Electricity generation in Denmark is undergoing a gradual transition from taking place in a few large power-plants to taking place at many small and geographically scattered CHP (combined heat and power) and wind-power plants. A new situation is thus being created for the transmission grid. From a mainly unidirectional flow from the few large power plants to the scattered consumption points, the flow is changing to a bidirectional flow subject to scattered electricity production. In this article, the requirements of the transmission grid are analysed in (a) a year 2020 situation with power balancing (matching production and consumption) as it is now on the few large power plants, and (b) a year 2020 situation with geographically-scattered power balancing using e.g. CHP plants, heat pumps, and heat storage. Geographic modelling of production and consumption loads combined with grid analyses reveal that the transmission grid needs reinforcements to meet transmission demands unless geographically scattered power balancing is introduced. The analyses also emphasize the importance of reactive compensation especially of wind turbines. (C) 2003 Elsevier Ltd. All rights reserved.