Energy Tech is one of the sectors where Europe leads the world, with European companies producing globally recognized and advanced innovative technologies. Demand is exploding on an international level, but how do we boost scalable uptake in Europe, our home market?
Nearly 40% of Europe’s distribution infrastructure was built over forty years ago. At that time, energy generation was centralized, electricity flowed in a single direction, and consumption patterns were easier to predict. Can Europe’s ageing electricity grids power the clean, digital economy it aspires to build?
A smarter, digital, flexible grid is the essential for Europe’s energy transition but the investment gap is staggering. Europe needs around €20 billion every year until 2030 just to modernize and digitalize its electricity networks. Thousands of renewable projects are stuck waiting years just to connect. In 2024 alone, an estimated €7.2 billion worth of green power was wasted because there was simply no room on the grid to carry it.
Electrification and digitalization — known as electricity 4.0 — can turn this challenge into Europe’s biggest opportunity, saving €150 billion annually and tripling energy efficiency compared with fossil-based systems.
As the European Commission prepares to launch its Grids Package, our message is clear: Europe cannot deliver decarbonization, competitiveness and energy security without a modern, digitalized, flexible, and interconnected electricity network.
DIGITALEUROPE has launched its Energy Executive Council to drive this vision forward, uniting Europe’s leading energy, green tech and digital innovators.
To make this transformation real, Europe needs three things: more investment, faster grid upgrades, and simpler rules.
Investment: valuing digital energy investments as physical ones, and increasing the resilience of energy infrastructure
A smarter, flexible, digital grid is the foundation of Europe’s energy transition. Smart energy management systems alone can shorten project timelines by 35–65%.
Yet across Europe, energy regulators tend to separate capital expenses (CAPEX), such as building new power lines or substations, from operating expenses (OPEX), such as software, sensors, and digital tools. The result is that companies can recover the cost of building new physical assets, but not that of maintaining or improving existing assets through digital upgrades, even when those upgrades make the grid more efficient and cheaper to run in the long term. Europe must change that.
That’s why EU countries need to fully adopt the Total Expenditure (TOTEX) approach, a financing model that looks at a project’s total lifecycle costs, rather than only upfront capital spending. The Electricity Market Design reform is a good start, but Member States now need to fully apply the TOTEX approach consistently so digital and physical investments are treated equally.
Beyond TOTEX, Europe must make scalable investments in critical infrastructure, starting with energy. DIGITALEUROPE’s Copenhagen Project can offer the blueprint for such investments with its focus on building scalable, interoperable capabilities on dual-use technologies. Europe needs to launch flagship cross-border investments to fast-track procurement and tax incentives for digital and energy solutions that are interoperable, resilient and ready to scale within three years.
This is vital to strengthen Europe’s resilience and reinforce its industrial leadership in the home market and globally.
Grid reform: clearing the permitting and connection backlog
Even when funding exists, projects are trapped in administrative queues. Grid and permitting delays drag on from 5 to 15 years for power lines and 7 to 10 years for data centres — far too long for an economy targeting decarbonization.
Permitting, connection, and planning delays have become structural bottlenecks, slowing investment and delaying electrification
The upcoming European Grids Package must therefore be bold in advancing true permitting reform, by simplifying procedures, enforcing deadlines, and improving coordination across national and cross-border projects.
Digitalization can make this possible. Advanced analytics and digital replicas of grid systems can help regulators and operators identify stress points early, optimize connection queues, and model the best deployment scenarios.
Streamlined, digital-first planning would allow Europe to build the energy backbone it needs at the speed demanded by climate and industry goals.
Smarter rules and better data-sharing incentives
Finally, no grid modernization can succeed without simple, clear regulation and a balanced approach to data sharing that enable collaboration while protecting security and business interests.
This matters because Europe’s future grid system will rely on millions of connected assets working together in real time. Without consistent rules to manage this complexity, innovation slows, investment stalls, and the risk of operational disruptions increases. This is why we need to standardize data interoperability between smart devices and grid systems, to enable contextualized data for grid optimization using integrated digital solutions. Standardisation should build on common EU-wide standards and protocols (IEC, CENELEC) to enable seamless, secure data exchange between smart devices, aggregators, DSOs, and TSOs.
On AI, the AI Act must avoid broad “high-risk” labels that slow the rollout of safe, proven grid technologies. On cybersecurity, rules should build on trusted frameworks like NIS2 and existing standards. Consistent and timely implementation across Member States will also be essential to provide clarity and stability for operators of critical infrastructure like grids are.
Data sharing has immense potential in the energy sector. The upcoming EU Roadmap on AI and the digitalization of energy should establish principles to allow energy players to share data where they see it can creates real value. Europe must build this framework grounded on cooperation, not obligation, ensuring that data exchange remains secure, purposeful, and trusted.
Conclusion
When the EU will deliver on these three pillars, namely investment, grid system reform, and regulatory alignment, it will mark the start of a new era for Europe’s energy transition.
The world’s most competitive regions are already moving this way, embedding digital twins, advanced analytics, and interoperable data platforms in their grids. Europe cannot afford to lag behind.
Our call is simple: Europe must invest in the grid of the future, not the past.
If we succeed, Europe’s energy system will not only be cleaner and more secure — it will also be smarter, fairer, and truly fit for the 21st century.
Written by Peter Weckesser, Chief Digital Officer, Schneider Electric, and Cecilia Bonefeld-Dahl, Director-General, DIGITALEUROPE