Decarbonisation could threaten Europe’s energy networks by changing business models, introducing disruptive technology and requiring new regulations.

That’s according to a new report published by research group Moody’s, which says these changes could undermine network operators and their credit quality.

The report suggests large scale operators in particular may be slow to adapt to the changing generation and consumption landscape, as electricity users becoming increasingly independent and operate their own renewable generation and storage units.

It also says the growing electrification of the transport and heating sectors could significantly change network requirements.

The report adds while these changes could lead to sector fragmentation and undermine existing network operators, the role as system operators may become more important, as power from a range of widely distributed, independent sources needs to be managed and security of supply needs to be carefully controlled.

Major transformation in the sector could necessitate changes in the way European energy networks are remunerated and customers tariffs are set, if credit quality is to be maintained, according to the report.

Stefanie Voelz, Vice President and Senior Credit Officer at Moody’s, said: “The shift to renewables in Europe has thrown up different challenges for the region’s energy network operators, with the huge uptick in renewables-related investment into electricity networks posing execution risks, while the move to decarbonisation casts doubt over the long term use of natural gas and the networks that distribute it.”