Milo McBride / Jul 2026
Photo: Shutterstock
The power grid is commonly referred to as the world’s most complex machine, harmonising high-tech power plants, electronics gear, and power lines in a near-impossible balancing act monitored in milliseconds. But it is also the essential backbone of a modern, highly electrified and competitive economy, delivering electrons to factories, electric vehicles, and homes. As these burgeoning markets drive electricity demand growth, the global need for a bigger, better, and smarter grid presents an enormous challenge – one that Europe is well positioned to meet.
European policy makers should play to Europe’s legacy industrial strength of grid technology like cables, transformers, switchgears, and inverters as a core solution to the bloc’s competitiveness crisis and ambitious electrification strategy. Recent analysis at Carnegie Europe found that, despite massive supply deficiencies in some strategic sectors like critical raw materials and rare earth magnets, Europe will remain relatively self-sufficient in its ability to produce much of its grid hardware mostly from domestic national champions that have honed these complex systems over decades.
This may not look like the type of clean energy industrialisation that policy makers had once envisioned for Europe: regaining solar manufacturing or building globally competitive battery champions, both of which look near impossible today. But the vision of Europe as a grid technology superpower is a strong bet and one that might benefit from concerted policy attention in the coming years. Specifically, the EU and member states should target their innovation policy on advanced grid tech, ensure support measures for domestic firms throughout the supply chain, and focus foreign projects like the Global Gateway on grid build out with European-made hardware.
The demand is urgent. In Europe, grid infrastructure is aging, and integrating new renewables will require thousands of new grid devices by 2030 and about EUR 2 trillion worth of investment by mid-century. Moreover, the power grid has become a sensitive target – whether by Russian cyberattacks in the EU or direct kinetic strikes on the Ukrainian grid, this hardware has inherent security dividends.
The drivers are also global. In the US, data centre demand is projected to double by 2030 and skyrocket from there – a market already dependent on large volumes of European grid tech exports and a unique point of leverage over Washington. Across the world, the trends are more startling, especially given the 750 million people still living without basic access to electricity, mostly in sub-Saharan Africa.
To its credit, the Commission has indeed moved forward on strong demand-side policies essential to stimulating Europe’s much needed build out to integrate different regions and connect new renewable resources. For example, the Grids Package seeks to streamline permitting while also designating several energy highways for transmission to connect different power markets.
But in Brussels and member states, domestic grid tech manufacturing has not been prioritized to the same extent of less strategically important sectors like hydrogen. First, the recently tabled Industrial Accelerator Act (IAA) does not provide local content subsidies for grid tech and might be adjusted to include such measures. For example, if state aid is used to subsidize a wind farm, the wind turbine would need to use European made gear, but enabling power equipment could then be Chinese-made, a notable loophole. From there, the EU should target grants to onshore some of the complex and critical inputs for its grid tech to ensure that its supply chain has some level of resilience against future shocks.
Funding from the European Innovation Council and forthcoming Competitiveness Fund should target advanced grid tech start-ups and projects above other sectors like carbon capture or solar where the opportunity for Europe to compete is negligible. New grid technology breakthroughs are on the horizon like power lines that can hold 5-10 times the amount of electricity carried by regular transmission lines. Additional programmes might include match-making grid tech start-ups with Europe’s existing incumbents who have the balance sheets and institutional capacity to scale this technology to market. Second, member states and system operators might consider developing so-called “sandboxes” where these technologies can be tested to build trust with risk-averse power utilities.
Already, American and Chinese firms are racing ahead to corner new advances in this space –– it is important that European technology remains at the frontier and does not bow out of this race.
Globally, the EU and member states should take a more proactive role in promoting European grid manufacturing and construction in third markets. In an era of ruthless competition from Chinese firms, it’s essential that European companies maintain global market share, especially in the grid sector where it has a footing. This may entail not just scaling up grid tech factories in the single market but financing them abroad in regions where demand for grid build out is robust. This is a sound offering to partner countries, especially those in the global south that are determined to attract value-added manufacturing and jobs.
Securing European competitiveness and supply chain resilience will of course require a grand strategy and tactical, muscular policy – but this essential sector where Europe already has strength should not fall by the wayside. It should be at the top of the agenda.
