In Europe, grid expansion plans for 2021-2030 provide the foundation for increased investment, supported by economic recovery schemes. While the European Commission’s 2030 climate ambition plan released in September 2020 foresees annual grid investments of ~USD 70 billion during 2021-2030 (more than double 2011-2020 spending), investments are set to be even higher owing to its July 2021 Fit for 55 plan, which aims for emissions in 2030 to be 55% lower than in 1990 (compared with the previous plan’s 40% reduction). For instance, overall EMDE investments in smart meters totalled less than USD 2 billion per year over the past five years, while advanced economies spent over USD 10 billion annually. Spending cuts also affected smart grids and digital devices, especially those benchmarked against other regions. Investments in electricity networks in these countries fell 15% in 2020, to ~60% of the 2016 level. The pandemic further weakened the financial situation of some distribution companies in EMDEs, which had already been undermined by governments’ limited fiscal capacities and higher financing costs, particularly state-owned utilities that had taken on greater debt in recent years. However, with 2060 net zero goals on the horizon as well as an ambitious 14th Five-Year Plan for renewables, state-owned utilities’ impressive expansion plans are expected to trigger investments. In China, most of the drop in 2020 was in the electricity distribution sector, as targets for rural power grid expansion had been met and focus shifted to transmission, which represents a smaller share of grid investments. However, the considerable expansion plans expected for 2021 are likely to reverse this trend. Electricity grid investments are expected to reach ~USD 290 billion in 2021, recovering from 2020 and even surpassing the 2019 level of ~USD 270 billion. Sustaining the falling trend of the previous four years, most of the 2020 decline stemmed from lower investments in China and several emerging markets and developing economies (EMDEs), which more than outweighed increases in the United States and Europe.
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