AleaSoft Energy Forecasting, May 6, 2025. The European electricity system is moving towards a fully decarbonised model, where energy storage, grid digitalisation, active demand management, more robust interconnections and a diversified renewable energy mix will be key pillars. Achieving this will require a profound technological, regulatory and economic transformation, as well as the active involvement of all stakeholders in the sector.
A key role for energy storage
Energy storage is pivotal to the decarbonised European electricity system. Batteries will be essential to absorb excess solar and wind energy generation and to meet demand during periods without sun or wind. These systems will be deployed in both stand‑alone installations and integrated into hybrid plants that manage their own production.
Pumped hydro storage will be reinforced and modernised, thereby consolidating its position as a reliable renewable backup. Furthermore, green hydrogen will facilitate seasonal energy storage and serve as an energy carrier in sectors and transport modes that are difficult to electrify.
A smart and digitalised grid
Transforming the European electricity system requires a much more flexible, automated and digital grid. The deployment of sensors, advanced power electronics, real‑time control, artificial intelligence and cybersecurity measures will facilitate the management of a complex and highly distributed infrastructure.
Transmission and distribution networks will evolve into more independent and resilient subnetworks, capable of operating autonomously when necessary. In addition, consumers will also become producers, feeding energy into the grid from their solar panels, home batteries or electric vehicles.
Advanced management of flexible demand
Electricity demand will no longer be a passive element, but will play an active role in balancing the system. Consumers will adapt their consumption according to grid conditions and will be able to participate directly in adjustment services, thereby contributing to system stability.
To facilitate this change, dynamic tariffs and economic incentives that promote consumption during hours of high renewable energy production will become widespread, aligning consumption habits with the availability of clean energy.
Stronger interconnections
Strengthening interconnections will be essential to achieve full integration of the European electricity system. These infrastructures will allow the efficient exchange of electricity between countries, optimising the use of the renewable resources distributed across the continent.
The system’s enhanced transfer capacity between distant regions will enable swift responses to variations in renewable energy production or unexpected failures, ensuring stability and continuity of supply.
Diversified renewable mix
The zero‑emissions electricity system will be based on a balanced renewable mix, where solar photovoltaic, onshore and offshore wind, hydro and biomass will complement each other to ensure continuous generation adapted to system needs.
Generation will be increasingly distributed, combining large centralised plants with a growing network of small producers. This will bring resilience, proximity to consumption and greater citizen participation in the energy transition.
High‑precision planning and forecasting
In an electricity system dominated by variable renewable sources, accurate forecasting of both the available resource and consumption will be critical to maintain the balance between supply and demand. The quality of these forecasts will directly impact operational efficiency and security of supply.
Specialised companies such as AleaSoft Energy Forecasting will play a key role in anticipating market and grid behaviour, providing critical information for real‑time decision making and mid‑ to long‑term planning.
Conclusion
Europe has the potential to achieve a 100% renewable energy system. However, this will require a comprehensive transformation of the energy sector, including the introduction of new infrastructures, technologies and regulations, as well as the active involvement of all stakeholders. Billions of euros in investments will be required in the coming years.
European Transmission System Operators (TSO) face a significant challenge. Managing the entire electricity system using only renewable energy will be a complex and exciting task, not without its problems and difficulties.
Achieving full decarbonisation and total energy independence will be a major quantitative and qualitative leap for the European continent from economic and social perspectives.
AleaSoft Energy Forecasting analysis on the outlook for European energy markets and energy storage
AleaSoft Energy Forecasting, through its AleaBlue division, provides essential short‑ and mid‑term energy market forecasts for energy management, planning, offer generation, risk management, and for short- and mid-term hedging.
AleaBlue’s services include demand forecasting, as well as intraday market pricing and balance services, which are needed for energy storage price arbitrage.
In addition, through the AleaStorage division, they offer forecasting reports specifically designed for energy storage projects. These include revenue and profitability calculations for energy storage projects, optimal battery sizing for hybrid systems with renewable energies, and customised analysis for different business models.
Source: AleaSoft Energy Forecasting.
