Austria may require more than €68bn in grid investments by 2040

Austria, with the highest share of renewable energy in electricity consumption in the EU, faces rising grid investment needs as cleaner energy sources continue to expand.

This is one of the key take-outs from the International Energy Agency’s (IEA) Energy Policy Review Austria 2026.

The report notes that Austria has a marked generation and demand imbalance between the east and the west of the country, creating needs for strong transmission corridors.

“The west hosts major pumped hydro storage sites while the east has higher potential for solar PV and is also responsible for most of the demand.”

The IEA said that the ÖNIP or Integrated Austrian Grid Infrastructure Plan considers the expansion and reinforcement of the power transmission network to address these regional disparities as “no-regret” measures, as they are necessary across all future scenarios.

Drawing from estimates in the Austrian Power Network Expansion Plan 2023, the ÖNIP cites about €9 billion is needed for transmission grid investments until 2034.

The ÖNIP also cites another assessment that estimates investment needs at €44.4 billion for transmission networks and €24.2 billion for distribution networks by 2040.

Call for redispatch measures to be increased

The regional distribution of renewable energy generation and demand centres, combined with limited transmission network capacity, has led to a rising need for redispatch measures as a congestion-management tool, said the IEA report.

“Redispatch costs have risen over the last years, reaching around €142 million in 2023. They are passed on to consumers through grid tariffs. The greater frequency of redispatch reflects the growing gap between economically efficient dispatch at the zonal level and the secure operation of the physical grid, especially as VRE [Variable Renewable Energy] expands.”

Have you read?

Download: Enlit industry report 2026 on energy system resilience solutions

Is a solid framework the missing piece of Europe’s flexibility puzzle?

The report further notes that persistence and magnitude of redispatch, in terms of activation days and costs, may indicate underlying structural congestion and shifting power-flow patterns and highlight the need for complementary measures such as grid reinforcement, improved locational price signals and broader participation of flexible resources.

“In this context, the growing role of non-traditional redispatch solutions such as industrial demand response, virtual power plants and digitalised control systems, evidenced by initiatives like Industry4Redispatch, is a positive development that can help reduce reliance on conventional thermal and hydro units over time.”

Addressing grid costs through market reform

The report said the major challenge ahead will be maintaining system stability when VRE output is high.

“Importantly, Austria must not only address increased renewables integration but also handle growing electricity demand, which is projected to nearly double by 2040.

“Ensuring affordable and reliable electricity for industry and households, achieving cost-effectiveness and preventing stranded assets are all critical for future progress.

“Furthermore, since grid costs and renewable energy potential vary across provinces, regional fairness may become an increasingly significant consideration.”

According to the Energie-Control Austria (E-Control) the independent regulatory authority for the electricity and natural gas markets in Austria, grid fees made up nearly 50% of the final retail tariff for an average 2,900kWh household in January 2026.

On average, grid costs have increased over recent years and are expected to further increase with rising investment needs.

Fees vary across regions due to topography, population density, consumption patterns, renewable grid integration needs and local levies employed by some federal states, among others.

Network costs conundrum

One of the Elektrizitätswirtschaftsgesetz’s (the ElWG or Electricity Industry Act) objectives is to introduce a fair and cost-reflective distribution of network costs by applying the “user-pays” principle.

Consumers currently bear 94% of total network costs, whereas only large generators (> 5MW) pay for some components such as network losses and system services.

This cost structure raised questions about the lack of incentives for generators to operate in a system-friendly manner.

To address this, the ElWG introduces a grid infrastructure contribution for generators (with a capacity 20kW or more) starting in 2027. While the contribution is limited to 0.5 EUR/MWh, the government still must determine the final design of the additional network charge for generators.

The report recommends that Austria must revisit and realign its delivery mechanisms and available financial resources to help close the gap to reach its targets.