Gas distribution grids have lower costs than electricity grids today and in the future
Initial first-of-its-kind analysis indicates a significant cost-benefit advantage of gas infrastructure over electricity grids. These insights highlight the need to leverage existing gas network assets with biomethane to lower overall energy costs, especially as electricity infrastructure expenses continue to climb rapidly.
A recent paper by Common Futures examines the cost advantages of gas distribution grids over electricity distribution grids in Europe, both today and into the future.
As Europe moves toward a decarbonised energy system, it is essential to understand the cost dynamics of its infrastructure. With electricity grid costs projected to rise sharply due to substantial investment needs, more detailed analysis and targeted policies are required to understand how lower-cost gas infrastructure can reduce the overall bill. Maintaining and optimising the existing gas grid, while integrating increasing shares of renewable gases, could help to significantly lower overall system costs, reduce the burden on consumers, and accelerate defossilisation through a more integrated energy system approach.
Key takeaways of this analysis include:
- Both electricity and gas grids are source-agnostic, able to carry both fossil-based and renewable energy, like biomethane, making them a strategic asset in supporting the European energy transition.
- Current costs: Gas grid tariffs are significantly lower than electricity grid tariffs. Across various EU countries, gas DSO tariffs range from €6–17/MWh, while electricity DSO
- Projects:
- Gas distribution grid tariffs are expected to increase only slightly in the future, due to a moderate decline in demand and fewer connections, with new investments limited to green gas development. These increases will be partly offset by the growing depreciation of existing assets.
- Electricity infrastructure costs are set to rise sharply due to growing demand and the need for significant new investment to support electrification and renewables.