Europaudvalget 2022
KOM (2021) 0950
Offentligt
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EUROPEAN
COMMISSION
Brussels, 26.10.2021
SWD(2021) 307 final
PART 1/5
COMMISSION STAFF WORKING DOCUMENT
Accompanying the document
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND
THE COUNCIL
Progress on competitiveness of clean energy technologies
1 - Macroeconomic
{COM(2021) 950 final} - {COM(2021) 952 final}
EN
EN
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CONTENTS
PROGRESS ON COMPETITIVENESS OF CLEAN ENERGY TECHNOLOGIES ........4
1.
INTRODUCTION .......................................................................................................4
1.1. An EU climate neutral pathway for the clean energy system ............................4
1.2. Context of the Report .........................................................................................6
2.
OVERALL COMPETITIVENESS OF THE EU CLEAN ENERGY SECTOR ........7
2.1.
2.2.
2.3.
2.4.
2.5.
2.6.
Energy and resource trends ................................................................................7
Human Capital .................................................................................................12
Research and innovation trends .......................................................................21
The clean technologies funding landscape ......................................................24
Covid-19 impact and recovery .........................................................................30
Innovative and cooperative business models ...................................................33
OFFSHORE WIND ...........................................................................................................41
INTRODUCTION .............................................................................................................41
3.
4.
5.
6.
TECHNOLOGY ANALYSIS – CURRENT SITUATION AND OUTLOOK ........41
VALUE CHAIN ANALYSIS OF THE ENERGY TECHNOLOGY SECTOR .......59
GLOBAL MARKET ANALYSIS .............................................................................72
SWOT AND CONCLUSIONS .................................................................................80
WIND ONSHORE .............................................................................................................82
7.
8.
9.
TECHNOLOGY ANALYSIS – CURRENT SITUATION AND OUTLOOK ........82
VALUE CHAIN ANALYSIS OF THE ENERGY TECHNOLOGY SECTOR .......87
GLOBAL MARKET ANALYSIS .............................................................................92
10. SWOT AND CONCLUSIONS .................................................................................94
SOLAR PHOTOVOLTAICS ............................................................................................95
INTRODUCTION .............................................................................................................95
11. TECHNOLOGY ANALYSIS – CURRENT SITUATION AND OUTLOOK ........95
12. VALUE CHAIN ANALYSIS OF THE ENERGY TECHNOLOGY SECTOR .....110
13. GLOBAL MARKET ANALYSIS ...........................................................................118
14. CONCLUSIONS .....................................................................................................125
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HEAT PUMPS FOR BUILDINGS .................................................................................127
INTRODUCTION ...........................................................................................................127
15. TECHNOLOGY ANALYSIS – CURRENT SITUATION AND OUTLOOK ......128
16. VALUE CHAIN ANALYSIS OF THE ENERGY TECHNOLOGY SECTOR .....139
17. GLOBAL MARKET ANALYSIS ...........................................................................143
18. SWOT AND CONCLUSIONS ...............................................................................155
BATTERIES ....................................................................................................................156
INTRODUCTION ...........................................................................................................156
19. TECHNOLOGY ANALYSIS – CURRENT SITUATION AND OUTLOOK ......156
20. VALUE CHAIN ANALYSIS OF THE ENERGY TECHNOLOGY SECTOR .....168
21. GLOBAL MARKET ANALYSIS ...........................................................................175
22. SWOT AND CONCLUSIONS ...............................................................................181
HYDROGEN ELECTROLYSERS .................................................................................185
INTRODUCTION ...........................................................................................................185
23. TECHNOLOGY ANALYSIS – CURRENT SITUATION AND OUTLOOK ......186
24. VALUE CHAIN ANALYSIS OF THE ENERGY TECHNOLOGY SECTOR .....199
25. GLOBAL MARKET ANALYSIS ...........................................................................202
26. CONCLUSIONS .....................................................................................................203
SMART GRIDS (DISTRIBUTION AUTOMATION, SMART METERING, HOME
ENERGY MANAGEMENT SYSTEMS AND SMART EV CHARGING) ..........205
INTRODUCTION ...........................................................................................................205
27. DISTRIBUTION AUTOMATION .........................................................................208
28. SMART METERS ...................................................................................................212
29. HOME ENERGY MANAGEMENT SYSTEMS (HEMS) .....................................219
30. SMART CHARGING ..............................................................................................226
31. CONCLUSIONS .....................................................................................................237
RENEWABLE FUELS IN AVIATION AND SHIPPING .............................................239
INTRODUCTION ...........................................................................................................239
32. TECHNOLOGY ANALYSIS – CURRENT SITUATION AND OUTLOOK ......240
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33. VALUE CHAIN ANALYSIS OF THE ENERGY TECHNOLOGY SECTOR .....256
34. GLOBAL MARKET ANALYSIS ...........................................................................260
35. SWOT AND CONCLUSIONS ...............................................................................266
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P
ROGRESS ON COMPETITIVENESS OF CLEAN ENERGY TECHNOLOGIES
1. I
NTRODUCTION
1.1.
An EU climate neutral pathway for the clean energy system
Since 2019, the European Green Deal is the overarching framework for EU clean energy policy. It sets the
objective for the EU to have no net emissions of greenhouse gases (GHG) in 2050 and to decouple economic
growth from resource use. To operationalise the European Green Deal, the EU Climate Law
1
has enshrined
into law the political priority of becoming climate neutral by 2050 and of reducing greenhouse gas
emissions by 55% by 2030, compared to 1990 levels. This has been followed by the Fit-for-55 package to
deliver on the European Green Deal, adopted by the Commission in July 2021, which proposes to revise
existing instruments as well as propose new ones
2
in order to achieve the 2030 target in a fair, cost-effective,
and competitive way. This package constitutes the most comprehensive set of proposals the Commission
has ever presented on climate and energy. These initiatives will notably contribute to the development of
the clean energy sector in the next decades, in particular by spurring innovation and creating new market
demand in the EU, cementing EU global leadership by action and by example in the fight against the climate
crisis.
The policy context is complemented by a new EU budget (the Multiannual Financial Framework) covering
the period 2021-2027. The EUR 1 074 billion
3
envelope sets a clear sustainable direction for the EU, with
a target of spending at least 30% of these funds on actions fighting climate change. The clean energy sector
is addressed by several EU programmes, notably: the cohesion policy funds, the Horizon Europe framework
programme for research and innovation (e.g. through its European Innovation Council and its Cluster on
Climate, Energy and Mobility), the Connecting Europe Facility (CEF), and the LIFE programme for
environment and climate action. In addition, the revision of the European Emission Trading Scheme (ETS)
will increase the allocation of allowances and therefore resources for the Innovation Fund, the
Modernisation Fund and the newly created Social Climate Fund. The Innovation Fund, depending on the
EU ETS price, could bring an estimated EUR 47 billion, to be invested over 10 years to support the
deployment in the market of breakthrough low carbon technologies. The Modernisation Fund, intended to
support low income Member States in the modernisation and decarbonisation of their energy systems,
would be increased by an additional 2.5% of total allowances. The Social Climate Fund would provide
EUR 72.2 billion in financing over seven years, or the equivalent of 25% of expected revenues under the
new emissions trading system covering buildings and road transport. It would fund Member States’
programmes designed to support investment in increased energy efficiency of buildings, the
decarbonisation of heating and cooling and zero- and low-emission mobility and transport, specifically
directed at vulnerable households. Finally, the Recovery and Resilience Facility (RRF), created as part of
NextGenerationEU and its EUR 750 billion
4
, is detailed in section 2.5.
1
2
3
4
Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021.
The legislative files include proposals to review the Renewable Energy Directive (RED), the Energy Efficiency Directive
(EED), the Energy Tax Directive (ETD), the EU Emissions Trading System (EU ETS), the Effort Sharing Regulation (ESR),
the Alternative Fuels Infrastructure Directive (AFID), the Regulation on Land Use, Forestry and Agriculture, the CO2 emission
standards for cars and vans, but also proposals to create a Carbon Border Adjustment Mechanism (CBAM), and the ReFuelEU
Aviation and FuelEU Maritime initiatives. An EU Forest Strategy and a proposal to create a Social Climate Fund complete the
package.
2018 prices.
2018 prices. EUR 806.9 billion in current prices.
4
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The clear direction described above, which sets targets, regulation, and funding – notably in energy
efficiency, renewable energy, and emissions reductions – enables the clean energy sector to have visibility
over future market prospects and opportunities, thus increasing investors’ certainty. The foundation on
which the framework is built is the EU internal market, which these policies aim to continuously strengthen
by removing internal and external investment and trade barriers. Most recently, the European Commission
presented its new Industrial Strategy
5
– updating it following the COVID-19 crisis
6
– to provide a roadmap
for the EU industry to become more competitive globally. Some highly relevant initiatives to the clean
energy sector include the creation of industrial alliances to accelerate activities that would not develop
otherwise. To date, relevant alliances in place are the European Batteries Alliance, the Clean Hydrogen
Alliance, and the European Raw Materials Alliance. Future alliances will include Zero Emission aviation
and renewable and low-carbon fuels alliances.
The dependence on key raw materials, which is relevant for certain technologies covered in this report (e.g.
batteries, PV), is also a centrepiece of the new industrial policy, as the EU aims to enhance its strategic
autonomy. In addition to policies ensuring the sustainability of raw material production, the EU is also
firmly attached to ensuring strong life-cycle and circularity considerations within its internal market,
including recyclability, reusability or waste management of its products. Relevant examples include the
proposal for a Batteries Regulation and the Circular Economy Action Plan, both presented by the European
Commission in 2020. The Clean Energy Industrial Forum (CEIF), set up in 2018 by the European
Commission, brings together industrial actors from the renewables, batteries and construction sectors, in
order to identify and take advantage of growth opportunities.
Common rules and standards for access to finance are also important for fair and competitive market access.
The EU aims to ensure this for example through the revision of state-aid guidelines for research,
development and innovation, for energy and environment, and for important projects of common European
interest (IPCEI). They will allow Member States to address market failures in very specific situations. At
the same time, initiatives such as the EU Taxonomy Regulation and its delegated acts for sustainable finance
will aim to steer market uptake of a wide range of technologies, including in the clean energy sector.
Another crucial point affecting the competitiveness of the clean energy industries, are the complex and
lengthy administrative and permitting procedures. Permitting delays constitute a major barrier for the
transition to a decarbonised energy system, delaying deployment and investments into clean energy
infrastructures and technologies by many years. A significant acceleration of deployment is needed to
achieve the current 2030 renewable energy target of 32%, and an even greater acceleration will be needed
to meet the newly proposed 40% target of the ‘Fit for 55’ package.
Urgent simplification and streamlining of permitting procedures is needed to create a common market for
renewables that facilitates efficient and cost-effective deployment as well as investor certainty, also in view
of the massive investments needed. To this end, the Commission plans in 2022 to present guidance on the
permitting provisions of the renewable energy directive, to facilitate best practices exchanges and strongly
encourages Member States to continue streamlining and simplifying procedures to this end.
Finally, trade policy has a key role to play in driving Europe’s economic prosperity and competitiveness,
supporting a vibrant internal market and assertive external action. Political and geo-economic tensions are
leading to growing unilateralism and distortions of trade and investments. This is also impacting the energy
sector, where increasingly EU companies are faced with third country governments putting in place market
access barriers, local content requirements or other discriminatory or otherwise trade restrictive measures
5
6
COM(2020) 102 final.
COM(2021) 350 final.
5
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aimed at promoting their domestic industry. In line with the Trade Policy Review, the European
Commission is taking an active role in securing access to third country markets for our renewable energy
industry through its bilateral trade agreements and its reinforced enforcement approach, while ensuring
undistorted trade and investment in the raw materials and energy goods required for the transition to climate
neutral economies.
1.2.
Context of the Report
This is the second competitiveness progress report published in the context of the State of the Energy
Union report. As competitiveness in the clean energy sector is a broad concept, the first report defined it
through a range list of indicators that this report uses to assess competitiveness.
Table 1 List of indicators for the Competitiveness Progress Report
Part 1: Macro
section
Macro-economic
analysis
(aggregated, per
MS and per clean
technology)
Primary and final
energy intensity;
share of RES; import
dependency,
industrial
electricity and gas
prices
Turnover
of the EU
(clean, Fossil Fuel)
sector (vs whole
economy)
Gross value added
of
renewable energy
production vs Energy
Efficiency vs economy
Employment figures
EU vs RoW;
gender
statistics
COVID-19
disruption
of value chains
Part 2: Technology specific section
1. Technology analysis
Current situation and
outlook
2. Value chain
analysis of the
energy technology
sector
3. Global market
analysis
Capacity installed,
generation/production
(today and in 2050)
Turnover
Trade (imports,
exports)
Cost / Levelised Cost of
Electricity (LCoE)
7
(today and in 2050)
Gross value added
growth
Annual, % change
Number of companies
in the supply chain,
incl. EU market
leaders
Employment in value
chain segment
Energy intensity /
labour productivity
Community
Production
Annual production
values
Global market
leaders vs. EU
market leaders
Public R&I funding (MS and
EU)
Private R&I funding
(venture
capital (value and number of
deals) (incl sources backing
VC), energy companies)
Patenting trends
(incl high value patents)
Level of scientific Publications
Resource
efficiency and
dependence
8
7
8
And –if available- Levelised Cost of Storage (LCoS).
Segments of the value chain that depend on critical raw materials.
6
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2.
O
VERALL COMPETITIVENESS OF THE
EU
CLEAN ENERGY SECTOR
2.1.
Energy and resource trends
Over the period 2005-2019, both primary energy intensity and final energy intensity in industry have
continued to decrease at an average annual rate of around 2%
9
. In the more recent period (2015-2019) the
majority of Member States achieved reductions in energy intensity, with the exception of Belgium
10
,
Hungary and Poland
11
. In absolute terms, over the same recent period, total primary and final energy
consumption increased slightly for the majority of Member States. However, big consumers such as
Germany, France and Italy managed to achieve reductions in primary energy consumption (along with
Denmark and the Netherlands), leading to a small overall reduction at EU level
12
. The reduced energy
intensities demonstrate the decoupling of energy demand from economic growth. However, increased effort
will be needed to achieve the new energy efficiency targets proposed by the Commission for 2030.
Table 2 shows the change in these indicators over the recent 5-year period per Member State. The majority
of Member States achieved reductions, albeit some at a lower rate than the EU average. Over the same
period the GHG intensity has also been decreasing consistently, enabled – among others – by the increasing
share of renewable energy in energy consumption.
9
Energy Union indicators
EE1-A1: Primary energy intensity EE3: Final energy intensity in industry, DE5: Share of renewable
energy in percentage of gross final energy consumption, SoS1: Net import dependency – sources Eurostat: Complete energy
balances [nrg_bal_c], Gross value added [nama_10_a10]; GDP: AMECO database
10
Where there was a small increase in primary energy intensity.
11
Where the final energy intensity in industry increased.
12
Even though reductions achieved in recent years have been small, overall, in the period 2005-2019 EU primary energy
consumption decreased by 10% and final energy consumption decreased by 5%.
7
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Table
2:
Trends per Member State on primary energy intensity, final energy intensity in industry,
renewable energy share and targets, and net import dependency (fossil fuels).
Primary energy
Final energy
intensity
intensity in industry
average
average
[toe/mn
annual [toe/mn annual
Euro
change
Euro
change
GDP2010]
[%]
GVA2015]
[%]
2019 2015-19
2019 2015-19
102
-2%
90
-2%
111
347
208
55
87
190
44
132
101
100
163
84
117
165
145
77
186
71
84
86
191
111
163
144
179
140
93
>0%
0%> and >-2%
<-2%
Position relative to EU average
Indicators
Unit
Year
EU
BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
HR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
Legend
RES in gross final
energy
consumption
gap to
2020
Share
target
[%]
[pp]
2019 2019
20%
10%
22%
16%
37%
17%
32%
12%
20%
18%
17%
28%
18%
14%
41%
25%
7%
13%
8%
9%
34%
12%
31%
24%
22%
17%
43%
56%
x>0.5 %
Net import
dependency
Net
absolute
imports change
[% ]
[pp]
2019 2015-19
61%
77%
38%
41%
39%
68%
5%
68%
69%
75%
48%
56%
77%
93%
44%
75%
95%
70%
97%
65%
72%
47%
74%
30%
52%
70%
42%
30%
x>0
x=<0
137
306
116
40
72
96
20
141
101
79
136
74
96
184
106
105
147
39
113
86
135
145
142
111
151
228
115
na
>0%
0%> and >-2%
<-2%
0.5%> and >0.1%
x<0.1 %
Source: Energy Union indicators, based on Eurostat data
13
In 2019, the renewable energy share in the EU gross final energy consumption reached 19.7% (Figure
below), very close to the 2020 target of 20%, with a renewable share of 34% in electricity generation.
13
Energy Union indicators EE1-primary energy consumption, EE2-Final energy consumption, EE3: Final energy intensity in
industry, SoS1: Net import dependency – sources Eurostat: [nrg_bal_c], [nrg_bal_s], Gross value added [nama_10_a10]; GDP:
AMECO database.
8
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Bioenergy accounted for 59% of the total renewable energy supplied, followed by wind (14%), hydro
(12%), geothermal (8%) and solar (7%)
14
. While more than half of the Member States have already
exceeded them, and a few more are very close, there are several countries further away from achieving their
targets. The penetration of renewable energy needs to be significantly accelerated in order to achieve the
new binding target proposed by the Commission of at least 40% renewable share in final energy
consumption by 2030.
Figure 1 EU primary energy intensity and final energy intensity in industry, renewable energy share, and
net import dependency (fossil fuels)
Source: Energy Union indicators, based on Eurostat data
15
Despite a short-term reduction between 2008 and 2013, the EU energy import dependency
16
has since
experienced an increase. In 2019, net import dependency reached 60.6%, the highest it has been during the
last 30-year period. This is due to reduced domestic production of fossil fuels
17
.
Under the package to deliver on the European Green Deal, the Commission has proposed to strengthen the
EU Emissions Trading System (ETS) by tightening the cap and increasing the linear reduction factor from
2.2% per year to 4.2%. Furthermore, the EU ETS would be extended to maritime transport. The use of
carbon pricing and carbon prices in economies with emissions trading systems and similar carbon pricing
systems are increasing as parties put in place measures to meet Greenhouse Gas Emissions reduction
targets. 2021 saw the launch of China’s national emissions trading system, covering the power sector and
due to expand to cover other heavy emitting sectors. Trading began in July 2021 at a price of RMB 50 (6.5
Euros) per tonne CO
2
. Since 2019, Canada has a federal carbon pricing system, with a benchmark/
minimum price across all provinces, which will reach 50 CAD (around 34 Euros) per tonne in 2022 and
will rise by 15 CAD (10 Euros) per year from 2023 to 2030. Other jurisdictions are also revising their ETS
legislation, for example, South Korea and New Zealand where the ETS price rose to 48 NZD (28 Euros)
14
15
Eurostat Complete energy balances [nrg_bal_c]
Energy Union indicators
EE1-primary energy consumption, EE2-Final energy consumption, EE3: Final energy intensity
in industry, SoS1: Net import dependency – sources Eurostat: [nrg_bal_c], [nrg_bal_s], Gross value added [nama_10_a10]; GDP:
AMECO database.
16
In the context of this report, net import dependency measures the level of total net imports as a proportion of total gross
inland consumption and the energy consumption of maritime bunkers (i.e. what is consumed in a country or region over a year).
The indicator is based on Eurostat energy statistics.
17
Eurostat (sdg_07_10), (sdg_07_11), (nrg_bal_c).
9
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per tonne in July 2021. The EU Emissions Trading System (ETS) prices have risen from about 25 Euros
per tonne of CO
2
in 2020 to around 50 Euros per tonne of CO
2
in mid-2021.
The Commission has also reviewed the functioning Market Stability Reserve (MSR) and proposed
adjustments to prevent excessive surpluses and deficits in the market. The Commission also proposes a
new, separate ETS to cover emissions from fuels used in the road transport and buildings sectors, to provide
incentives for decarbonisation. Social impacts on vulnerable households, micro-enterprises and transport
users that arise from the new system would be addressed by a new Social Climate Fund. Direct income
support would also be made available to vulnerable households, in order for them to absorb the immediate
price impact of the new emissions trading system.
Comparing EU
18
to the world’s biggest economies in terms of carbon pricing
19,20
(based on OECD data from
2018 on pricing carbon emissions of energy use
21
), only South Korea had higher level of pricing, in which
over 65% of emissions were priced above 5 EUR/tCO
2
, mainly via taxes on fuel use . In the EU, on average,
over 41% of emissions were priced above 5 EUR/tCO
2
. Also, over 27% was priced above 120 EUR/tCO
2
.
As mentioned above, since 2018, the EU ETS price has increased significantly. In the US and China, 65%
and 91% of emissions respectively were not priced at all or priced at less than 5 EUR/tCO
2
. Taking view
on industry and electricity sectors shows that emissions were priced generally at lower level. In the industry,
over 90% of emissions in South Korea were priced above 5 EUR/tCO
2
. In the EU this share was on average
about 56%. In contrast in the US and China, 97% and 98% of emissions were not priced at all or priced
below 5 EUR/tCO
2
. In the electricity sector, South Korea had again the highest pricing, where 72% of
emissions were priced at 5-30 EUR/tCO
2
and 25% of emissions priced at 30-60 EUR/tCO
2
. In the EU, on
average 77% of emissions were priced at 5-30 EUR/tCO
2
. In the US and China, 93% and 100% of emissions
respectively, were not priced at all or priced below EUR 5 per tCO
2
.
Figure
2:
Emissions priced at different levels – all sectors
22
, industry and electricity (2018)
18
This is based on OECD data which includes the following EU countries: AT, BE, CZ, DK, EE, FI, FR, DE, EL, HU, IE, IT,
LT, LV, LU, NL, PL, PT, SK, SI, ES, SE.
19
Effective carbon rates reported by OECD is the most detailed and comprehensive account of how 44 OECD and G20 countries
– responsible for around 80% of global emissions – price carbon emissions from energy use. Effective carbon rates consider
emission permit prices (e.g. EU ETS), carbon tax and fuel excise tax.
20
EU was calculated as simple average of EU countries, as there was no data to do weighted average calculation.
21
OECD (2021), Effective Carbon Rates 2021: Pricing Carbon Emissions through Taxes and Emissions Trading, OECD
Publishing, Paris, https://doi.org/10.1787/0e8e24f5-en.
22
All sectors include road, off-road, industry, agriculture and fisheries, residential and commercial, and electricity. Emissions
include also emissions from the combustion of biomass.
10
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Source: JRC elaboration based on OECD
23
Literature is inconclusive when it comes to the effects of carbon pricing on different elements of
competitiveness. Calel and Dechezlepretre (2016)
24
find that EU ETS has increased low-carbon
innovation
25
among regulated firms by as much as 10%, while not crowding out patenting for other
technologies. Results imply that the EU ETS accounts for nearly a 1% increase in European low-carbon
patenting compared to a counterfactual scenario. In another study Ley et al. (2016)
26
investigated patent
data and industry specific energy prices for 18 OECD countries over 30 years. They found that 10% increase
of the average energy prices
27
over the previous five years results in a 3.4% and 4.8% increase of the number
of green innovations and the ratio of green innovations to non-green innovations, respectively. In the meta-
23
24
OECD. Effective Carbon Rates: Share of emissions priced - Dataset. Availablet at:
https://stats.oecd.org/?datasetcode=ecr.
Calel, R & Dechezlepretre, A (2016) Environmental policy and directed technological change: evidence from the European
carbon market. The Review of Economics and Statistics 98:1, 173-191, DOI:
https://doi.org/10.1162/REST_a_00470.
25
Patents classified as ‘Technologies and applications for mitigation or adaption against climate change’ (Y02 class) are used as
a proxy for low-carbon innovation.
26
Ley, M, Stucki, T, Woerter, M (2016) The impact of energy prices on green innovation. The Energy Journal, International
Association for Energy Economics 37:1.
27
Energy prices here refer to end-use prices (per tonne of oil equivalent including taxes) for the manufacturing sector for different
energy products, such as electricity, light fuel oil, natural gas and different coal products.
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analysis of Venmans et al. (2020)
28
on the impact of carbon pricing on a range of economic indicators
29
,
positive effect is found on innovation and productivity, while effect on net exports, turnover, and
employment remain inconclusive. Carbon prices levied on industry have been low to date, either because
of exemptions to carbon taxes, or generous levels of free allowances, which in part explains these findings.
2.2.
Human Capital
2.2.1. Employment in clean energy
Looking more closely at direct and indirect jobs
3031
per renewable energy technologies over the period
2015-2018, shows that overall employment in EU has grown by an average 1% annual growth
32
. However,
there are vast differences across different technologies and Member States. In terms of renewable energy
technologies at EU aggregate level, the biggest decline has been in the wind sector. Decline of jobs has
been biggest in Germany, Lithuania, Poland and Finland. Especially in Germany, the biggest market,
decline has been due to the wind installation market slowing down, from annual installed capacity of 5.4
GW in 2016 to 1.7 GW in 2019
33
(see Offshore and Onshore wind sections). In contrast, the biggest overall
increase in EU has been in the biofuels and solar PV. Biofuel jobs grew most in the Greece, Poland and
Romania. Solar PV jobs grew the most in France, Hungary and the Netherlands.
Figure 3 Total change in employment by technology and by MS over 2015-2018 period
Source: JRC based on EurObserv’ER
Figure 4 (below) shows the average annual growth rate over the period 2015-2018 across Member States
and across different technologies. Jobs have grown fastest in solar PV (12%), biofuels (11%), and waste to
28
Venmans F., Ellis J. & Nachtigall D. (2020) Carbon pricing and competitiveness: are they at odds?, Climate Policy, 20:9, 1070-
1091, DOI:
10.1080/14693062.2020.1805291.
29
Net imports, foreign direct investments, turnover, value added, employment, profits, productivity, and innovation
30
It is important to note that two different data sources are used for employment figures in this report, namely Eurostat
Environmental Goods and Services Sector accounts and EurObserv’ER. The figures are not directly comparable as there are
methodological differences in approaches. The Annual Single Market Report 2021 estimated the employment and gross value
added of Renewables Ecosystem using national accounts and NACE classification.
31
EurObserv/ER definition – direct employment includes renewable equipment manufacturing, renewable plant construction,
engineering and management, operation and maintenance, biomass supply and exploitation. Indirect employment refers to
secondary activities such as transport and other services.
32
EurObserv’ER tracks direct and indirect jobs in renewable energy technologies per Member State. The methodology and scopes
in Eurostat EGSS accounts and EurObserv’ER are different, hence the figures should not be compared directly.
33
Based on EurObserv’ER Wind Energy Barometer.
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energy sector (9%), and declined fastest in geothermal (-8%), solar thermal (-6%), in wind (-5%) and biogas
(-5%). Jobs have grown overall fastest in Bulgaria (25%), Belgium (20%), Greece (20%), Ireland (16%)
and Netherlands (15%). Jobs have declined fastest in Italy (-14%), in Lithuania (-13%) and in Germany (-
6%). EU-average is used as a benchmark for ranking the growth rate of Member State in each technology
i.e. green – growing faster than EU average, yellow – growing but at lower level than EU average, and red
– declining or declining faster than EU average. Benchmarks per each technology are indicated in Figure
4.
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Figure 4 Average growth rate per year in jobs (2015-2018) by technology and by Member State
Source: JRC based on EurObserv’ER
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2.2.1.1.Global comparison
Overall global renewable energy employment increased by 4% from 2018 to 2019, reaching 11.5 million
jobs. Solar PV remains the biggest globally with 33% share, followed by bioenergy
34
with 31% share of
total jobs. The biggest increase since 2018 has occurred in India (growth of 16%), where jobs, especially
in solar energy increased by 68%. In China, the biggest market, jobs in solar energy grew only by 1%, with
the biggest growth occurring in hydropower with 82% growth. Also in Brazil growth of jobs was driven by
increase in solar energy employment, whereas jobs in wind sector decreased. In the US and Japan overall
level of jobs declined.
Figure 5 Renewable energy employment in the biggest economies
Source: JRC based on IRENA
2.2.1.2.Skills and training aspects
The clean energy system is entering a new era, where new innovations have been emerging at an accelerated
pace. Such acceleration requires re-skilling and up-skilling across all skills levels to deploy and further
develop clean energy technologies and solutions across different sectors. Demand for a wide range of
occupational categories relevant to the greening economy is expected to increase until 2030. These include
blue collar jobs like labourers in mining (covering also the mining of critical materials for clean
technologies), construction, manufacturing and transport, building and related trades, as well as white collar
jobs like science and engineering professionals
35
.
To support the uptake of next-generation skills essential for the EU green transition, the EU launched in 2020
the Pact for Skills
36
where partnerships with industrial ecosystems such as construction and energy intensive
industries are being set up through roundtables. There are over 336 signatories to the Pact, with 130 also making
commitments for upskilling and reskilling
37
. Signatories can be a rage of different actors: individual companies,
regional and local partnerships, industrial ecosystems and cross-sector partnerships. Key principles include the
promotion of lifelong learning, monitoring and anticipation of required skills, as well as working for equal
opportunity. High-level roundtables with industrial ecosystems in the construction and energy intensive
34
35
36
37
Bioenergy includes liquid biofuels, solid biomass and biogas.
https://www.cedefop.europa.eu/en/publications-and-resources/publications/3077
European Commission, The Pact for Skills – mobilising all partners to invest in skills, 2020.
https://ec.europa.eu/social/main.jsp?catId=1517&langId=en
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industries sectors have already taken place. These pave the way for partnerships established under the pact to
benefit from platforms for networking, expertise, guidance and financial resources.
The composition of training offered in clean energy reflects the need for balance between technical, soft,
and transversal skills. EU’s BUILD UP Skills initiative aims to equip construction professionals, ranging
from manual labourers to design professionals and senior management, with skills for sustainable and
energy efficient construction
38
. Various efforts at EU level (DigiPLACE project
39
, set up of Digital
Innovation Hubs and others) aim at supporting the digital transformation of the construction ecosystem.
Digital technologies in construction, buildings and infrastructure can improve sustainability, resource
efficiency and the overall management of the assets.
2.2.1.3.Gender aspects
While women accounted for an average of 32% of the workforce in the renewables sector in 2019
40
, in wind
sector specifically, women represent an estimated 21% of the industry’s workforce globally. In Europe and
North America, the best performing region, the share is 26%
41
. This is principally due to a heavy
representation of women in administration, see Figure 6. The role with the lowest share of female
employment (8%) was senior management (e.g. owners or members of the board of directors of an
organisation). Women being comparatively less represented in non-administrative functions might attest to
the existence of a variety of gender-specific barriers. Conventional energy sectors, including extractive
fossil fuel industries are even more male dominated
42
.
Figure 6 Shares of women by role in the wind energy sector in Europe and North America and globally
38
39
40
41
42
CORDIS, New skills for the construction sector to achieve European energy targets, Results Pack, 2020.
Home (digiplaceproject.eu)
IRENA (2019):
https://www.irena.org/publications/2019/Jan/Renewable-Energy-A-Gender-Perspective
IRENA (2020), Wind Energy: A Gender Perspective. IRENA, Abu Dhabi.
https://www.irena.org/-
/media/Files/IRENA/Agency/Publication/2020/Jan/IRENA_Wind_gender_2020.pdf
https://publications.jrc.ec.europa.eu/repository/handle/JRC120302.
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Source: JRC elaboration based on IRENA (2020)
43
The energy sector also faces stark gender gaps in innovation and entrepreneurship. In the patent classes
closely associated to the energy sector – combustion apparatus, engines, pumps and power – women are
listed in less than 11% of applications, and over 15% for climate change mitigation technologies (CCMT),
which is comparable to all technologies, including information and communication technologies (ICT)
44
.
Highest share (about 25%) of women in patent applications is in chemistry and health sectors.
Gender imbalances both in the energy sector workforce as well as in energy related research and innovation
activity, are closely connected to the underrepresentation of women in higher education in some STEM
sub-fields. In the EU, women are overrepresented in tertiary education as a whole (54 % across all tertiary
education levels and all fields). Within STEM, there is gender balance in the Natural sciences, mathematics
and statistics sub-field. However, the sub-fields highly relevant for the energy sector remain strongly male
dominated: in 2019 less than a third of Engineering, manufacturing and construction and less than a fifth
of ICT higher education students was female.
Figure 7 Distribution of tertiary education students in STEM fields by sex, %, EU-27, 2019
Information and Communication
Technologies
Engineering, manufacturing and construction
Natural sciences, mathematics and statistics
Total (all fields of study)
0
Female
10
20
30
40
50
60
70
80
90
Distribution of tertiary education students in STEM fields
by sex, %, EU-27, 2019
Male
Source: JRC based on Eurostat [EDUC_UOE_ENRT03]
2.2.2. Gross value added in clean energy
The gross value added of clean energy systems overtook the rest of the economy with an average annual
growth of 5% compared to the 3% in the whole economy since 2010. Clean energy (EUR 133 billion)
represented 1% of the total value added in the EU in 2018. Within the clean energy systems, gross value
added in ‘Renewable energy’ (EUR 60 billion) has grown with an average annual growth of 2%, while
‘Energy efficiency and management systems’ (EUR 67 billion) has grown on average by 9% in the same
period. Gross value added in the ‘Electric mobility’ at EUR 7 billion has grown at less than 1% annually.
43
44
IRENA (2020), Wind Energy: A Gender Perspective. IRENA, Abu Dhabi.
https://www.irena.org/-
/media/Files/IRENA/Agency/Publication/2020/Jan/IRENA_Wind_gender_2020.pdf
IEA (2020), Gender diversity in energy: what we know and what we don’t know, IEA, Paris
https://www.iea.org/commentaries/gender-diversity-in-energy-what-we-know-and-what-we-dont-know.
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Figure 8 Clean energy systems gross value added vs total economy - growth in EU27 2010-2018 and
clean energy systems gross value added - change by Member State over 2014-2018
Source: JRC based on Eurostat ‘env_ac_egss2’
45
2.2.3. Labour productivity
‘Renewable energy’ jobs created on average EUR 104 000 of gross value added per employee in 2018 with
an average annual growth
46
of 5% since 2010. This is nearly twice as much as in the rest of the economy
(EUR 64 000 of gross value added per employee). Figure 9 below displays the higher growth in gross value
added per employee of multiple components of the clean energy system compared to total economy as well
as a break down by Member State.
45
46
Eurostat ’env_ac_egss2’. Clean energy systems include CReMA 13A - Production of energy from renewable resources, which
includes both generation of renewable energy and manufacturing of technologies needed to produce renewable energy
(‘Renewable energy’); CReMA 13B - Heat/energy saving and management, which includes heat pumps, smart meters, smart
grids, energetic refurbishment of buildings, and storage (‘Energy efficiency and management’); and CEPA1 - Protection of
ambient air and climate, which includes electric vehicles and associated components and the essential infrastructure needed to
for the operation of electric vehicles (’Electric mobility’).
Compound average growth rate.
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Figure 9 Gross value added per employee – Clean energy systems vs Total economy (2010-2018), and
gross value added per employee per MS in 2018 and compound average growth rate over 2015-2018
period
Source: JRC based on Eurostat ‘env_ac_egss1’ and ‘env_ac_egss2’
47
Labour productivity in 'Renewable energy' is about three times higher in Spain and Belgium than the EU
average, though declining. In Spain and Belgium a large share of gross value added in renewable energy,
85% and 64% respectively, comes from generation of renewable electricity. By contrast, more than half of
the value added of the renewable energy sector in Denmark, Croatia and Austria is generated by the
manufacturing of clean energy technologies. Labour productivity in ’Energy efficiency and management‘
is highest and growing in Denmark and Austria, and in both over half of the value added is generated by
the manufacturing sector. The factors behind high variation of productivity levels among Member States
include income, energy prices, subsidies for renewable energy, composition of the renewable energy mix,
and the scope of activities covered
48
.
47
Clean energy systems include CReMA 13A - Production of energy from renewable resources, which includes both generation
of renewable energy and manufacturing of technologies needed to produce renewable energy (‘Renewable energy’ – in the
graph); CReMA 13B - Heat/energy saving and management, which includes heat pumps, smart meters, smart grids, energetic
refurbishment of buildings, and storage (‘Energy efficiency and management’ – in the graph); and CEPA1 - Protection of
ambient air and climate, which includes electric vehicles and associated components and the essential infrastructure needed to
for the operation of electric vehicles (’Electric mobility’ In the graph).
48Eurostat.
Available
at:
https://ec.europa.eu/eurostat/statistics-
explained/index.php?title=Environmental_economy_%E2%80%93_statistics_by_Member_State#Employment.
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While employment in the wind sector has decreased in the EU in the past years, the labour productivity
49
is highest, at EUR 145 000 per employee, and has grown by 4% a year on average. Second highest labour
productivity is in the solar PV sector at EUR 125 000 per employee (with 2% average annual growth) and
hydropower at EUR 120 000 per employee (with 6% average annual growth). Interestingly, while
employment in biofuels has grown, its labour productivity is by far the lowest, at EUR 57 000 per employee
and it has been decreasing by 4% a year on average. This is due to a large portion of jobs related to the
feedstock procurement component of the value chain. Biomass production in agriculture and forestry
sectors is more labour intensive but yields less value than i.e. biomass conversion. While there are
differences among Member States and technologies (Figure 10), overall at aggregate EU level there has
been no growth in turnover per employee.
Figure 10 Turnover per employee in 2018 and compound average growth rate over 2015-2018 period
Source: JRC based on EurObserv’ER
49
This is based on turnover per employee figures from EurObserv’ER, hence these should not be compared to labour productivity
measured as gross value added per employee above.
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2.3.
Research and innovation trends
After the last economic crisis, public investments in R&I prioritised by the Energy Union
50
,
51
went into a
decline for half a decade, only showing signs of recovery after 2016. Since then, the EU MS have invested
an average EUR 3.5 billion per year, but spending is still lower than that observed a decade ago. The trend
from 2016 is consistent with increased investments in energy in general – and clean energy in particular -
globally
52
, however these do not seem to keep pace with increases in GDP or R&I spending in other sectors.
Today, at 0.027%, the EU has the lowest R&D investment intensity in the clean energy sector (measured
as a share of GDP) of all major global economies, just below the US, though levels seem to be decreasing
or stable for all. In 2019 the R&I budget allocated to the socioeconomic objective of energy in the EU was
EUR 4.1 billion, representing 4.4% of total spending on R&I
53
, having decreased slightly compared to the
two previous years. This shows that, while increasing in absolute terms, investments in the technologies
needed for decarbonisation are not keeping pace with the growth of the economies themselves, or prioritised
as much as other sectors.
EU research funds have been contributing an increasing share of public funding and have been essential in
maintaining research and innovation investment levels over recent years, contributing on average an
additional EUR 1.5 billion per year. Combined with an estimated average EUR 20 billion of private
spending
54
, the average annual total investment in the Energy Union R&I priorities over recent years (2014-
2018) is in the order of EUR 25 billion
55
.
In 2019, total public investment from all EU MS was still 5% lower than 2010, but had increased by 2%
compared to 2015. Table 3 shows that there is a mixed picture at Member State level. About a quarter have
consistently increased spending overall throughout the 10-year period, with an equivalent number showing
a decrease. For the remaining, the trend coincides with the total for all EU MS, or information on R&I
spending is not available. While there is a clear need to improve monitoring of R&I investment, there is
also increased momentum and engagement from the Member States in view of the reporting foreseen in the
Energy Union Governance Regulation. This goes beyond public R&I investment, to also stepping up efforts
at national level to monitor R&I investments from the private sector.
50
51
52
53
54
55
COM(2015)80; renewables, smart system, efficient systems, sustainable transport, CCUS and nuclear safety.
JRC SETIS
https://setis.ec.europa.eu/publications/setis-reseach-and-innovation-data_en.
https://www.iea.org/reports/world-energy-investment-2020/rd-and-technology-innovation.
Eurostat, Total GBAORD by NABS 2007 socio-economic objectives [gba_nabsfin07]. The energy socioeconomic objective
includes R&I in the field of conventional energy. The Energy Union R&I priorities would also fall under other socioeconomic
objectives.
Private investment estimates have been revised upwards, due to changes in classification and the underlying data.
The increased total compared to last year’s reporting is due to the revision of the private investment estimates (see above).
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Table 3 Overview of public R&I investment and patenting per Member State .
Source: JRC
56
based on IEA
57
, own work.
Private investment in the Energy Union R&I priorities in the EU is estimated at 0.18% of GDP, above the
US but lower than other major competing economies. This represents 12% of the business expenditure on
R&D, which is above the 6% estimated for the US, but about half of the share observed for major Asian
economies.
56
57
JRC SETIS
https://setis.ec.europa.eu/publications/setis-reseach-and-innovation-data_en.
Adapted from the 2021 edition of the IEA energy technology RD&D budgets database.
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Following a peak in 2012, overall patenting activity in clean energy technologies
58
decreased
59
. This trend
seems to be reversing from 2016, with annual filing levels in the EU (Figure 11), and globally, returning to
those observed in 2012. The EU has a greater share of ‘green’ inventions in Climate Change Mitigation
Technologies, compared to other major economies (and the world average) indicating greater focus and
specialisation of inventive activity in clean energy technologies. This specialisation is not equally shared at
Member State level. Larger economies, with traditionally strong innovation ecosystems may have high
outputs in terms of patents per capita as part of a large portfolio of innovation; others may not be as strong
in terms of output, but show higher specialisation for these technologies within their patenting activity.
Overall, in terms of high-value inventions
60
, the EU is second only to Japan, mainly due to Japan’s
advantage in transport technologies; however, the EU leads when it comes to renewables and energy
efficiency. The EU also continues to host a quarter of the top 100 companies in high-value patents in clean
energy over the last 5-years. Nonetheless, there is increasing (global) unease about the impact of state- or
subsidy- backed technology domination, closed markets and different intellectual protection rules and
policies on innovation and competitiveness in the sector, especially as manifested by China. Despite those
concerns, over a quarter of the clean energy inventions protected internationally over the last 5 years by EU
applicants have also targeted the Chinese market.
Figure 11: EU patenting trends in the Energy Union R&I priorities, and positioning in high-value patents
and share of ‘green’ technologies in patenting activity versus major economies
61
Source: JRC
62
based on EPO Patstat
58
59
60
61
62
Low-carbon energy technologies under the Energy Union’s R&I priorities. This is the overall trend; there were exceptions for
certain technologies (e.g. batteries) which kept increasing throughout the period. The same applies for broad ‘green’ patenting
activity in Climate Change Mitigation technologies.
With the exception of China, where local applications keep increasing, without seeking international protection. (See also: Are
Patents Indicative of Chinese Innovation?
https://chinapower.csis.org/patents
/).
High-value patent families (inventions) are those containing applications to more than one office i.e. those seeking protection
in more than one country / market.
Cumulative number of high-value patents in Energy Union R&I priorities over 2005-2018; average share of ‘green’ patents in
Climate Change Mitigation Technologies for 2017-2018; data for 2018 is provisional.
JRC SETIS
https://setis.ec.europa.eu/publications/setis-reseach-and-innovation-data_en.
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In terms of collaborations in green innovation, beyond the alliances built within Europe due to geographical
proximity, EU firms tend to collaborate most with US counterparts
63
. EU Member States generate 33% of
co-inventions in green technologies through Intra-EU connections, 29% with the USA and only 6% with
China. France and Germany are the two Member States with the highest number of international partners
and co-inventions. The US has the highest number of co-inventions in clean energy technologies, nearly
40% of which are with the EU. East-Asia countries, namely China, Japan, South Korea and Taiwan have
strong mutual collaborations.
According to the recent UNESCO Science Report
64
, the volume of scientific publications from the EU
65
on
nine SDG7
66
renewable energy topics has increased from nearly 60k in the period 2012-2015 to over 70.5k
in the period 2016-2019 (18% increase). However, the report also notes that high-income economies are no
longer dominating topics related to clean energy and innovation, and some of the strongest growth is instead
taking place in lower middle-income countries. For example, the respective publications from East &
Southeast Asia increased by 45% and those from South Asia more than doubled.
2.4.
The clean technologies funding landscape
2.4.1. Introduction
The Climate Tech domain encompasses a broad set of sectors which tackle the challenge of decarbonising
the global economy
67
. It also includes novel technologies e.g. long-duration energy storage, green hydrogen
production, storage, and use of hydrogen in heavy industry, carbon management) that, together with more
mature generation technologies (e.g. solar and wind) under deployment, will be crucial to achieve carbon
neutrality by 2050, if properly developed and scaled-up.
Climate Tech is an emerging and challenging domain for Venture Capital (VC) investors. These novel
technologies usually involve high investments in R&I, long lead times to reach maturity and typically
require a significant amount of capital in pilot plants
68
. This calls for substantial public support along the
start-up lifecycle to de-risk and stimulate further private investments for their development and
implementation at scale.
63
64
65
66
67
68
JRC118983 Grassano, N., Hernández, H., Tübke, A., Amoroso, S., Dosso, M., Georgakaki, A. and Pasimeni, F.: The 2020 EU
Industrial R&D Investment Scoreboard.
UNESCO (2021) UNESCO Science Report: the Race Against Time for Smarter Development. S. Schneegans, T. Straza and J.
Lewis (eds). UNESCO Publishing: Paris.
The study refers to EU28 (including the UK).
"Ensure access to affordable, reliable, sustainable and modern energy for all."
Climate Tech encompasses a broad set of sectors which tackle the challenge of decarbonising the global economy, with the
aim of reaching net zero emissions before 2050. This includes low-to-negative carbon approaches to cut key sectoral sources
of emissions across energy, built environment, mobility, heavy industry, and food and land use; plus cross-cutting areas, such
as carbon capture and storage, or enabling better carbon management, such as through transparency and accounting.
Giving rise to the notion of Deep Green start-ups: cutting edge technologies focused on addressing environmental challenges
(e.g. green battery manufacturing, electric aircraft). Deep Green are at the intersection between Climate Tech and Deep Tech,
defining the latter as companies building on scientific discovery in engineering, mathematics, physics, and medicine.
Characterised by long R&D cycles and untested business models.
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2.4.2. VC investment trends in Climate Tech companies (Global and EU)
Worldwide VC investments
69
in climate tech start-ups and scale-ups reached EUR 14 billion in 2020
70
,
increasing more than 1250% since 2010 (EUR 1 035 million). Within this, VC investments in EU-based
climate tech companies have been 11 times higher over the past 5 years than they were between 2009 and
2014, reaching more than EUR 2.2 billion in 2020
71
.
EU firms received 16% of global VC funding in the climate tech domain compared to only 8% of overall
VC funding (all domains)
72
. Figure 12 highlights the attractiveness of EU climate tech start-ups but also the
investment gap in EU start-ups as VC investments range far behind levels in the US and China.
Figure 12: VC funding in Climate Tech vs Total (2020)
73
Source: JRC elaboration based on PitchBook data.
At the same time, for the first year in 2020, early stage investments in EU climate tech start-ups were higher
than those in the US and China.
EU-based climate tech start-ups still trail their counterparts in ability to scale. Over the past 5 years, they
only benefited from 7% of all later stage investments in climate tech start-ups, far behind the US (44%) and
China (41%)
74
. Furthermore, out of the total number of climate tech Unicorns
75
, those based in the EU
account for only 6%, compared to US (56%) and China (26%)
76
.
69
Investments include Early stages (Accelerator/Incubator, Angel, Seed and early stage VC) and later stages (later stage VC and
Private Equity Growth).
70
Accounting for: i) between 4 to 6 % of total VC funding according to JRC elaboration based on PitchBook data and ii) PwC
data based on Dealroom data.
71
JRC elaboration based on Pitchbook data 2021.
72
JRC elaboration based on Pitchbook data 2021.
73
Where Climate Tech is expressed as % of global Climate Tech investments and total is expressed as % of all global VC
investments.
74
JRC elaboration based on PitchBook data.
75
The standard definition of unicorn is a privately held start-up valued at more than USD 1 billion.
76
JRC elaboration based on PitchBook data.
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2.4.2.1.Climate Tech investments in the Energy Sector
Worldwide, the Energy domain
77
accounted for 8.2% of total VC Climate Tech investment between 2013
and 2019, far below the Mobility and Transport domain (63%) and Food, Agriculture and Land use
(13.6%)
78
. Global investment in Energy start-ups has grown at a moderate pace, recording a Compound
Annual Growth Rate (CAGR) of 41%, which is substantially lower than the overall growth rate of climate
tech investment). This reflects the relative maturity of two of the major sources of renewable energy – wind
and solar – which are now being deployed globally at scale, and are increasingly financed through
traditional project, debt and other finance rather than venture capital.
Europe (EU and UK) is investing a higher share of VC in Energy domain (23.5%) compared to the US
(9.4%) and China (less than 1%). Most investment is taking place in developing the core technologies for
renewable energy generation (predominantly PV cells) and the energy storage (batteries) to support their
proliferation
78
.
Figure 13 Area-specific VC funding as % share of the overall Climate Tech VC investments in the US,
China and Europe
Source: PwC analysis on Dealroom data
2.4.2.2.The Digitalisation of Energy and VC funding dynamics
As the digitalisation of energy is a crucial enabler of the energy transition, understanding the trend of VC
investments in digital start-ups entering the energy sector is key to support the development of a more
integrated, interconnected, secure, transparent and competitive energy system, where not only energy but
also data need to flow freely in the system.
Figure 14 shows that, despite considerable decrease in number of VC-backed energy start-ups worldwide
at the beginning of the last economic crisis, the share of digital start-ups in the Energy sector has increased
and reached its maximum in 2015.
77
78
Identified by the PwC report as one of the key sectors contributing to the majority of global GHG emissions – together with
Mobility & Transport, Food, Agriculture and Land Use, Heavy Industry, Built environment (vertical areas), GHG Capture and
Storage, and Climate and Earth Data generation (horizontal areas).
PwC, The State of Climate Tech 2020. The next frontier for venture capital, 2020.
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Figure 14: Total number of Energy start-ups and the percentage of digital start-ups
79
in the Energy sector
that received VC funding between 2000 and 2017
Source: JRC analysis based on Venture Source, Dow Jones data
2.4.3. The Clean Tech funding landscape in EU
Both the overall Climate Tech VC funding dynamics in the EU and the attraction of VC investors for EU-
based Climate Tech are strongly related to the number of overarching policy goals in the climate and energy
sector established at EU and Member States level (see section 1.1), together with tools supporting Climate
Tech (e.g. fund of funds, grants, equity and debt co-investment, R&D tax credit), and the overall EU support
for a R&I green innovation ecosystems.
The EU public funding institutions have shown they can lead green innovation excellence. The Horizon
Europe pillar III on “Innovative Europe” aims at supporting the development of disruptive and market-
creating innovations through three distinctive and complementary instruments:
The European Innovation Council (EIC)
80
, with a budget of EUR 10.1 billion, is a one stop shop for scaling
up the next European’s unicorns, providing financial support, investment opportunities and coaching to
breakthrough and disruptive innovation projects
81
. So far, the EIC pilot has achieved 90% of innovations
addressing Sustainable Development Goals (SDG), in particular in the field of Green Deal, Digital and
Health.
The European Institute of Innovation & Technology (EIT), with a budget of EUR 2.965 billion, aims at
strengthening Europe’s innovation ability by powering solutions to pressing global challenges and by
nurturing entrepreneurial talent. Supporting the development of EIT Knowledge and Innovation
Communities (KICs), EIT has the scope to increase the collaboration between business, education and
research organisations, public authorities and civil society.
79
80
81
Digital start-ups in the Energy sector: this set includes start-ups in the Energy sector whose description of activity includes any
digital-related keyword.
European Innovation Council (europa.eu)
Through the EIC Pathfinder, Transition activities, Accelerator, and Business acceleration services. So far, the EIC pilot has
achieved 90% of innovations addressing Sustainable Development Goals (SDG), in particular in the field of Green Deal, Digital
and Health.
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The European Innovation Ecosystems initiative, with a budget of EUR 527 million, focuses on building an
interconnected, inclusive, innovation ecosystem, complementing the actions carried out by the EIC and the
EIT, as well as activities managed under other pillars of Horizon Europe and initiatives developed by
Member States and Associated Countries.
Furthermore, the InvestEU programme and cohesion policy aims at supporting access to and availability of
finance primarily for SMEs, including innovative ones and those operating in the cultural and creative
sectors, as well as for small mid-cap and other companies. In addition, the European Investment Fund (EIF)
invests in European VC funds, providing venture debt directly to start-ups and connects investors with start-
ups, and the European Investment Bank (EIB), beyond loans, provides venture debts, invests in private
equity funds, provides guarantees to improve the costs of financing for strategic projects or sectors.
While some of their offerings overlap, these institutions are designed to complement each other across the
start-up’s life-cycle
82
. As an example, the EIB played a role in attracting private investments in Northvolt -
the Swedish green battery company founded in 2016 - which is building the first European commercial-
scale battery plant in Sweden and raised EUR 1.4 billion in financing in June 2020 . EIT InnoEnergy
supported the company to put together a consortium of investors and access EIB funding: the EUR 350
million loan from EIB is accompanied by EUR 886 million from private investors
83
. After the first plant in
Sweden, Northvolt plans a joint venture with Volkswagen to build a battery plant in Germany.
Moreover, additional funding programmes exist to convey revenues from climate-related policies in support
of the energy transition. The Innovation Fund supports the deployment in the market of breakthrough low
carbon technologies. The Modernisation Fund intends to help low income Member States in the
modernisation and decarbonisation of their energy systems. The Social Climate Fund would fund Member
States’ programmes designed to support investment in increased energy efficiency of buildings, the
decarbonisation of heating and cooling and zero- and low-emission mobility and transport.
Despite these innovation ecosystem support instruments, EU-based climate tech start-ups still trail their
counterparts in ability to scale, thus hindering the EU from reaping the climate and competitiveness benefits
of EU innovation as well as preventing movement of promising ventures to the US or Asia to reach scale.
For example, while Northvolt is a success, it dwarves the rest of EU investments, thus illustrating the need
of public funding for the development of commercial scale pilot plants.
Overall, the significant difference in regional VC funding, including climate tech, across geography is
partially due the different VC funding culture. As an example, the US institutional investors have
traditionally been more willing to engage in VC, and the US has a stronger history of start-ups and scale-
up success, thus creating a more favourable start-ups ecosystem.
In addition, key structural barriers are holding back the EU-based climate tech scale-ups compared to US
and China, such as:
Innovation performance barriers: difficulty in translating a strong EU research performance into
innovation; lack of breakthrough/disruptive innovations creating new markets.
Innovation funding barriers: i) transition from lab to enterprise, ii) scaling up for high risk
innovative start-ups. The more difficult access to finance reported by EU scale-ups is consistent
82
83
World Economic Forum in collaboration with KPMG, Bridging the gap in European scale-ups funding: the green imperative
in an unprecedented time, 2020.
VW, BMW, Goldman Sachs, AMF, Folksam Group and IMAS Foundation.
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with a higher reliance on internal funds among these firms, as well as a relatively under-developed
venture capital market in EU compared to US
84
.
Innovation ecosystem barriers: despite many national and local ecosystems exist, the EU’s market
and regulatory fragmentation hinders growth and leads to different maturity of VC ecosystems;
there is a pressing need to include all regions and all talent. Within this, the lack of labour force
with the right skills can represent an obstacle to growth among scale-ups.
2.4.4. New generation of financial mechanisms to support Climate Tech scale up in
EU and EU supporting initiatives
Filling the gap in scale-up between EU and other major economies requires mobilising private investors to
participate more actively in the European VC market and in the funding of climate tech and Deep Climate
Tech start-ups
85
. This is still a poor fit for the business model of “traditional” VC funds.
As an example, blended finance
86
structures could address the mismatch of the VC model and deep-tech
investment and scaling up EU’s industrial transformation, by mobilising private investments or
incentivising patient capital from the private sector. While blended finance is rare in the EU, successful
examples exist (Estonian EIC-funded start-up Skeleton
87
and the German “Future Fund”
88
)
89
. The future
success of SPACs faces uncertainty.
The recent lackluster aftermarket performance for SPACs could intensify the downward pressure on new
SPAC IPO issuance and general enthusiasm for the product. A related decline of investor sentiment around
SPACs is to be expected if returning capital due to failure to find a target becomes a regular occurrence.
Regulation and litigation risks are also looming, which may discourage new SPAC activity.
90
In view of the Green Deal’s objectives and recognising the role of technological innovation as key enabler
for climate neutrality, the EU has put a number of relevant support mechanisms in place. For example, the
2020 European Industrial Strategy package sets key actions to improve access to finance for Small and
Medium Sized Enterprises (SMEs), including a mechanism to boost the scale of VC funds, increase private
investment and facilitate the cross-border expansion and scale-up of SMEs. Furthermore, the joint fund
EIB, Investment report 2019/2020: accelerating Europe’s transformation
Deep Tech start-ups build on scientific knowledge and are characterised by long R&D cycles and untested business models.
Deep Climate tech start-ups are companies using cutting edge technology to address environmental challenges. As they rely
on large capex investments in pilot plants for new technologies to be able to scale their revenues, they require even a higher
levels of investments – compared to Climate Tech.
86
Blended finance is a structuring approach which uses public funding to de-risk private investments and, by doing so, acclimatize
private investors with a new technology, sector, region or asset class. It leverages a combination of grant with equity, debt
investments or insurance-like products from either the public or private sectors and mobilizes consortium of investors to meet
the funding needs of deep tech start-ups.
87
One of the largest European manufacturers ultracapacitor-based energy storage. The products are used to power and save energy
in various applications in the automotive, transportation, grid, and renewable energy industries. the Clean Tech solutions have
caught the attention of new industrial investors and top European entrepreneurs, and the company raised EUR 41.3 million in
equity round, bringing its total capital raised to over EUR 93 million. The investment is in the top five funding rounds of the
cleantech sector in the EU in 2020 and will further accelerate Skeleton's growth.( https://community-smei.easme-
web.eu/articles/green-innovations-eic-funded-company-skeleton-technologies-raised-eu413-million-equity).
88
The German federal government is providing EUR 10 billion for an equity fund for technologies of the future (Zukunftsfonds
or “future fund”). The fund will primarily benefit start-ups in the growth phase with high capital requirements. Together with
further private and public partners, the fund projects to mobilise at least EUR 30 billion in venture capital for start-ups in
Germany, and combined with existing financial instruments, over EUR 50 billion in venture capital are expected to be mobilised
for start-ups in the next few years, together with private investors. (Federal Ministry of Finance, 2021).
89
World Economic Forum, Bridging the gap in European scale-up funding: the Green Imperative in an unprecedented time, 2020.
90
PitchBook SPAC market update Q3 2021, Uncertainty Clouds Future for SPACs
84
85
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between EIB, EC and Breakthrough Energy Ventures Europe (BEV-E) allows for the blending of
institutional (risk-averse) with a VC (less risk-averse) investment approaches
91
. Next Generation EU
financing and the EU Sustainable Finance Regulation may further accelerate clean energy VC support.
Further scaling up can be achieved by streamlining existing mechanisms, making use of synergies across
instruments at EU and MS level, further exploring new funding solutions (creation of funds directing private
savings towards VC-funded firms, blended instruments) and introducing further funding incentives (e.g.
government financing/co-financing for start-ups). The European Scale-up Action for Risk
capital (ESCALAR), a pilot programme launched by the European Commission and managed by the EIF,
is a good example for a new investment approach.
92
It is also crucial that policy initiatives, EU programmes
and related instruments maintain and increase the attractiveness of EU Climate Tech firms for VCs.
Furthermore, public and corporate procurement opportunities could foster long-term growth in strategic
sectors or even kick-start emerging markets, while involvement of investment management firms could
improve perspectives for VC firms. Finally, involving universities could attract highly skilled workers and
encourage entrepreneurship.
2.5.
Covid-19 impact and recovery
2.5.1. Impact
2.5.1.1.Impact on clean energy generation, investments and R&I
The renewable energy sector generally proved to be resilient during the pandemic
93
. As displayed in Figure
15, while electricity generation from coal, gas and nuclear decreased, renewables overtook fossil fuels for
the first time as the EU’s main power source for the year 2020 (renewables 38% of EU electricity, versus
37% fossil fuels and 25% nuclear)
94
. Wind (14%) and solar (5%) generated one fifth of EU’s electricity in
2020, the remaining 19% came mainly from hydropower and bioenergy which have stagnated the past few
years
95
. In all IEA global post-pandemic scenarios, renewables grow rapidly – mainly solar due to its high-
cost reductions (followed by onshore and offshore wind).
91
The European Commission, European Investment Bank and Breakthrough Energy Ventures establish a new EUR 100 million
fund to support clean energy investments (eib.org)
92
https://ec.europa.eu/growth/content/escalar-%E2%82%AC12-billion-help-high-potential-companies-grow-and-expand-
europe_en
93
IEA, World Energy Outlook, 2020.
94
Agora Energiewende and Ember (2021), The European Power Sector in 2020: Up-to-Date Analysis on the Electricity
Transition, https://ember-climate.org/wp-content/uploads/2021/01/Report-European-Power-Sector-in-2020.pdf.
95
Ibid.
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Figure 15 Growth of renewables share in electricity production compared to fossil fuels
Source: Agora Energiewende and Ember, 2021
2020 was also a year of unprecedented global spending on the deployment (excluding investments in
companies, R&D and manufacturing) of low-carbon technologies, reaching USD 501.3 billion, a growth of
9% compared to 2019
96
. Falling capital costs enabled a record number of solar and wind to be installed
globally, while investment in heat pump installation increased 12%, energy storage (esp. batteries)
remained level with respect to 2019, despite falling prices, and CCS investments tripled. Hydrogen
investments dropped 20% but 2020 was still the second highest annual investment ever
97
.
Europe and China are currently vying for top position among markets active in energy transition
investment
98
. Europe accounted for the biggest part of the global investment in 2020, with USD 166.2
billion (up 67%), China at USD 134.8 billion (down 12%) and the US as USD 85.3 billion (down 11%).
Europe’s performance was driven by a i) record year for electric vehicle sales, and ii) the best year in
renewable energy investment since 2012.
99
.
Early trends indicate general resilience in global R&I spending for renewable energy as well. Growth in
global public spending on energy R&D slowed from 7-10% in 2017 and 2018 down to 2% in 2020, but the
renewable component grew more quickly, achieving 83% of total energy R&D spending. Similarly, while
overall corporate R&D energy spending dropped in 2020, the renewable component continued to grow
100
.
Worldwide, in spite of an overall downward investment dynamic and despite the fact that significant VC
funding was redirected to pandemic-related industries such as pharmaceuticals and healthcare, Climate
Tech domain is proving to be resilient to the COVID-19 outbreak and remained attractive to the VC funding.
Examples include Amazon’s USD 2 billion “Climate pledge” venture fund, Microsoft’s USD 1 billion
Climate Innovation Fund.
96
97
98
99
100
BloombergNEF, Energy Transition Investment Hit $500 Billion in 2020 – For First Time, 2021.
Ibid.
BloombergNEF, Energy Transition Investment Trends – Tracking global investment in the low-carbon energy transition, 2021.
BloombergNEF, Energy Transition Investment Hit $500 Billion in 2020 – For First Time, 2021.
IEA, World Energy Investment, 2021.
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2.5.1.2. Impact on supply chains and installed capacity
EU energy technology supply chains have generally been resilient to the impacts of the pandemic. Covid-
induced restrictions temporarily disrupted supply chains and delayed construction of renewable energy
installations in key markets (especially onshore wind and solar PV). Yet, since mid-May 2020, renewables-
based construction projects, equipment supplies, policy implementation (permitting, licensing, auctions)
and financing have returned to near normal levels in many countries because project developers and
manufacturers have modified their operations to adapt to ongoing social‑distancing rules
101
.
In addition to bottlenecks due to disruptions in production, logistics and transportation sectors, operating
costs of some energy technology supply chains increased due to price increases in products and services
such as transportation. Yet these impacts were common to all economic sectors
102
. While important EU
suppliers in China and other Asian countries generally were able to limit impacts, supply chains faced
greater impacts from intra-EU measures such as border closures and lockdowns. Intra-EU difficulties were
therefore often more important than manufacturing and logistics challenges in non-EU countries. Supplier
concentration exacerbated these impacts, while global supply chains provided advantages such as supply
diversification and access to global markets
103
.
2.5.2. Recovery
The analysis of the 22
104
RRPs approved by the Commission by 5 October 2021
105
shows that EUR 177
billion have been allocated to climate-related investments, representing 40% of the total of EUR 445 billion
of RRF funds allocated to these Member States. Nearly all Member States are using RRF funds for
investments in building renovation and clean transport (around 62 billion is dedicated to sustainable
mobility), and many are using it to invest in renewable energy. In this context, Member States
106
have
significantly built on the ‘flagship initiatives’ put forward by the Commission in relation to the green
transition, in particular the ‘Power up’, ‘Renovate’ and ‘Recharge and refuel’ flagship initiatives. About
43% of climate-related investments (EUR 76 billion) is dedicated to energy efficiency (27.9%) and
renewable energy and network (14.8%).
Research and innovation also represented an important share within the climate-related investments , as
Members States allocated nearly EUR 12.3 billion to investment in R&I in climate change mitigation and
adaptation and the circular economy in their Recovery and Resilience Plans. The timely implementation
of
the RRPs can help Member States achieve the more ambitious targets for 2030 in line with the European
Green Deal Package
107
.
IEA, Renewables 2020 – Analysis and forecast to 2025, 2020.
Study on Resilience of the critical supply chains for energy security and the clean energy transition during and after the
COVID-19 crisis (2021).
103
Ibid.
104
AT, BE, CY, CZ, DE, DK, EE, EL, ES, FI, FR, HR, IE, IT, LT, LU, LV, MT, PT, RO, SI, SK.
105
The expenditures reported for the RRF are estimates processed by the Commission based on the information on climate tracking
published as part of the Commission’s analyses of the recovery and resilience plans. The data reported cover the 22 national
recovery and resilience plans assessed and approved by the Commission by 05 October 2021 and the amount will evolve as more
plans are assessed.
106
Annual Sustainable Growth Strategy 2021, COM(2020) 575 final, 17 September 2020, section IV.
107
The Commission has already disbursed EUR 52.4 billion in pre-financing from the RRF to Austria, Belgium, Croatia, Cyprus,
Czechia, Denmark, France, Greece, Italy, Latvia, Lithuania, Luxembourg, Portugal, Slovenia, Slovakia and Spain, equivalent
to 13 % of the grant and (where applicable) loan component of those Member State's financial allocation, except for Germany
where it corresponds to 9%.
101
102
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2.6.
Innovative and cooperative business models
The energy transition changes the way the energy system operates. Distributed renewables, proactive
consumers, the opportunity to track and trace energy sources, monitor energy consumption and energy
efficiency in real time and provide flexibility services to the system create new innovations, actors, and
type of business. The section below explores three key business models that help creating markets for new
technologies, services and innovations, in a decentralised energy system: energy communities, one stop
shops for building renovation, and energy service companies (ESCOs). Many of these new business models
are enabled by smart grid technologies analysed in the next section.
2.6.1. Energy communities
Under the Clean Energy Package, extensive provisions were introduced in the Electricity Directive (‘citizen
energy communities’) and the Renewable Energy Directive
108
(‘renewable energy communities’) to
promote energy communities and prosumers, thereby allowing consumers to take an active role in the
energy market and strengthening energy production from renewable sources. In particular, energy
communities in EU legal framework have been conceptualised in Article 2 (11) Electricity Market Directive
(‘citizen energy communities’) and in Article 2 (16) Renewable Energy Directive (‘renewable energy
communities’), and linked to an enabling framework to facilitate their participation on the relevant energy
markets (Article 16 Electricity Market Directive; and Article 22 Renewable Energy Directive). Both legal
concepts share a common core: they need to be organised through a legal entity, are effectively controlled
by non-professional actors, have an open and voluntary participation structure and have as a purpose to
provide social, economic and environmental benefits rather than financial profits. However, there are also
some fundamental difference in terms of energy source, ownership and participation:
‘renewable energy communities’ (REC) are about all sources of renewable energy. ‘Citizen energy
communities’ (CEC) are about all sources of electricity, but not other forms of energy. Note that
both concepts overlap when an energy community is active in 100% renewable electricity, in which
‘renewable energy communities’ become a subset of ‘citizen energy communities’;
members or shareholders that effectively control the ‘renewable energy community’ need to be
located in proximity of the renewable energy projects that are owned and developed by that
community. As such, renewable energy communities are ‘local’ energy communities. This is not
the case for ‘citizen energy communities’, allowing for more flexibility and thus both local
communities and communities-of-purpose;
all types of actors can participate in ‘citizen energy communities’, whilst for ‘renewable energy
communities’ this is limited to citizens, SMEs and local authorities.
Note that energy communities are in essence not about technology, smart grids, etc. Developments in this
field can be useful for energy communities, but this is not a technological concept.
In border regions, there can be a significant added value of a cross-border approach, allowing to benefit
from local complementarities across borders in areas such as renewable energy production or storage
solutions, taking into account the ‘energy efficiency first’ principle. However, energy markets do not yet
function across borders as seamlessly as they do within a country. For example, cross-border electricity
108
In RED II, introduction of enabling frameworks by Member States to facilitate their development, to ensure inter alia that
unjustified barriers to renewable energy communities (RECs) are removed and relevant distribution system operators cooperate
with the RECs, but also that RECs are regulated according to the activities they engage in. Member States also have to take the
characteristics of RECs into consideration when they design their support schemes.
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transactions are frequently limited because legal frameworks do not allow for low-voltage exchanges of
electricity across the border. Energy communities can play a significant role in charting the way ahead.
Both the Electricity Market Directive and the Renewable Energy Directive set the conditions for Member
States to include options for cross-border implementation of energy communities in their national
transpositions
109
.
In terms of enabling framework, both ‘citizen energy communities’ and ‘renewable energy communities’
benefit from set of rights and responsibilities to facilitate their market integration, most notably related to
enabling activities (generate, store, sell, share, aggregate or other energy services), and ensuring non-
discriminatory treatment in terms of charges and procedures (e.g. supply licensing; grid access procedures).
For ‘renewable energy communities’ there are some additional set of privileges. In this regard, it is
important to understand that the criteria of the legal concept of ‘renewable energy communities’ are more
narrow than for ‘citizen energy communities’, so harder to fulfil. The latter forms the basis to justify the
privileges included in the enabling framework of Article 22 Renewable Energy Directive, including but not
limited to the requirement for Member States to consider the characteristics of ‘renewable energy
communities’ when designing support schemes.
Whilst only recently conceptualised in EU legislation, Energy communities are not a new phenomenon.
Nowadays, there are thousands of these initiatives scattered across Europe, each with different scales and
use of technology, ownership structures and actors involved.
Currently, at least two million European citizens collectively engage in more than 8400 energy
communities, having realized a minimum of 13000 projects since 2000
110
. They support the energy
transition and contribute to the competitiveness of renewable energy technologies in various ways. Energy
communities raise technology awareness and acceptance, promote energy efficiency, produce and distribute
renewable-based electricity, provide services around e-mobility, and run energy consulting services. They
experiment innovatively with business models and self-sufficiency concepts for the benefit of local
communities.
Figure 16 details the number of initiatives and projects per country. Differences across countries can be
explained by varying strength of governmental support and incentives schemes, historic path dependencies
of the energy system, and social and technological preferences. Current total renewable capacities installed
by energy communities in Europe can be estimated at least as high as 6.3 GW, contributing up to 7% to the
nationally installed capacities. The lion’s share is taken by solar PV (~50%), followed by onshore wind
(~10%). A conservative estimate of the total invested finances amounts to at least 2.6 billion EUR
111
. The
continuation and extension of energy communities in Europe depend on favorable legislation and financial
incentives as well as on the competitiveness of technologies that are accessible to citizens (i.e., granular
technologies, such as roof-top solar, small- to medium-size wind and solar parks, heat pumps, micro hydro,
biomass furnaces, and biogas installations).
“EU Border Regions: Living labs of European integration”, COM(2021) 393 final, 14.7.2021.
Schwanitz, V. J., Wierling, A., Zeiss, J. P., von Beck, C., Koren, I. K., Marcroft, T., … Dufner, S. (2021, August 22). The
contribution of collective prosumers to the energy transition in Europe - Preliminary estimates at European and country-level
from the COMETS inventory.
111
ibid
109
110
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Figure 16
Collective action initiatives in Europe
Source
Schwanitz, V. J., Wierling, A., Zeiss, J. P., von Beck, C., Koren, I. K., Marcroft, T., … Dufner, S. (2021,
August 22). The contribution of collective prosumers to the energy transition in Europe - Preliminary estimates at
European and country-level from the COMETS inventory.
Many of the above-identified energy communities are member of REScoop.eu
112
the European federation
for energy cooperatives.
Whilst the legal organizational form of cooperative is by far the most prominent for energy communities
across the EU, there are various types of legal entities (partnerships, limited liability companies,
associations etc.), as well as organizational and social arrangements that have developed in the different
Member States of the EU. Indeed, various member states will have different experiences with energy
communities. For example, in the Netherlands community actors are usually individuals or small
businesses, whilst in Germany and Greece municipalities have played a crucial role.
Until today, less than half of Member States have notified the full transposition of the Electricity Market
Directive rendering it difficult to establish a causal relation between the surge in energy communities and
the EU legal frameworks for ‘citizen energy communities’. So far, no Member State has notified full
transposition of the Renewable Energy Directive (REDII). Whilst the EU frameworks provide a good basis
to trigger the development of energy communities across the EU,
113
much will depend on how Member
States will implement the enabling framework for these types of energy communities, notably how Member
States translate the right to non-discriminatory, proportionate, fair and transparent procedures. For
‘renewable energy communities’ the implementation of Article 22 (7) RED II will be of particular
importance as energy communities today struggle to build their business case without financial support.
Partly due to the phase-out of feed-in-tariffs and transition to premium price auctions, the development of
112
113
www.REScoop.eu.
Energy Communities under the Clean Energy Package - REScoop.
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energy communities in Germany have stagnated as they experience difficulties competing for subsidies
with large undertakings.
114
In response, energy communities are exploring new activities and services such
as electro-mobility sharing, optimizing collective self-consumption, interacting with dynamic pricing and
providing flexibility services to the public network. Especially the latter is a promising activity to create an
additional source of revenue for energy communities, provided existing barriers are removed (complexity
of ITC services, lack of local flexibility markets at DSO level, difficulties with aggregating different devices
due to lack of data interoperability, lack of standardization etc.). Some of these barriers are already
addressed through the Electricity Market Directive.
115
The NECP framework already has a requirement for Member States to report on renewable energy
communities, however only a few Member States included (voluntarily) quantitative targets or concrete
measures for the development of energy communities in their NECPs (most demonstrate awareness but no
planning). Member States with early legal frameworks in place for energy communities, including the
Netherlands, Denmark and Germany today have the highest number of energy communities (see graph
above).
116
Outdated regulatory frameworks and administrative procedures adjusted to large vertically
integrated undertakings have also been identified as one of the major barriers for the development of energy
communities.
117
In order to boost the development of energy communities in the sense of the EU Directive, the Commission
is in the process of setting up an Energy Community Repository. The Energy Community Repository will
contribute to the dissemination of best practices and provide technical assistance for the development of
concrete energy community initiatives across the EU. The aim of this project is to assist local actors and
citizens willing to set up REC and CEC in rural and urban areas, through technical and administrative
advice and encourage their development. The data collected through this project would constitute a very
important source of information for European institutions and national, regional and local authorities. It
will contribute to the identification and dissemination of best practices and know-how for communities that
wish to set up a sustainable energy project, in particular in Member States that do not have so far strong
tradition of energy community initiatives. The projects that will receive targeted technical assistance under
this repository will serve as examples of positive local actions that should inspire widespread efforts for
citizen-driven initiatives through the development of energy communities. . Energy community initiatives
could also be supported by cohesion policy funding, including through the Community Led Local
Development (CLLD) instrument. In addition, the Commission is in the process of setting up an Advisory
Hub for rural energy communities, i.e. ‘citizen energy communities’ and ‘renewable energy communities’
in rural areas in order to remedy the disproportionate impact of the energy transition on communities in
rural areas by supporting the development of sustainable energy action that can be conducive to the local
economy and increase security of energy supply. Special emphasis will be put on the involvement to local
authorities, linked to the Covenant of Mayors.
114
115
116
117
Entwicklung und Umsetzung eines Monitoringsystems zur Analyse der Akteursstruktur bei Freiflächen-Photovoltaik und der
Windenergie an Land (umweltbundesamt.de).
Article 32 on local flexibility markets; Article 23 juncto 24 on data management and interoperability.
One of the drivers for the heterogeneous picture of energy communities across Member States have been the varying national
legislative frameworks in place for energy communities. See Frontiers, ‘Assessment of policies for gas distribution networks,
gas DSOs and the participation of consumer’, pp. 8-9; Ronne, A., and F.G. Nielsen, ‘Consumer (Co-)Ownership in Denmark’,
Energy Transition - Financing Consumer Co-Ownership in Renewables, Palgrave Macmillan, Cham, 2019.
Benjamin Huybrechts and Sybille Mertens, ‘The relevance of the cooperative model in the field of renewable energy [2014]
Annals of Public and Cooperative Economics, pp. 199-201; Binod Prasad Koirala, ‘integrated community energy systems’
(DPhilthesis, Delf University of Technology 2017, p.1; Stakeholder interview with Cormac Walsh from Energy Cooperatives
Ireland, 12th of June 2021; Frontier et al’s report (2019), ‘Potentials of sector coupling for decarbonisation – Assessing
regulatory barriers in linking the gas and electricity sectors in the EU - Final report’, p. 49.
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2.6.2. Renovation of buildings - One stop shop
The market-based model of one-stop shops (OSSs) is among the most prominent recent approaches aimed
at supporting building renovation decisions. OSSs work as a market place, offering integrated renovation
solutions, encouraging action, guiding building owners through the entire renovation journey, providing
technical and administrative assistance and helping secure the right financial solutions. While all energy
efficiency projects could be good candidates, OSSs are particularly well equipped in addressing the
renovation market fragmentation barriers on both demand and supply sides, overcoming some of the
sociotechnical barriers surrounding the decision to renovate in a holistic way. For these reasons, OSSs are
especially well suited to support small-scale renovation projects (e.g. individual buildings or apartments).
OSSs are only recently appearing in Europe. From a recent analysis of the current OSSs present in Europe
conducted by the JRC
118
, 62 OSSs have been identified across the EU in 2020, located in 22 countries, 57
were found to be operating or planned to be launched soon across the EU and Norway, and 6 have been
closed. Around two third of the Member States have at least one OSS on the national renovation market.
Regionally, Western Europe has the most abundant OSS markets, centred in France, the Netherlands, the
UK, Belgium, Spain and Denmark.
Overall, OSSs have been found to be a promising approach to bring together homeowners and actors from
the construction supply side and increase demand in energy renovations because they i) are locally
embedded; ii) establish a trust-based relationship with the clients; iii) simplify the renovation decision
process, informing, motivating, and providing support from the start to the end; iv) boost the interest of not
yet committed energy users through awareness raising; facilitate access to financing and occasionally offer
better rates; v) follow-up on finished projects; vi) and reach out to vulnerable populations, contributing to
tackle energy poverty.
2.6.3.
ESCOs
Energy Service Companies (ESCOs) are another business model that plays an important role in energy
efficiency and functioning of energy services markets by providing turnkey services, addressing several
market barriers on the ground and unlocking the energy savings potential
119
. Their distinct feature is
associated with their incentive/remuneration structure; ESCOs assume performance risks by linking their
compensation to the performance of their implemented projects, thus incentivising themselves to deliver
savings-oriented solutions.
The EU’s legislative framework contributes to fostering the energy services market. The Energy Efficiency
Directive (EED)
120
provides the key requirements for promoting energy services and energy performance
contracting in the Member States. The revised EED
121
strengthens the role of energy services and notably
use of Energy Performance Contracts (EnPC) in contributing to the renovation wave with specific focus
given to the public sector to lead by example.
118
Boza-Kiss, B., Bertoldi, P., Della Valle, N. and Economidou, M., One-stop shops for residential building energy renovation in
the EU, EUR 30762 EN, Publications Office of the European Union, Luxembourg, 2021, ISBN 978-92-76-40100-1,
doi:10.2760/245015, JRC125380.
119
Boza-Kiss, et al. 2017, 2019; Moles-Grueso, et al. 2021.
120
Directive (EU) 2018/2002 of the European Parliament and of the Council of 11 December 2018.
121
Proposal for Directive (EU) 2021/0218 of the European Parliament and of the Council of 14 July 2021.
37
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The average ESCO market of the European Union has been on a steady rise for the last decades, and the
growth and maturity has continued or even increased slightly between 2015 and 2018. However, important
barriers still remain: lack of technical knowledge and experience in procurement, lack of financing and low
level of awareness of energy performance contracting which have contributed to the low level of trust to
energy services providers. The drivers and barriers determining ESCO markets are distinctly local and
specific to the legal, policy, fiscal, financial and cultural context in each Member State. With the recent
revision of the EED, it is expected that persisting barriers can be better overcome to ensure necessary
conditions and incentives for the uptake of the EnPC and energy services markets.
Figure 17 The speed and direction of development between 2015 and 2018 in national ESCO markets
Source: The assessment is purely based on own research data (JRC survey 2018)
It is therefore important that Member States continue promoting the uptake of energy services and energy
performance contracting through clear and transparent rules including certification of energy services
providers, and also capacity building. Dissemination of experience of implemented projects and best
practices are necessary to increase trust and ensure better understanding of energy performance contracting
and ESCO’s role in contributing to the renovation wave and bringing multiple benefits including new and
innovative business models.
Table 4
.
Size of the ESCO and EnPC markets of the EU in JRC reports.
122
122
Boza-Kiss Benigna, Zangheri Paolo, Bertoldi Paolo, Economidou Marina, Practices and opportunities for Energy Performance
Contracting in the public sector in EU Member States, EUR 28602 EN, Publications Office of the European Union,
Luxembourg, 2017, ISBN 978-92-79-68832-4, doi:10.2760/49317, JRC106625.
38
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Number of active
ESCOs (2018)
123
Number of EnPC
providers
(2016)
124
Number of EnPC
providers to the
public sector
(2020)
125
246
5
9
5.8
10.5
0
7.2
2.7
2
3
10
8
12
4
10.8
20
0
2
n/a
n/a
40
7.5
Number of EnPC
contracts signed
(2016)
126
Number of EnPC
contracts signed
in the public
sector (2020)
127
617
11
11
10
50
0
25
9
1
5
50
58
8
20
4
230
6
6
n/a
n/a
n/a
13
EU
AT
BE
BG
HR
CY
CZ
DK
EE
FI
FR
DE
GR
HU
IE
IT
LV
LT
LU
MT
NL
PL
1383
36
9
12
12.5
22
15
4
4
15
45
560 (Service
suppliers)
6
10
25
3400
4.5
n/a
n/a
n/a
57 (EnPC only)
25
261
17.5
>7
12.5
5
19
9
7
0
6
10
8.5; 138
130
; 50
131
3
133
5
134
n/a
4.5-20(?)
3
4.5
1(?)
0
15; 57
135
12.5; 20
136
559
26.5
5
2
3
0
45
11
“few”
4
40
30
5
1.5
n/a
50
0
3.5
1
0
27
15
Value of the
EnPC contracts
signed in the
public sector
(m€) (2020)
128
975
6.5
20
3
25
0
21
70
1
3.5
70; 50
129
90; 7,700
132
100
2.8
16.6
250
12.6
3.2
n/a
n/a
n/a
39
123
When not stated the contrary, data is about 2018. Main source:
Boza-Kiss, B., Toleikyté, A., Bertoldi, P. 2019. Energy Service Market in the EU - Status review and recommendations 2019.
Scientific and Technical Report. European ESCO Market Reports series. EUR 29979 EN, European Commission, Luxembourg,
2019, ISBN 978-92-76-13093-2, doi:10.2760/768, JRC118815.
124
When not stated the contrary, data is about 2016. Main source: Boza-Kiss et al. (2017).
125
Source: Moles-Grueso, S., Bertoldi, P., Boza-Kiss, B. Energy Performance Contracting in the Public Sector of the EU – 2020,
EUR 30614 EN, Publications Office of the European Union, Luxembourg, 2021, ISBN 978-92-76-30877-5,
doi:10.2760/171970, JRC123985.
126
Source: Boza-Kiss et al. (2017).
127
Source: Moles-Grueso, et al. (2021).
128
When not stated the contrary, data is about 2020. Main source: Moles-Grueso, et al. (2021).
129
Value for 2018, in Boza-Kiss et al. (2019).
130
Value for 2018, in Boza-Kiss et al. (2019,
131
Value for 2020, in Moles-Grueso et al. (2021).
132
Value for 2018, in Boza-Kiss et al. (2019).
133
Value for 2018, in Boza-Kiss et al. (2019).
134
Value for 2018, in Boza-Kiss et al. (2019).
135
Value for 2018, in Boza-Kiss et al. (2019).
136
Value for 2018, in Boza-Kiss et al. (2019).
39
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PT
RO
SK
SI
ES
SE
13.4
10
40
10
70
20
12.5
<10
10
137
4
138
25
4.5
15
4
8.5
6
>50
3
n/a
0
45
15
250
6
13
0
25
44
59
1
50
0
25
96, 25
139
60
10
Country values are calculated using average values of estimates reported in a specific year (i.e. 2016, 2018
or 2020). For Total EU values, the most recent values reported were selected.
137
138
139
Value for 2018, in Boza-Kiss et al. (2019).
Value for 2018, in Boza-Kiss et al. (2019).
Value for 2018, in Boza-Kiss et al. (2019).
40