Europe could cut energy system costs by more than 560 billion euros between 2030 and 2050 by shifting to integrated infrastructure planning, according to new modelling prepared for Agora Energiewende. The savings rise to 750 billion euros when reduced back-up generation needs are considered, underscoring how structural planning choices can materially influence the cost and pace of the continent’s transition to climate neutrality. The findings, derived from a detailed co-optimisation model developed by Fraunhofer IEG, Fraunhofer ISI, and d-fine, quantify what policymakers have only loosely acknowledged so far. Europe’s fragmented infrastructure governance is leaving substantial cost efficiencies unrealised, delaying deployment timelines and contributing to systemic bottlenecks.
At the core of the analysis is the conclusion that Europe’s current energy system modelling and planning processes are too siloed. Most national plans and even the EU’s Ten-Year Network Development Plan rely on bottom-up inputs that prioritise national perspectives and sector-specific assumptions. The Fraunhofer model instead integrates electricity, hydrogen, fossil gas, and carbon dioxide infrastructure across 62 regional clusters. This approach captures interactions frequently lost in conventional studies, such as the combined impact of renewable siting, grid expansion, storage optimisation, and industrial hydrogen demand. The results show that an integrated scenario requires 505 gigawatts less backup capacity, 15 percent less onshore wind capacity, and 9 percent less electrolyser capacity than more sector-isolated planning frameworks.
The implications extend beyond capacity estimates. A consistent pattern emerges across all scenarios in the modelling. Electricity grids remain the dominant infrastructure priority through 2050, with significant expansion required to support electrification across transport, heating, and industrial applications. This reinforces the EU’s existing policy emphasis on electrification, visible in the Fit for 55 package and the Energy System Integration Strategy. By contrast, the need for widespread fossil gas pipelines declines rapidly, and hydrogen or carbon dioxide networks appear necessary only in targeted industrial clusters rather than across an extensive continental backbone. These findings diverge sharply from several existing national hydrogen strategies, where transport infrastructure is frequently planned at scales the model does not support.
The study’s quantitative results also highlight how integrated planning redistributes investment needs over time. In the high-integration scenario, reductions in backup capacity and sector-coupling assets combine with more efficient siting of renewables to drive down capital expenditure. Figure 3 of the report shows that technology CAPEX and infrastructure CAPEX both fall substantially in the integrated scenario, while additional autonomy in national planning increases total system costs further. This aligns with earlier analyses from ACER and CEER that warned about the financial impact of uncoordinated national grid development.
A key structural finding concerns governance. The report stresses that Europe’s current planning arrangements lack any truly top-down infrastructure model against which national contributions can be benchmarked. The Ten-Year Network Development Plan incorporates some shared scenario work, but the electricity and gas system operators still carry out modelling separately and with limited cross-sector consistency checks. Stakeholder review processes exist, but are insufficient to compensate for incompatible inputs or insufficient transparency around data. The study therefore recommends that an independent entity perform open-source, co-optimised modelling at the EU level. Options include the European Commission, the Joint Research Centre, or the creation of an entirely new independent system operator.
This shift would have direct practical implications. The report argues that a high-level system vision should guide bottom-up national planning, ensuring that national network development plans align with Europe-wide optimisation. It also identifies areas where misalignment is already visible. Current hydrogen pipeline proposals exceed the model’s derived needs by a factor of 2.5, suggesting that the political momentum behind hydrogen transport infrastructure is outpacing evidence-based system design. Conversely, electricity grid expansion appears under-prioritised compared to what integrated modelling shows is required.
Another strategic recommendation concerns investment allocation. Top-down modelling can identify priority corridors whose development would generate shared market benefits. These corridors are essential for enabling countries to participate in cross-border energy flows, which increase system security and reduce overall costs. However, the distribution of these benefits is uneven, and the report notes that existing cost-sharing mechanisms, such as cross-border cost allocation and congestion income distribution, are inadequate. Without new cost-allocation frameworks that compensate countries with higher investment burdens, Europe risks continued delays in developing strategically important cross-border projects.
By combining scenario modelling with governance analysis, the study makes a clear argument. Europe’s ability to achieve a secure, competitive, and climate-neutral energy system depends not only on technology deployment rates but on the structural architecture of infrastructure planning. Integrated modelling reveals efficiencies that fragmented approaches cannot identify. Prioritising electricity grids, tailoring hydrogen and carbon dioxide infrastructure to industrial clusters, and implementing EU-level planning oversight appear essential to realising the cost reductions quantified in the analysis.
