Europe needs to modernize its power grids. ABB invests billions, Siemens Energy raises outlook

Europe’s energy sector is seeing a new wave of investment in power grids and energy infrastructure. Swiss-Swedish company ABB is benefiting significantly from this trend, having announced a $200 million investment to expand its production of medium-voltage equipment in Europe. It is not alone: Germany’s Siemens Energy has raised its outlook for this year on the back of strong demand for grid technologies and energy equipment. 

ABB said it will invest $200 million by 2028 to increase production of medium-voltage equipment in Europe. The company is responding to rapidly growing demand for technologies needed to modernize distribution grids, develop renewable energy sources, support electric mobility and power data centers. The investment will go primarily to its European plants, where pressure to strengthen electricity infrastructure is mounting.

Siemens Energy is confirming a similar trend. The German company raised its full-year outlook in late April after recording strong growth in orders for grid technologies. It expects higher revenue and profitability, with demand for transformers, substations and other power grid technologies remaining the main driver.

Industrial companies are increasingly focusing on infrastructure for electrification

According to Reuters, European energy companies and industrial firms are increasingly focusing on infrastructure essential to electrifying the economy. Rising electricity consumption is linked not only to the development of renewable energy sources, but also to the growth of electric mobility, heat pumps and data centers. Data centers, in particular, have been among Europe’s fastest-growing electricity-consuming sectors in recent years.

The European Commission and the International Energy Agency (IEA) are also warning that without massive investment in grids, it will not be possible to meet climate targets or ensure the stability of the energy system. The IEA’s analyses indicate that construction and modernization of transmission and distribution grids will need to accelerate significantly by the end of the decade, as the current pace is not enough to accommodate the growing volume of new renewable energy sources.

For Europe, this is also a matter of competitiveness. Energy technology manufacturers are benefiting from a new wave of investment, accelerated by the energy crisis after 2022 and efforts to reduce dependence on fossil fuels. Investment in grids is thus becoming one of the fastest-growing segments of the energy industry. Investors in stock markets have also been taking considerable notice of this trend for several months.