The term anticipatory investment has been coined on a recognition that we need to build electricity grids at a quicker pace, in greater volume, and with view of a longer time-horizon than before in order that grids do not present a bottleneck to the clean energy transition.

Long connection queues and growing renewable energy source curtailment, already standard features of many European electricity markets, point to the need to rethink the regulation of power grids. And a look to the future suggests these problems will only become more significant without action now. Future power systems will require more grids to integrate new loads created by electrification and new renewables, many at new locations, at a speed and scale envisaged to be greater in magnitude than seen before, especially at the distribution level.

Anticipatory investments are not a new form of grid investment, and as such do not require a brand-new regulatory framework. Optimal investment — whether anticipatory or not — still entails investing so that the additional cost of build matches the expected societal benefit of this extra capacity.

This deep dive, part of our Power System Blueprint, presents a revitalised regulatory framework to unlock anticipatory investments to the benefit of consumers:

• A revitalised regulatory processes is overseen by a national regulatory authority that is independent and with net zero mandate.
• Holistic energy plans are formed with policies that fully deliver on decarbonisation ambitions. These keep in view sufficiently long-time horizons (such as to net zero). And they reduce the need for new grids — such as by implementing obligations on making cross zonal capacities available to the market, addressing barriers to deployment of grid enhancing technologies, or adopting scarcity-based network tariffs.
• These are translated into grid plans, subject to enhanced institutional coordination — across energy vectors, voltage levels and jurisdictions — which inform the investments undertaken.
• Tools to allocate risk to those who can manage it best are deployed, including incentives linked to utilisation and mechanisms to elicit financial commitment from prospective future grid users.
• Plans are evaluated and revisited by the regulator regularly.