Cristina Gamboa is chief executive of the World Green Building Council
Joined-up thinking is vital to quicken the transition at the least cost
The European Commission’s Electrification Action Plan sets out how the continent can accelerate clean power, expand grids and phase out fossil fuels. This is positive news for the energy transition. But Europe’s energy policy also mandates that investments are assessed for efficiency first, ensuring demand-side alternatives are prioritised before new infrastructure is approved.
The EU executive estimates that Europe needs at least €1.2tn in grid investment by 2040 to deliver electrification, with around €584bn of that required by 2030. This is one of the largest infrastructure commitments the continent has ever made.
However, a recent review of the Commission’s Clean Energy Investment Strategy found that the efficiency-first principle was largely missing from grid financing planning, especially so when it comes to buildings.
This summer’s heatwaves are a preview of what the gap between investing in capacity without doing the same for efficiency costs. Households are running cooling systems, grids are under pressure and energy prices are climbing again.
Buildings account for 40 per cent of EU energy demand, and sit at the exact point where grids, renewables and end users meet. A well-insulated, efficient building draws less power at the moments the grid is under most strain, while a poorly performing one pushes in the opposite direction. That difference determines how much new grid capacity is actually needed.
Regional grid operators in the Netherlands have more than 14,000 businesses and projects waiting to connect to the electricity grid because there is not enough grid capacity. Those requests total 9 gigawatts, with the national operator TenneT holding a further 212 requests worth 38GW.
Grid operators are spending up to €8bn a year, with the government fast-tracking grid expansion, but they are also relying heavily on demand-side flexibility because building new capacity alone is too slow.
UK approach
The UK has taken a different approach. Instead of automatically upgrading substations and cables, UK Power Networks pays homes and businesses to adjust their electricity use at peak times. This saved £114mn last year because the grid did not need to build new infrastructure, and the regulator has signed off more than £500mn of further savings over the next five years.
Efficient buildings give double benefits: they lower baseline demand and free up capacity faster than new infrastructure can be built.
That said, efficiency without co-ordination creates its own problems.
Italy’s Superbonus, a tax credit launched in 2020 that reimbursed homeowners for up to 110 per cent of renovation costs, drove a surge in home energy-efficiency upgrades but also triggered a wave of new heat pump and rooftop solar connections that grid operators struggled to absorb. This shows why renovation and grid planning need to happen together, not sequentially or in isolation.
New York offers a striking comparison. Faced with a grid overload in Brooklyn and Queens, the local grid operator avoided building a new substation that would have cost more than $1bn by instead investing around $200mn in energy efficiency, demand response and batteries.
Demand-side measures replaced a major grid asset at a fraction of the cost, exactly the kind of investment logic Europe risks missing.
National plans
This is precisely what National Building Renovation Plans, required from each EU member state under the Energy Performance of Buildings Directive, are supposed to deliver.
Done properly, they are where efficiency first stops being a principle on paper and becomes a plan governments actually follow: setting a credible pace of renovation, targeting the worst-performing buildings first and aligning that work with how national grids are being expanded.
Governments do not need to choose between electrification and efficiency. The real gains come when they are planned together.
Every euro spent renovating a building before it is electrified is a euro of grid investment saved. Get the sequencing right, and Europe does not just deliver its Electrification Action Plan more affordably — it shows the rest of the world what a genuinely joined-up energy transition looks like.