years to connect to aging electrical networks and tension in Europe, have declared experts at CNBC, as the emergence of new areas of demand leads to an unprecedented increase in permit for power permit. According to the IEA, at least 1,500 gigawatts Global clean energy projects have been stopped or delayed due to a lack of network connections and around $ 700 billion in network investment are necessary for countries to achieve their green objectives.

Data centers, large facilities that house servers for computer processes and often require huge amounts of powerAre the “main director” of this growing competition to connect to the network, said Diego Hernandez Diaz, partner at McKinsey.

He told CNBC that customers had cited waiting times of up to eight years to connect to the grid.

“There are certain operators of transmission systems in Europe, who are already faced with two, three or more people who all try to interconnect at the same knot at the same time. … There is a literal queue in individual connection points to see who can connect first,” he said.

Hernandez, whose work focuses on the electro-intensive industries, said that during the last 18 months, almost all of his work has concentrated on data centers, a sector that he expects to grow at an annual compound rate of 20% in the next six years. The request for the installations required to form significant language models (LLMS) should continue its exponential increase While technology giants rush to dominate in AI.

Energy management company Schneider Electric Warned in a January report that Europe is faced with an imminent energy tightening, with three to five years of waiting lists for network connections in energy limited regions.

“It’s a kind of race,” Steven Carlini, AI lawyer and Schneider Electric data, told CNBC. “You have all these companies that try to deploy as much capacity as possible. But it is limited by the number of GPUs [graphics processing units] and the available power and permits. “”

“We go from a situation where you have one or two applications [to connect to the grid] A year, in some countries, at 1,000, “said Carlini.

It is not only the amount of investment required – but also the speed at which it can be deployed – which will be essential to solve the problem, said Diaz de McKinsey. He also underlined the growing complexity of the work of high -voltage network operators and the example of Germany, which must go from 400 kilometers of electric lines per year to 2,000 kilometers.

Diaz sees the competition to connect to the “maintain or intensify” grid in 2025.

Jerome Fournier, director of innovation at the manufacturer of Nexans submarine cables, said that his company had a “huge” order book in the range of seven to 10 billion euros ($ 7.28 billion at $ 10.40 billion). Nexans cables are used to transmit electricity generated by wind and solar farms and to provide energy to houses and businesses.

“Everyone plans: do we still have room in our plans to manufacture other projects?” He said.

Fournier told CNBC that companies like Nexans should also keep the slots available for smaller projects such as interconnections for offshore wind turbines. “You must have the right balance between the load of plans, profitability and this type of electrification,” he said.

Power constraints direct data centers operators to develop their own “power backup ecosystem”, according to Carlini by Schneider Electric.

In the future, data centers should be at the center of this network ecosystem, in particular if they are able to generate their own power with Small modular reactors – Mini nuclear reactors that produce electricity.

Battery storage And the strategic burden also becomes more and more important, said Carlini. These systems allow the temporary storage of energy from the electrical network to provide additional backup.

The CEO of the provider of AVK power solutions, Ben Pritchard, said that some European countries are faced with large demands for a grid connection of 100 megawatts of a size that they had never seen before.

It recommends energy solutions linked to transition such as the use of micro-network, which is a separate island supply system.

In Norway, they are tested Flexible connection agreements When customers limit their connection to the network based on certain conditions, Beatrice Petrovich, senior energy and climate analyst at Think Tank Ember, said. This allows them to adjust their energy consumption depending on how the grid is doing at certain times.

EMPER also called for the implementation of rules on what she calls Investments in the “anticipated” grid. These would allow operators of electrical networks to plan prospectively, taking into account key technology market trends, such as growth in renewable energies and the storage of batteries, Petrovich explained.

The countries that are advancing with the improvement of the legislation on companies allowing an entirely decarbonized energy stack will be the “winning winner”, offering a “more friendly ecosystem” around data centers, said Pritchard d’Avk.

In the end, a bottleneck in the grid “encourages people to think differently, and when people are encouraged to think differently, they are more open to different solutions. This, I think, is moving to the market changes fairly large,” said Pritchard.

Despite an increasing need for power of certain new and developing industries, Europe is still lagging behind the rest of the world with regard to the growth in demand for electricity. High electricity prices and operational costs hinder overall demand in the region, leading to a more fragmented market.

The International Energy Agency (IAI) this month has praised the rise of an “new era of electricity” because it has increased its forecasts for global demand, predicting growth of 3.9% for 2025-2027-the fastest growth rate in recent years.

Forecasts for Europe are however more modest. After two years of sharp drop in demand for electricity, the region had an increase of only 1% in 2024, according to a January report by Energy Think Tank EMB.

“2024 marks a turning point for the request for electricity,” said Ember’s Petrovich, one of the authors of their report. “What we have seen is the first rebound – even if it was a small rebound after many years of decline – it was spread in the block.”

Diaz de McKinsey explained that since the energy crisis triggered by the invasion of Ukraine by Russia and subsequent sanctions, the prices of electricity have settled around 60 to 80 euros per megawatt hour. However, it is still 50 to 100% more expensive than the prices observed in the previous two decades.

Consequently, the costs for consumers have skyrocketed, leading to signs of decelerating demand for heat pumps and electric vehicles, he said.

Diaz added that for manufacturers in Europe, energy needs “exceed those of any other geography in the world, it is not only potentially more expensive, but even potentially more difficult,” said Hernandez.

The “unprecedented” growth in data centers “slightly helps the global curve, but everything else is fighting against it,” said Hernandez.