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.

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.

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.

The EU’s legislative framework contributes to fostering the energy services market. The Energy Efficiency Directive (EED) provides the key requirements for promoting energy services and energy performance contracting in the Member States. The revised EED 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.

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. 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.

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.

OSSs are only recently appearing in Europe. From a recent analysis of the current OSSs present in Europe conducted by the JRC, 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.

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).

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.

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). 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.

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, 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 energy communities in Germany have stagnated as they experience difficulties competing for subsidies with large undertakings. 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.

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.

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. 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).

Currently, at least two million European citizens collectively engage in more than 8400 energy communities, having realized a minimum of 13000 projects since 2000. 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.

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.

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.

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 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.

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.

·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;

·‘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’;

Under the Clean Energy Package, extensive provisions were introduced in the Electricity Directive (‘citizen energy communities’) and the Renewable Energy Directive (‘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:

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.

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.

The analysis of the 22 RRPs approved by the Commission by 5 October 2021 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 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%).

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. 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.

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.

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. 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.

Europe and China are currently vying for top position among markets active in energy transition investment. 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..

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. 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.

The renewable energy sector generally proved to be resilient during the pandemic. 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). 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. In all IEA global post-pandemic scenarios, renewables grow rapidly – mainly solar due to its high-cost reductions (followed by onshore and offshore wind).

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. 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.

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 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. Next Generation EU financing and the EU Sustainable Finance Regulation may further accelerate clean energy VC support.

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.

As an example, blended finance 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 and the German “Future Fund”). The future success of SPACs faces uncertainty.

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. This is still a poor fit for the business model of “traditional” VC funds.

·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.

·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 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.

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.

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.

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.

While some of their offerings overlap, these institutions are designed to complement each other across the start-up’s life-cycle. 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. After the first plant in Sweden, Northvolt plans a joint venture with Volkswagen to build a battery plant in Germany.

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.

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.

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.

The European Innovation Council (EIC), 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. 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 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:

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.

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.

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.

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 proliferation78.

Worldwide, the Energy domain 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%). 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.

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%). Furthermore, out of the total number of climate tech Unicorns, those based in the EU account for only 6%, compared to US (56%) and China (26%).

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 firms received 16% of global VC funding in the climate tech domain compared to only 8% of overall VC funding (all domains). 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.

Worldwide VC investments in climate tech start-ups and scale-ups reached EUR 14 billion in 2020, 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.

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. 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.

The Climate Tech domain encompasses a broad set of sectors which tackle the challenge of decarbonising the global economy. 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.

According to the recent UNESCO Science Report, the volume of scientific publications from the EU on nine SDG7 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.

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. 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.

Overall, in terms of high-value inventions, 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.

Following a peak in 2012, overall patenting activity in clean energy technologies decreased. 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.

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.

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.

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, 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.

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, 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.

After the last economic crisis, public investments in R&I prioritised by the Energy Union, 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, however these do not seem to keep pace with increases in GDP or R&I spending in other sectors.

While employment in the wind sector has decreased in the EU in the past years, the labour productivity 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.

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 .

‘Renewable energy’ jobs created on average EUR 104 000 of gross value added per employee in 2018 with an average annual growth 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.

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.

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.

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) . Highest share (about 25%) of women in patent applications is in chemistry and health sectors.

While women accounted for an average of 32% of the workforce in the renewables sector in 2019 , 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% . 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 .

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 . Various efforts at EU level (DigiPLACE project, 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.

To support the uptake of next-generation skills essential for the EU green transition, the EU launched in 2020 the Pact for Skills 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 . 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 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 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 .

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 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 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 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 .

Looking more closely at direct and indirect jobs per renewable energy technologies over the period 2015-2018, shows that overall employment in EU has grown by an average 1% annual growth . 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 (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.

Literature is inconclusive when it comes to the effects of carbon pricing on different elements of competitiveness. Calel and Dechezlepretre (2016) find that EU ETS has increased low-carbon innovation 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) 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 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-analysis of Venmans et al. (2020) on the impact of carbon pricing on a range of economic indicators, 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.

Comparing EU to the world’s biggest economies in terms of carbon pricing , (based on OECD data from 2018 on pricing carbon emissions of energy use), only South Korea had higher level of pricing, in which over 65% of emissions were priced above 5 EUR/tCO2, mainly via taxes on fuel use . In the EU, on average, over 41% of emissions were priced above 5 EUR/tCO2. Also, over 27% was priced above 120 EUR/tCO2. 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/tCO2. 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/tCO2. 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/tCO2. In the electricity sector, South Korea had again the highest pricing, where 72% of emissions were priced at 5-30 EUR/tCO2 and 25% of emissions priced at 30-60 EUR/tCO2. In the EU, on average 77% of emissions were priced at 5-30 EUR/tCO2. In the US and China, 93% and 100% of emissions respectively, were not priced at all or priced below EUR 5 per tCO2.

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.

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 CO2. 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) per tonne in July 2021. The EU Emissions Trading System (ETS) prices have risen from about 25 Euros per tonne of CO2 in 2020 to around 50 Euros per tonne of CO2 in mid-2021.

Despite a short-term reduction between 2008 and 2013, the EU energy import dependency 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.

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. Bioenergy accounted for 59% of the total renewable energy supplied, followed by wind (14%), hydro (12%), geothermal (8%) and solar (7%). 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.

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.

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%. In the more recent period (2015-2019) the majority of Member States achieved reductions in energy intensity, with the exception of Belgium, Hungary and Poland. 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. The reduced energy intensities demonstrate the decoupling of energy demand from economic growth.

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.

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 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.

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.

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.

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.

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.

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 – updating it following the COVID-19 crisis – 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 policy context is complemented by a new EU budget (the Multiannual Financial Framework) covering the period 2021-2027. The EUR 1 074 billion 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, is detailed in section 2.5.

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 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 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 SWOT analysis presented in the offshore wind chapter applies to the onshore wind as well. An additional threat for onshore wind turbines are in the build environment and there is more resistance to the build of new wind farms. Considering that the overall capacity is expected to be 5-6 times higher in 2050, land use and public acceptance will become potential threats. Continuous effort to reduce environmental and social impact will be needed.

The committed capacity of wind energy installations (268.4 GW) in the EU Member States National Energy and Climate Plans (NECP) until 2030 will form a good basis streamlining investments to the wind sector while on the same time contributing to the clean energy transition and 2050 climate targets. The committed capacity of wind energy installations (268.4 GW) in the EU Member States National Energy and Climate Plans (NECP) until 2030 will form a good basis streamlining investments to the wind sector.

Within the next decade, it is expected that Europe will maintain its leadership position in annual growth of offshore wind, yet China, Asia Pacific and North America are expected to develop a significant market size (i.e. installed capacity) of more than 50% (average market shares in the period 2025 – 2030: China 21%, Asia Pacific 19%, North America 13%). With respect to onshore wind China will remain the largest market (average annual market share of about 50% in the period 2020-2025) followed by the Europe (18%), North America (14%) and Asia (excluding China) (8%).

Supply of critical raw materials for wind generators are mainly imported from China. Material shortages and disruptions pose a potential risk to EU wind energy production industry. Circularity, recycling and substitution are therefore priority areas of innovation to abate these risks, while improving the overall sustainability of the sector and are included in the 2021-2022 Work Programme of Horizon Europe.

Since 2016, EBIT margins of EU OEMs are declining due to high competition in turbine orders particularly in the period 2017-2018 and increased material costs for main turbine components. Despite the record year in installations in 2020, these factors were further intensified through the impact of Covid-19 which created logistic challenges for all manufacturers.

The EU has had a positive trade balance in wind energy related eqipment in the last 20 years. Yet there is some stagnation in the growth of this indicator. This can be connected to the Chinas trade policy. Following a set of policies protecting China’s domestic market (e.g. local content requirements, import tariffs and local VAT exemption), since 2007 imports of wind generating sets to China fell drastically, and did not recover until today. 21% of Chinese wind-related exports in 2018 were destined for the EU market.

According to WindEurope, European wind turbine manufacturers have a 42% share of the global market for wind turbines. Of the 10 biggest wind turbine manufacturers in the world, 5 are EU-based. Among the top 10 Original Equipment Manufacturers (OEMs) in 2018, European OEMs led with 43 % of market share, followed by the Chinese (32 %) and North American (10 %) companies. The European OEMs in the wind energy sector held a leading position in the last few years. In 2020 they lost for the first time their first rank to the Chinese OEMs when analysing the Top10 OEMs in terms of market share (EU: 28%; China: 42%). This can mainly be explained by a surge in new installations in the Chinese wind market following China’s shift from Feed-in-Tariffs towards a tender-based support scheme necessitating projects approved before 2018 to be grid-connected latest by the end of 2020 in order to receive the expiring Feed-in-Tariff.

The resource efficiency and dependence indicators are for the entire wind sector and cannot be split between onshore and offshore wind. Please see the offshore chapter.

Since 2016 EBIT margins of EU OEMs are declining due to high competition in turbine orders particularly in the period 2017-2018 and increased material costs for main turbine components. In 2020 these factors were further intensified through the impact of Covid-19 which created logistic challenges for all manufacturers. As a result only Vestas could present a positive EBIT margin (+5.1%), whereas NordexAcciona (-1.3%) and SiemensGamesa RE (-2.5%) reported negative figures.

This section is common for the entire wind sector and cannot be split between onshore and offshore wind. Please see the offshore chapter.

The trade indicators are for the entire wind sector are not split between onshore and offshore wind. Please see the offshore chapter.

Europe is a recognized market leader in the wind energy. As onshore wind projects necessitate large investments with strong pricing competition, driving down margins, economies of scale provide a competitive advantage. It is estimated that the sector offers between 240 000 and 300 000 jobs. With the annual market size (in terms of revenues) of the EU in onshore wind expected to grow from about 25.3 BEUR in 2020 to about 35.4 BEUR in 2050 wind energy can make a substantial contribution, not only in the energy mix but can also contribute to the new challenge of the European industry in its transition towards climate neutrality and digital leadership. The trade indicators are for the entire wind sector are not split between onshore and offshore wind. Please see the offshore chapter.

The community production indicators are for the entire wind sector and are be split between onshore and offshore wind. Please see the offshore chapter.

The energy intensity is analysed based on the cumulated energy demand (CED) along the lifecycle of onshore wind. Life cycle analyses from both, specific case studies and OEM data (SiemensGamesa, Vestas, NordexAcciona) indicate a decrease in the CED from 0.12 - 0.17 MJinput/kWhel in 2011 to current levels a range of about 0.08 - 0.12 MJinput/kWhel. Figure 44 shows that this decrease is driven by the continuous development of more powerful turbines up to the 5MW scale which allow to generate more electricity per input of primary energy than their predecessors.

Econometric models on regional and national level estimate the number of direct jobs between 0.5 to 2.3 FTE/MWInstalled with European estimates declining to about 0.7 FTE/MWInstalled in 2019 . Long term scenario models estimate future labour productivity for onshore wind at a similar scale with values ranging from 0.35 to 0.9 FTE/MWInstalled.

As compared to offshore wind, the onshore wind sector shows a lower specific labour productivity when referring to latest case studies and econometric models ( Figure 43 ). Direct job estimates on single onshore wind projects (given in full time equivalent years) range from 1.7 – 3.0 FTE/MWproject for projects in the period 2015-2019. Differences in this spread seem to originate from project size and geographical scope .

This section concerns the entire wind sector and is not split between onshore and offshore wind. Please see the offshore chapter.

There are 248 operational manufacturing facilities in Europe (30% of all facilities, 214 (26 %) in EU countries). 155 facilities are dedicated to onshore wind and a further 66 supply to both onshore and offshore wind. Onshore wind projects necessitate large investments with strong pricing competition, which drives down margins. As a consequence, economies of scale provide a competitive advantage, meaning that the incumbents of the established industry create an adverse environment for newcomers throughout the value chain: in 2019, only 15 start-ups received private funding. 40% of these companies were headquartered in the EU.

The gross value added growth trends indicators are for the entire wind sector and are not split between onshore and offshore wind. Please see the offshore chapter.

A recent study estimates the annual market size (in terms of revenues) of the EU in onshore wind to grow from about 25.3 BEUR in 2020 to about 35.4 BEUR in 2030. In 2020 this represents about 15.2% of the global market. Across the different value chain segments the global share of the EU market ranges from 9.6% (Logistics & Installation) to 18.7% (Turbine) ( Figure 42 ).

Europe is a recognized market leader in the wind energy: 48% of active companies in the wind sector are headquartered in the EU compared to the RoW. The European OEMs in the wind energy sector have held a leading position in the last few years although their market share has decreased in 2018 mainly in favour of the Chinese OEMs. Within the next decade, Europe will maintain its leadership position in annual growth, yet China, Asia Pacific and North America are expected to develop a significant market size (i.e. installed capacity) of more than 50%. Among the top 10 OEMs in 2018, European OEMs led with 43 % of market share, followed by the Chinese (32 %) and North American (10 %) companies. In 2020 Chinese OEMs (42%) overtook for the first time their competitors from EU-27 (28%) and the US (12%), following the ongoing transition in China from a Feed-In Tariff towards a tender based support system.

Although publication counts seem to indicate a stronger activity outside the EU countries on country level, the EU as a whole ranks first (5 406 publications, 27%). Moreover, publications from the EU countries leading in wind energy deployment and research show high citation impacts indicating a higher recognition of their scholarly outputs than those from their global competitors.

The EU is leading in high value patents (with the major EU OEMs filing most of the inventions), yet experiencing a decrease since 2012, due to strong performance in high-value patents by major companies from the US (e.g. General Electric) and Japan (e.g. Mitsubishi Heavy Industries, Hitachi).

Over the last decade private R&D spending held a relatively constant level between EUR 1.6 billion and EUR 1.9 billion. Moreover, private R&D investments topped public R&D investments by a factor of 10 during this period.

The indicators are for the entire wind sector and cannot be split between onshore and offshore wind. Please see the offshore chapter.

The patenting trends indicators are for the entire wind sector and cannot be split between onshore and offshore wind. Please see the offshore chapter.

Japan is by far the largest investor, followed by Germany the US, and Norway. Total investment of EU countries over the past 3 years totalled EUR 496 million. Five out of the ten top countries where these investments occurred are in the EU.

Although most of the EU R&I funds was spent of offshore or floating offshore wind in 2020, about 37% of the EU R&I funding was also awarded to projects addressing the broader wind categories which also facilitate innovations in the onshore wind sector. Since 2009 about 52% of the EU R&I funding was granted through FP7 and H2020 to these projects addressing R&I priorities apart from the offshore dimension (see Figure 9 in offshore chapter).

EU public investment has remained roughly constant, between 2012 and 2016 around EUR 120-145 million with an increasing trend since then, reaching EUR 179 million by 2019 ( Figure 41 ). Preliminary numbers for 2020 on selected EU MSs indicate that this increase of public investments continues.

According to the JRC-TIMES ‘Zero Carbon’ scenario, investment in wind energy clearly dominates among the different low carbon energy technologies with about EUR 2 640 billion until 2050 (of which EUR 1851 billion are deployed onshore).

Cost assumptions on onshore wind within the PRIMES model see investment costs dropping to about EUR 850 per kW until 2050. According to WindEurope data, investment costs are expected to decrease from EUR 1300 per kW in 2019, to EUR 1 000 per kW in 2030, to EUR 850 per kW in 2050.

Although a decrease in the cost of finance (weighted average cost of capital (WACC)) of onshore wind projects can be observed in the last years this indicator varies considerably among EU countries. Whereas many central EU countries benefit from low WACC (1.3%-4.3%), less developed markets such as Greece, Romania and the Baltic States show a WACC range of about 7% to 10%. This spread can to some extent be explained by diverging interest rates and country risks faced by investors. Evidence suggests that a further decrease (and convergence among countries) in WACC could be achieved by focussing on de-risking debt financing of wind energy projects by policies that implement support schemes decreasing the volatility of a projects cash flow (e.g. Contracts for Difference).

According to WindEurope data, the LCOE of onshore wind will decrease from EUR 40 per MWh in 2019, to EUR 26 per MWh in 2030, to EUR 19 per MWh in 2050. BNEF estimates the LCOE of onshore wind in EU countries between EUR 24 and 55 per MWh, depending on for example location and financing conditions.

Based on the main cost estimates and projections on onshore wind, Figure 40 identifies a LCoE range spanning from EUR 34 per MWh to EUR 74 per MWh in 2019 which is expected to further decline to values between EUR 19 per MWh to EUR 33 per MWh in 2050.

The age structure of the EU onshore wind fleet indicates that repowering will play a crucial rule in the coming years. About 18% of the EU onshore fleet is older than 15 years, approaching quickly their design lifetime (20-25 years). This trend is even more pronounced for the leading MS in terms of installed capacity (e.g. Germany, Spain) and first-mover countries (Denmark) ( Table 2 ). Repowering of onshore wind plays a crucial role in reaching the countries NECP targets and offers the possibility to optimise the resource potential of onshore wind sites with the best wind resource while using more powerful but fewer turbines.

In 2020, the EU installed 10.5 GW of wind power capacity, bringing its cumulative wind power capacity to 178.7 GW. Based on the ambitions set in European Member States’ National Energy and Climate Plans (NECPs), in 2030 the installed capacity of EU should be 295 GW.

The cumulative installed capacity of wind energy globally grew from 198 GW in 2010 to about 743 GW in 2020. Since 2015, the majority of global installed capacity is located in China (39% in 2020), followed by the EU (24%) and the US (16%) . The global wind power industry is expected to install more than 600 GW of new capacity over the next ten years, becoming a market worth EUR 77 billion in 2019 to EUR 1 trillion over the next decade.

Cumulative installed onshore wind capacity in the EU increased by 109% from 78.4 GW in 2010 to 164.1 GW in 2020. Since 2018 reduced annual onshore wind additions can be observed mainly originating from moderate deployments in Germany due to complex permitting rules and potential exposure to legal challenges (regional siting plans are not robust). Moreover Germany’s Renewables Law aims for a relatively modest increase in onshore wind (to 71 GW as compared to today’s 55 GW) until 2030.

Onshore wind is a crucial part of the energy mix, as it is a highly cost-effective renewable technology, set to grow further as more sites are under development. It is expected to deliver the main part of EUs renewable electricity by 2030. EU onshore wind deployment in deep decarbonisation scenarios until 2050 range from about 370 GW to 950 GW Deploying and integrating this amount of wind energy will bring about both environmental benefits and economic opportunities; stimulating research and innovation is key in this regard.

Despite the numerous examples showcasing that wind can be competitive compared to conventional energy sources, the technology is still perceived as being expensive. It also requires a high initial investment. There is intensive competition from manufacturers based in China and the US. Differing and changing rules, regulations and support schemes in different countries also poses a threat to the expansion of wind energy. In addition, EU companies are increasingly faced with third country governments putting in place market access barriers, local content requirements or other discriminatory or otherwise trade & investment restrictive measures aimed at promoting their domestic industry. A further risk for wind energy is the supply of raw materials which are mainly imported from China. Circularity of wind installations is still to be further developed. Wind blades, for instance, are often made in composite materials hard to re-use or recycle. Circularity requires R&I and deployment, but the industry is already very committed for circularity.

With the world markets shifting to green energy and away from conventional energy sources there will be an increasing market for wind turbines in the coming years. The growth of smart grids infrastructure and interconnections will permit higher penetration levels of wind energy. Floating offshore structures offer the potential of economic sustainability and improved public acceptance. With 48% of the active companies in the wind sector headquartered in the EU, holding a leading market position, the above present a unique opportunity for further expansion and competitiveness. The age structure of the EU onshore and offshore wind fleet indicates that repowering will also play a crucial rule in the coming years.

In order to be viable, wind energy installations should be placed in high wind potential sites, therefore there are geographical limitations which should be taken into account. In addition, important wind potential is often observed in sites where the grid is not strong enough or is not existent, necessitating important investment in grid infrastructure. Concerns of environmental, visual and noise impact of wind installations still exist, and in some cases, like offshore installations, are not well known. The intermittent and variable nature of wind is also a concern when wind reaches high grid penetration levels, nevertheless this can be managed through grid interconnection, wind forecast and transmission planning. For offshore wind, the multiple uses of the ocean (e.g. fisheries, biodiversity, energy production) is a matter of concern, which requires Maritime Spatial Planning and collaboration between Member States.

Wind energy is one of the most promising, clean energy source, a reliable, cost effective, large-scale technology with a steadily increasing installation rate, and with the potential of substantial contribution to the European energy mix and to and the achievements of the EU climate and energy targets.

Making a success of offshore wind energy can yield great benefits for Europe, it can ensure the EU delivers a sustainable energy transition, and bring the Member States on a realistic path to zero pollution and climate neutrality by 2050. It can also make a major contribution to the post COVID-19 recovery, as a sector where Europe’s industry has world leadership and which is forecast to grow exponentially in the coming decades.

For offshore wind fixed-bottom and floating installations, the challenge is to create the optimum environment to maintain and accelerate the momentum created in the North Sea, extending best practice and experience to other sea basins, starting from the Baltic Sea, and supporting global expansion.

The blade is another key component of a wind turbine. Its performance requirements lead to a selection of materials that combine high strength-to-weight with high stiffness and fatigue resistance (Reinforced composites such as glass-fibre composites or carbon fibres). It is estimated that about 4 700 turbines (or 14 000 blades) could be decommissioned by 2023 and would need to be sustainably disposed. Although several recycling routes for glass fibre and carbon fibres exist (e.g. fluidised bed, solvolysis, high voltage pulse fragmentation, pyrolysis, mechanical grinding) and are at a high TRL, competitiveness as compared to new material sourcing has not been reached yet. The current preferred route for composites recycling is co-processing in the cement industry to produce clinker cement, thus not a recovery of the initial material. Future innovation in composite blade recycling might necessitate large scale demonstration plants, synergies with other sectors (e.g. use of recycled blades in manufacturing processes) among others . Moreover new 100% recyclable materials replacing composites gain more attention (e.g. blade manufacturer LM Wind Power and chemical company Arkema using a thermoplastic resin to produce 60 to 80 meter fully recyclable blade prototype). Lately a Vestas led consortium announced a novel chemical recycling process which would allow to fully recycle thermoset composites.

A bottleneck assessment performed in EC (2020) for wind turbines shows that the risk to the supply of raw materials is the highest along the supply chain. This risk diminishes downstream through a medium risk for the supply of processed materials and component, until an undetectable risk for assemblies. Indeed, the European share increases from 1% for the raw materials, to 12% for processed materials, 18% for components, until 58% for assemblies.

The REEs, i.e. neodymium, praseodymium and dysprosium, are key ingredients in the most powerful magnet material, namely neodymium-iron-boron (NdFeB). This magnet is used to manufacture permanent magnet synchronous generators (PMSG), which are used in the major wind turbine configurations. The most relevant materials required in wind power generation are listed in Figure 36.

A key component of a wind turbine is the generator, which converts the mechanical energy to electrical energy. There are three main types of wind turbine generators: direct current, alternative current synchronous and asynchronous. Considering the fluctuating nature of wind, it is advantageous to operate the generators at variable speed to reduce the mechanical stress on the turbine blades and drive train. Permanent magnet (PM) generators have been introduced in the recent decades in wind turbines applications due to their high power density and low mass. In particular, the Direct Drive PMSG offers certain advantages in terms of efficiency, weight, dimension and maintenance. However, this type of turbine is associated with a high demand for Rare Earth Elements (REEs).

Yet the European Original Equipment Manufacturers in offshore wind rank among the Top 3. SiemensGamesa RE is leading in first place (24%), closely followed by Goldwind (23%) from China while the second European manufacturer Vestas ranks in third position (14%).

Similarly as in the onshore case, offshore wind projects approved before 2018 and grid connected by end of 2021 still receive a Feed-in-Tariff whereas auctions in the following two years will implement a price cap. Thus an increased deployment activity in China (more than 3GW) led to a strong increase in the market share of Chinese OEMs (47%) leading ahead of the European manufacturers (39%) when assessing their cumulative market share.

This latest surge in Chinese wind deployment can, to some extent, be explained through a set of new policies targeting renewable energy integration and a shift from Feed-in-Tariffs towards a tender-based support scheme. This necessitates projects approved before 2018 to be grid-connected latest by the end of 2020 in order to receive the expiring Feed-in-Tariff.

Danish Vestas remained in first place, yet a strong increase in new deployments using turbines from both Chinese OEMs and GE Renewable Energy from the US can be witnessed. This can be explained by a surge in new installations in the Chinese and US wind market.

The European Original Equipment Manufacturers (OEMs) in the wind energy sector have held a leading position in the last few years. In 2020 they lost for the first time their first rank to the Chinese OEMs when analysing the Top10 OEMs in terms of market share. Among the top 10 OEMs in 2020, Chinese OEMs led with 42 % of market share, followed by the European (28 %) and North American (12 %) companies.

On a single country level the United Kingdom, Mexico and Norway rank among the top importers of wind related goods in the period 2017 – 2019. On the contrary six EU countries can be found among the Top10 global exporters of wind related goods during that period ( Figure 33 ).

Exports of wind related goods to countries outside the EU (extra trade) show a positive development since 2000. However in the last decade some stagnation can be witnessed ( Figure 32 ). Since 2010 most EU exports are shipped to the UK (25%) followed by the United States (13%), Turkey (9%) and Canada (9%). Only 0.6% of all EU exports on wind related goods are exported to China in the period 2010-2019.

Imports of wind related goods is mainly done among EU countries (intra trade). In 2019 only 11% of wind related goods came from countries outside the EU, with the majority stemming from China (87%) and India (12%). Imports from the US ranging in the last decade from 3% to 9% dropped in 2019 to 0.2%.

The EU has had a positive trade balance in wind energy related equipment in the last 20 years. Yet there is some stagnation in the growth of this indicator ( Figure 31 ). This is partially explained by third countries catching up on the EU’s first mover advantage, but also by third country policies aimed at protecting their domestic market or forcing EU companies to localise production capacity (e.g. through local content requirements). To illustrate, exports of wind generating sets to China have fallen drastically since 2007 after local content requirements were introduced, and have not recovered. On the opposite, 21% of Chinese wind-related exports in 2018 were destined for the EU market.

IWG Offshore Wind foresees the main challenges to be addressed by offshore wind energy R&I in the areas of cost reduction, the increase of the system value of wind, the need to fully integrate sustainability (both from environmental and social perspective) and adaptability to regional conditions and regional cooperation (e.g. the North Seas Energy Cooperation, the Baltic Sea Offshore Wind, the Atlantic Action Plan, the Blue-Med).

The EU wind sector has shown its ability to innovate: the EU is leading in the parts of the value chain dealing with sensing and monitoring systems for onshore wind turbines, including research and production. Also, the EU wind industry has high manufacturing capabilities in components with a high value in wind turbine cost (towers, gearboxes and blades), as well as in components with synergies to other industrial sectors (generators, power converters and control systems).

Wind is a strategic industry for Europe. It is estimated the sectors offers between 240 000 and 300 000 jobs. Most European manufacturing facilities are located in the country of the company’s headquarter or countries with increased wind energy deployment. 48% of active companies in the wind sector are headquartered in the EU. There are 248 operational manufacturing facilities in Europe (30% of all facilities). 155 facilities are dedicated to onshore wind and a further 66 supply to both onshore and offshore wind.

The total production value of the wind energy value chain in the EU is shown in Figure 30. It remains at a relatively high level in the order of EUR 8 billion per year, since 2014

The energy intensity is analysed based on the cumulated energy demand (CED) along the lifecycle of offshore wind. The majority of life cycle analyses finds the cumulated energy demand between 0.1 and 0.19 MJinput/kWhel, a comparable order of magnitude when compared with the cumulated energy demand of current onshore wind turbines (see grey dots in Figure 29 ). Notably data points on floating offshore show higher values than bottom fixed offshore wind in terms of cumulated energy demand. However, a decisive factors influencing the CED, besides the life cycle inventory data used, is the chosen system boundary and assumed geographical reference (e.g. countries electricity mix and wind resource, which becomes apparent in the outlier value of Wagner et al (2011) which includes also the connection of the Alpha Ventus wind farm to the electricity grid). Given the small amount of available LCA data in offshore wind no clear trend in the CED can be observed, neither in terms of evolution in time nor in respect to the growth in turbine size ( Figure 29 ).

Current econometric models estimating the number of jobs using employment factors, trade data and/or contribution to the GDP of the sectors involved show direct employment figures declining from about 4 FTE/MWInstalled in 2010 to a range of 1.8 to 2.9 FTE/MWInstalled in 2020. When including indirect employment effects range between 2.2 to 5.1 FTE/MWInstalled seems plausible . Scenario-based analyses estimate a further decline in direct labour productivity to about 1.2 FTE/MWInstalled by 2050.

Figures on labour productivity in the offshore wind sector measured in direct full term equivalents (FTE) per MW installed are declining over the latest years as the learning effect improves with more capacity installed in the sector. Yet the scope and boundary conditions of these studies differ significantly ranging from case studies on project level to econometric models and scenario based projections estimating the employment factor on country or sector level ( Figure 28 ). Direct job estimates on single projects (given in full time equivalent years) range from 16.3 – 15.8 FTE/MWproject for projects in the period 2013-2016 . Due to productivity improvements some studies estimate a further decrease in specific direct labour requirements to 9.5 FTE/MWproject by 2022. Although these numbers show the expected learning effect they cannot directly be used to estimate the number of total jobs in the entire industry as the extrapolation from project-level capacity to installed capacity in the market would lead to double counting and thus an overestimation.

Wind is a strategic industry for Europe. It is estimated the sectors offers between 240 000 and 300 000 quality jobs, 77 000 of which related to offshore wind, contributing EUR 37 billion to EU GDP. Each new turbine generates on average EUR 10 million economic activity. Its 248 factories are all over Europe including in economically-deprived regions. Wind is a major European exporter: half the world’s wind power comes from turbines made by European companies. A growth of 2% was observed between 2015 and 2017

Currently, there is no European production of the four main materials used for the production of wind rotors (i.e. boron, molybdenum, niobium and Rare Earth Elements (REEs)). For other raw materials, the EU share of global production is below 1%. China is the largest global supplier for about half of the raw materials needed for wind generators. The EU import reliance for processed REEs (especially neodymium, dysprosium, and praseodymium) used for permanent magnets, is 100%, with 98% being supplied by China ( Figure 25 ). Future materials shortage or supply disruptions could prove to be a risk, given the low substitutability for many raw materials, especially those in high-tech applications. The European Commission proposes an action plan in its communication on critical raw materials to address the issues of overdependence on single supplier countries. Likewise, circularity, recycling and substitution are key R&I technological priorities. In 2022, a call for projects is expected under the Horizon Europe programme, particularly dealing with the R&I challenges of the wind community on large-scale recycling and innovative substitution approaches towards full circularity.

A potential risk of offshore wind energy concerns the supply of raw materials. This paragraph considers the critical raw material dependence of both offshore and onshore wind energy since their raw material usage is similar to a large extent. EU companies are ahead of their competitors in providing offshore generators of all power ranges, due to a well-established European offshore market and the increasing size of newly installed turbines. Wind turbine blades are often made up of composite materials, which are difficult to recycle/re-manufacture. 2.5 million tonnes of composite material are in use in the wind sector globally. 14 000 wind turbine blades will be decommissioned in Europe the next five years. This is a major challenge, both environmentally and economically. Because there is a need to reduce polluting extraction of raw materials and to decrease dependency of the European economy may on raw materials produced in third countries. Applying circular economy approaches, along the life-cycle of installations, is of key importance.

This means that European offshore manufacturing at ports will need to grow substantially to serve annual capacity additions up to an estimated 16 GW to satisfy the demand in the period 2030-2050.

The increase in rated capacity and blade size of offshore wind turbines further amplifies the need to upsize the infrastructure in existing and future ports hosting manufacturing facilities of large subcomponents (blades and nacelles) or final nacelle assembly. Today the three main offshore OEMs have an estimated 6.5 to 8 GW of nacelle assembly capacity at European ports .

In the last years the EU offshore market further consolidated following Senvion’s insolvency at the end of 2019 and Vestas buying out Mitsubishi Heavy Industries (MHI) from their offshore wind joint venture in 2020 . With SiemensGamesa RE, Vestas and General Electric RE there are currently three offshore original equipment manufacturers (OEMs) with manufacturing capabilities in EU waters. So far, offshore wind OEMs located their factories mainly around the North Sea and Baltic Sea; however, suppliers of subcomponents can be found all over Europe, even in landlocked countries ( Figure 24 ). In January 2021, Chinese offshore wind manufacturer MingYang entered the EU offshore wind market by securing a deal to supply 10 offshore wind turbines to the 30MW Port of Taranto (Beleolico) offshore wind project (replacing the previously planned Senvion turbines) which will be the first commercial EU offshore wind farm in the Mediterranean Sea (end of 2021). MingYang will execute the project from its EU HQ in Germany while turbines seem to be shipped from China. Moreover, monopiles will be provided by a Spanish manufacturer (Haizea Wind Group) .

The EU wind sector has shown its ability to innovate: the EU is leading in the parts of the value chain dealing with sensing and monitoring systems for onshore wind turbines, including research and production. Also, the EU wind industry has high manufacturing capabilities in components with a high value in wind turbine cost (towers, gearboxes and blades), as well as in components with synergies to other industrial sectors (generators, power converters and control systems).

OEMs also locate their manufacturing facilities in countries where they supply wind turbine components and services, except for Gamesa (ES) and Senvion SE (DE), whose manufacturing facilities are only placed in their country of origin. Smaller OEMs tend to locate their facilities around their headquarters .

Most European manufacturing facilities are located in the country of the company’s headquarter or countries with increased wind energy deployment. 48% of active companies in the wind sector are headquartered in the EU. Specifically for wind rotors, the share of EU companies is 58%, with most headquartered in Germany, Denmark and France. Europe is leading in all parts of the value chain for sensing and monitoring systems for onshore wind turbines, including research and production.

A recent study estimates the annual market size (in terms of revenues) of the EU in offshore wind to almost double from about EUR 31.3 billion in 2020 to about EUR 59.2 billion in 2030. In 2020 this represents about 31.2% of the global market. Across the different value chain segments the global share of the EU market ranges from 23% (Logistics & Installation) to 34.6% (Support Structures) ( Figure 19 ).

Europe is a recognized market leader in the wind energy: 48% of active companies in the wind sector are headquartered in the EU compared to the RoW. European manufacturers capture around 35% to 40% of the global wind turbine value chain (China almost 50%). The European OEMs in the wind e