How do electricity TSOs embrace innovation to future-proof their role in the energy transition?

Abstract

Access to electricity is the lifeblood of modern society. Electricity grids are undergoing transformative changes, driven mainly by decarbonization, decentralization and the integration of variable renewables. Transmission System Operators (TSOs) face increasing pressures from these changes, yet the scale and pace of innovation required to overcome them remain largely unexplored. This study uses interviews with innovation leaders at 11 European TSOs to investigate their approaches to managing the energy transition, focusing on innovation strategies, technology adoption, and future visions. We find that many TSOs adopt decentralized innovation strategies, involving business lines in defining innovation needs and exploring digital and grid technologies to improve efficiency and flexibility. TSOs are using cross-sector collaborations with various decision-making and benchmarking tools to improve performance and better manage emerging technologies like non-wires alternatives. While TSOs seek to adopt new technologies, regulatory constraints, excessive bureaucracy, technology immaturity, skills gaps, and organizational cultural inertia are raised as key barriers. We argue that proactive engagement in innovation, supported by collaboration and regulatory changes could improve TSO resilience and agility. We highlight the importance of integrating innovation into the core strategy of TSOs and the critical need to modernize regulatory frameworks, originally designed for a very different historical context, to eliminate outdated constraints and enable TSOs to more effectively future-proof their organizations.