As Europe accelerates its transition towards a decarbonised economy, the new Eurelectric Flagship study “Redefining Energy Security in the Age of Electricity”, published 13/02/2025 in collaboration with Compass Lexecon, introduces a comprehensive framework ‘Security of Supply 2.0’ designed to address emerging risks in the electricity sector and ensure resilience in a net-zero future.
A Shifting Landscape
The report identifies a range of external and internal pressures reshaping Europe’s energy security landscape. Externally, geopolitical instability, particularly in the wake of Russia’s invasion of Ukraine, has underscored the vulnerabilities of relying on imported fossil fuels. Climate change further complicates the situation, as extreme weather events—heatwaves, storms, and droughts—increasingly disrupt power infrastructure and energy demand. Ireland has had close at hand and recent experience of this with Storm Eowyn with nearly 1 million premises loosing electricity. Additionally, Europe’s reliance on critical raw materials such as lithium and rare earth elements poses risks to the scalability of renewable energy deployment.
Internally, a rapid increase in renewable energy penetration is driving the need for greater system flexibility. By 2050, renewables are expected to account for 81% of Europe’s electricity generation, necessitating expanded storage solutions, interconnections, and demand-side response mechanisms. Meanwhile, the decentralisation of energy systems—through distributed generation, rooftop solar, and electric vehicles—presents both opportunities and challenges for energy markets.
The Three Pillars of Security of Supply 2.0
The main policy recommendations in this study aim to enhance the efficiency, security, and resilience of the electricity system and can be summed up as follows:
- Enhancing System Needs Assessment: Existing planning tools such as the Ten-Year Network Development Plan (TYNDP) and the European Resource Adequacy Assessment (ERAA) are criticised for focusing too narrowly on generation adequacy and grid expansion. The report calls for a more integrated approach that considers flexibility needs, supply chain vulnerabilities, and cross-sector coordination between electricity, gas, hydrogen, and transport.
- Strengthening Investment Frameworks: The study highlights deficiencies in market signals that fail to incentivise investment in flexible and firm capacity. It advocates for a harmonised approach to capacity mechanisms across EU member states, market-compatible investment models, and streamlined permitting processes for grid reinforcements, and storage projects. An improved coordination of investments has the potential to bring down system costs, especially given increasing congestions in the system.
- Improving Market and Operational Frameworks: Short-term electricity price signals currently do not reflect system flexibility needs, and consumer engagement in demand-side flexibility remains limited. Eurelectric recommends refining market structures, expanding forward markets for better hedging, and accelerating the implementation of recent Electricity Market Design reforms. As a result, the de-risking of investment acts to reduce the cost of financing, and ultimately the costs of secure energy supply to consumers.
A Call for Action
The Eurelectric flagship study presents a clear message: Europe’s existing approach to security of supply is outdated in an increasingly electrified economy. By expanding the framework to encompass resilience, flexibility, and cross-sector coordination, policymakers can safeguard Europe’s energy future while advancing towards decarbonisation goals. With strategic investments and regulatory reforms, the vision of a secure, clean, and affordable electricity system is within reach.