Challenges and Outlook for electrical infrastructure in 2026
In 2026, electrical infrastructure will need to continue addressing a set of major challenges, from the national to the local scale, linked to the energy transition and electrification.
This will involve sustained growth in investments in power grids—both transmission and distribution networks—to adapt them to new needs. These investments go hand in hand with changes in how electrical infrastructure is managed.
At the National Level: Market Organization is Evolving
The reform of the European electricity market, which came into effect in 2024, confirmed that capacity mechanisms can become a permanent feature of electricity markets in EU countries.
These markets, which are a key component of the business model for generation and flexibility players, are evolving in several ways:
- In France, the overhaul of the mechanism (shifting to a centralized system) will impact both supply (through differentiated price caps by asset type, participation rules for decarbonized flexibility and cross-border capacities) and demand (via the introduction of a redistribution levy).
- The question of how best to coordinate these capacity mechanisms across multiple countries is now emerging.
In addition, the growing share of “non-inertial” renewable generation connected to the grid is triggering discussions on the need for market mechanisms to ensure and remunerate assets capable of providing inertia to stabilize frequency variations. One of the most tangible signs is the creation, starting in 2026, of an inertia market by German TSOs, which will create opportunities for rotating machines (motors and turbines in thermal and nuclear plants), batteries equipped with grid-forming inverters, and dedicated assets (synchronous condensers). A similar market already exists in the UK, and EDF has proposed extending this concept to the European level, as its nuclear plants could benefit.
At the Local Level: Grid Constraints Are Becoming a Key Factor for Project Delivery and Economics
All types of grid connections—generation, EV charging, data centers, industry, batteries, buildings—have become a critical factor for project timelines and economics.
What has long been a reality in countries where the grid was not historically sized for heating loads (e.g., the Netherlands) is now also true in France.
This situation impacts projects in several ways:
- For projects subject to curtailment, it affects revenue streams: this phenomenon, already significant in Australia, can create major profitability gaps between projects located in the same market zone.
- For connection projects, it introduces significant uncertainty in development pipelines: the exact available capacity is only known after several weeks or months, or requires a paid connection study by the grid operator, which affects developers’ economics (project abandonment rates, application costs), despite increasingly detailed data published by operators.
- For all projects, it affects sizing decisions.
In this context, stakeholders are adapting in several ways:
- Public authorities and grid operators are implementing capacity allocation measures that depart from the historical “first come, first served” principle:
- In the UK: results of the first project pipeline prioritization exercise were published in December 2025 (https://www.neso.energy/industry-information/connections-reform/connections-reform-results).
- In France: the “Fos Berre Provence” consultation provided a concrete example of the revised connection request procedure introduced in 2023.
- Developers are adjusting projects, by aligning installation capacity with “easily accessible” connection capacity and complementing with:
- Flexibility solutions to cap injection and/or withdrawal peaks (behind-the-meter batteries, demand response).
Hybridization (notably in housing and industry, e.g., gas boiler/heat pump hybrids).
Moreover, for projects with flexible location (e.g., data centers), opportunities may arise with smaller grid operators that have unused connection capacity—this is notably the case in France in areas served by certain local distribution companies (ELDs).
Grid Operation Is Becoming More Critical
Grid operation is also becoming more complex: while stability has always been a major concern for TSOs (as highlighted by the Iberian blackout in 2025), it is increasingly so for DSOs due to:
- The sharp rise in the number of high-power injection and withdrawal points (PV panels, heat pumps).
- The synchronized control of some of these resources by third parties (flexibility providers) at the 15-minute market product interval (e.g., injection/withdrawal orders for water heaters and EVs in V1G or V2G mode), which can destabilize the local grid if the DSO cannot anticipate it.
To address these challenges, grid operators are introducing rules (e.g., power ramps to limit injection/withdrawal variations from batteries), but these measures reduce the value and usefulness of flexibility services for the overall power system.
Key Issues and Directions for Infrastructure in 2026
E-CUBE supports consumers, project developers, and grid operators in understanding, managing, and modeling these phenomena with fine geographic and temporal granularity, as they strongly impact business models.
E-CUBE will pay particular attention to several topics:
- Impact of market changes (capacity and inertia mechanisms) on business models.
- Impact of queue management rules on the outlook and development modalities for decentralized generation and new uses (heat pumps, EV charging).
- Development and implementation of flexibility (demand response, storage) at the local and behind-the-meter level.
In 2026, the search for technical and economic solutions will be at the heart of the work of power system stakeholders to ensure a stable, competitive, and decarbonized electricity supply.
E-CUBE has developed strong expertise on the topic of electrical infrastructures through its recent projects and the experience of its consultants. We would be delighted to discuss these market perspectives and opportunities with you. Please feel free to contact the experts below to schedule a conversation on the topic.
