REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on progress of clean energy competitiveness
Date: 2020-10-14
Institutions: Directorate-General for Energy, European Commission
Subjects: EU energy policy, clean technology, competitiveness, electricity storage device, energy efficiency, energy grid, energy resources, innovation, investment, soft energy

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 14.10.2020  COM(2020) 953 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on progress of clean energy competitiveness  {SWD(2020) 953 final}  
 
 
CONTENTS 

1. 

INTRODUCTION ....................................................................................................... 2 

2.  OVERALL  COMPETITIVENESS  OF  THE  EU  CLEAN  ENERGY 

SECTOR ...................................................................................................................... 4 

2.1 Energy and resource trends ................................................................................... 4 

2.2 Share of EU energy sector in EU GDP ................................................................. 6 

2.3 Human capital ........................................................................................................ 6 

2.4 Research and innovation trends ............................................................................. 9 

2.5 Covid-19 Recovery .............................................................................................. 11 

3.  FOCUS  ON  KEY  CLEAN  ENERGY  TECHNOLOGIES  AND 

SOLUTIONS ............................................................................................................. 12 

3.1 Offshore renewables – wind ................................................................................ 12 

3.2 Offshore renewables – Ocean energy .................................................................. 16 

3.3 Solar photovoltaics (PV) ..................................................................................... 18 

3.4 Renewable hydrogen production through electrolysis ........................................ 20 

3.5 Batteries ............................................................................................................... 23 

3.6 Smart electricity grids ......................................................................................... 26 

3.7 Further findings on other clean and low carbon energy technologies and  

solutions ........................................................................................................... 30 

CONCLUSIONS ............................................................................................................... 31 

1 

 
 
 
 
 
 
 
 
 
 
 
1.  INTRODUCTION 

The goal of the European Green Deal1, Europe’s new growth strategy, is to transform the 
European  Union  (EU)2  into  a  modern,  resource-efficient  and  competitive  economy, 
which is  climate neutral  by 2050. The EU’s economy will need to  become sustainable, 
while  making  the  transition  just  and  inclusive  for  everyone.  The  Commission’s  recent 
proposal3 to cut greenhouse gas emissions by at least 55% by 2030 sets Europe on that 
responsible  path.  Today,  energy  production  and  use  account  for  more  than  75%  of  the 
EU’s greenhouse gas emissions. The delivery of the EU’s climate goals will require us to 
rethink our policies for clean energy supply across the economy. For the energy system, 
this  means  a  steep  decarbonisation  and  an  integrated  energy  system  largely  based  on 
renewable energy. By 2030 already, the EU renewable electricity production is set to at 
least double from today’s levels of 32% to around 65% or more4 and by 2050, more than 
80% of electricity will be coming from renewable energy sources5. 

Achieving  these  2030  and  2050  targets  requires  a  major  transformation  of  the  energy 
system.  This  however  depends  heavily  on  uptake  of  new  clean  technologies  and 
increased investments in the needed solutions and infrastructure. However, as well as the 
business models, skills, and changes in behaviour to develop and use them. Industry lies 
at the heart of this social and economic change. The New Industrial Strategy for Europe6 
gives  European  industry  a  central  role  in  the  twin  green  and  digital  transitions. 
Considering  the  EU’s  large  domestic  market,  accelerating  the  transition  will  help 
modernise the whole EU economy and increasing the opportunities for the EU’s global 
clean technologies leadership.  

This first annual progress report on competitiveness7aims to assess the state of the clean 
energy  technologies  and  the  EU  clean  energy  industry’s  competitiveness  to  see  if  their 
development  is  on  track  to  deliver  the  green  transition  and  the  EU’s  long-term  climate 
goals.  This  competitiveness  assessment  is  also  particularly  crucial  for  the  economic 
recovery  from  the  COVID-19  pandemic,  as  outlined  in  the  ‘Next  Generation  EU’ 
communication8.  Improved  competitiveness  has  the  potential  to  mitigate  the  short-  and 
medium-term economic and social impact of the crisis, while also addressing the longer-
term challenge of the green and digital transitions in a socially fair manner. Both in the 
context  of  the  crisis,  but  also  in  the  long  run,  improved  competitiveness  can  address 
energy poverty concerns, reducing the cost of energy production and the cost of energy 
efficiency investments9. 

It is possible to ascertain the clean energy technology needs for achieving the 2030 and 
2050  targets  on  the  basis  of  the  impact  assessment  referred  to  in  the  European 

1 COM(2019) 640 final. 
2 For the purpose of this report, EU is to be understood as EU27 (i.e. without the UK). Whenever the UK is included, 

this report will refer to EU28. 

3 COM(2020) 562 final. 
4 COM(2020) 562 final. 
5 COM/2018/773 final. 
6 COM (2020) 102 final. 
7  Drawn  up  in  accordance  with  the  requirements  of  Article  35  (m)  of  Regulation  (EU)  2018/1999 

(Governance Regulation) 

8 COM(2020) 456 final 
9  See  also  A  Renovation  Wave  for  Europe  –  greening  our  buildings,  creating  jobs,  improving  lives  COM(2020)662 

accompanied by SWD(2020)550, and Energy Poverty Recommendation C(2020)9600 

2 

 
 
                                                 
Commission’s Climate Target Plan scenarios10. In particular, the EU is expected to invest 
in  renewable  electricity,  notably  offshore  energy  (in  particular  wind)  and  solar 
energy11,12.  This  large  increase  in  the  share  of  variable  renewables  also  implies  an 
increase  in  storage13  and  in  the  ability  to  use  electricity  in  transport  and  industry, 
especially through batteries and hydrogen, and requires major investments in smart grid 
technologies14.  On  this  basis,  the  present  report  focuses  on  the  six  technologies 
mentioned above15, most of which are at the heart of the EU flagship initiatives16,17 aimed 
at  fostering  reforms  and  investments  to  support  a  robust  recovery  based  on  twin  green 
and digital transition. The remaining clean and low-carbon energy technologies included 
in the scenarios are analysed in the staff working document with the title ‘Clean Energy 
Transition  –  Technologies  and  Innovations  Report’  (CETTIR)  that  accompanies  this 
report18.  

For the purpose of this report, competitiveness in the clean energy sector19 is defined as 
the capacity to produce and use affordable, reliable and accessible clean energy through 
clean energy technologies, and compete in  energy technology markets,  with  the overall 
aim of bringing benefits to the EU economy and people.  

Competitiveness  cannot  be  captured  by  a  single  indicator20.  Therefore,  this  report 
proposes a set of widely accepted indicators that may be used for this purpose (see table 
1 below) capturing the entire energy system (generation, transmission and consumption) 
and analysed at three levels (technology, value chain and global market). 

10At  time  horizon  2050,  the  1.5  TECH  from  the  EU  2050  Long  Term  Strategy  (COM  (2018)  773)  and  the  Climate 
Target plan (COM(2020) 562 final) scenarios display no significant differences and are therefore both referred to 
in this report. The CTP MIX scenario achieves around 55% GHG reductions, both expanding carbon pricing and 
moderately increasing the ambition of policies. 

11 ASSET Study commissioned by DG ENERGY - Energy Outlook Analysis (Draft, 2020) covering LTS 1.5 Life and 

Tech, BNEF NEO, GP ER, IEA SDS, IRENA GET TES, JRC GECO 2C_M 

12 Tsiropoulos I., Nijs W., Tarvydas D., Ruiz Castello P., Towards net-zero emissions in the EU energy system by 2050 
– Insights from scenarios in line with the 2030 and 2050 ambitions of the European Green Deal, JRC118592 
13  Study  on  energy  storage  -  Contribution  to  the  security  of  the  electricity  supply  in  Europe  (2020):  : 

https://op.europa.eu/en/publication-detail/-/publication/a6eba083-932e-11ea-aac4-01aa75ed71a1    

14  Between  EUR  71  and  110  billion/year  of  power  grid  investments  between  2031  and  2050  under  the  different 

scenarios, ‘In-depth analysis in support of COM(2018) 773’, table 10, p. 202. 

15  Offshore  renewables  (wind  and  ocean),  solar  photovoltaics,  renewable  hydrogen,  batteries  and  grid  technologies. 
This selection does not neglect the role of established renewables, in particular bioenergy and hydropower, within 
the  EU  portfolio of  low-carbon  energy  technologies.  These  are  covered  in  the  CETTIR  and  may  be  covered  in 
forthcoming annual reports on progress in competitiveness. 

16  European  flagship  initiatives  have  been  presented  in  the  latest  Annual  Sustainable  Growth  Strategy  2021 

(COM(2020) 575 final) – section iv.  

17  Recent  and  upcoming  initiatives  include  the  upcoming  offshore  energy  strategy  and  the  hydrogen  strategy 
(COM(2020) 301 final), including the Hydrogen Alliance, the European Batteries Alliance, and the energy system 
integration strategy (COM(2020) 299 final). These technologies are also described in a range of national energy 
and climate plans.  

18 SWD(2020)953 – This includes buildings (incl. heating and cooling); CCS; citizens and communities engagement; 
geothermal;  high  voltage  direct  current  and  power  electronics;  hydropower;  industrial  heat  recovery;  nuclear; 
onshore  wind;  renewable  fuels;  smart  cities  and  communities;  smart  grids  –  digital infrastructure; solar  thermal 
power. 

19 In this report and in the SWD, clean energy is considered as all energy technologies included in the EU Long-Term 

Strategy to achieve climate neutrality in 2050. 

20 Based on the conclusions of the Competitiveness Council (28.07.20). 

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Table 1 Grid of indicators to monitor progress in competitiveness 

1. Technology analysis 
Current situation and 
outlook 

Capacity installed, 
generation 
(today and in 2050) 
Cost / Levelised cost of 
energy (LCoE) 
(today and in 2050) 
Public R&I funding 

Private R&I funding 

Patenting trends 

Level of scientific 
Publications 

Competitiveness of EU clean energy industry 

2. Value chain analysis of the 
energy technology sector 

3. Global market analysis 

Turnover 

Trade (imports, exports) 

Gross value added growth 
Annual, % change 

Number of companies in the 
supply chain, incl. EU market 
leaders 
Employment  

Global market leaders vs. EU 
market leaders 
(market share) 
Resource efficiency and 
dependence 

Real Unit Energy Cost 

Energy intensity / labour 
productivity 
Community Production21  
Annual production values 

Analysis  of  competitiveness  of  the  clean  energy  sector  can  be  further  developed  and 
deepened  over  time,  and  future  competitiveness  reports  may  focus  on  different  angles. 
For  example  by  looking  in  more  detail  at  policies  and  instruments  to  support  R&I  and 
competitiveness at the Member State level, how these contribute to the Energy Union and 
the Green Deal objectives, looking at competitiveness at subsector22, national or regional 
level, or by analysing the synergies and trade-offs with environmental or social impacts, 
in line with the European Green Deal objectives.  

Given  the  lack  of  data  for  a  wide  range  of  competitiveness  indicators23,24,  some 
approximations  of  a  more  indirect  nature  are  used  (e.g.  the  level  of  investment).  The 
Commission calls on Member States and stakeholders to work together in the context of 
the National Energy and Climate Plans (NECPs)25 and the Strategic Energy Technology 
plan  to  continue  developing  a  common  approach  to  assessing  and  boosting  the 
competitiveness of the Energy Union. This is also important for the national recovery and 
resilience plans that will be prepared under the Recovery and Resilience Facility. 

2.  OVERALL COMPETITIVENESS OF THE EU CLEAN ENERGY SECTOR  

2.1 Energy and resource trends 

Over 2005-2018, primary energy intensity in the EU decreased at an average annual rate 
of  nearly  2%,  demonstrating  the  decoupling  of  energy  demand  from  economic  growth. 
Final  energy  intensity  in  industry  and  construction  followed  the  same  trend,  albeit  at  a 

21 This abbreviation means Production Communautaire (PRODCOM dataset). 
22 Eg. the scope and role of alternative business models, as well as the role of SMEs and local actors. 
23 For an overall mapping of competitiveness definitions, refer to JRC116838, Asensio Bermejo, J.M., Georgakaki, A, 
Competitiveness indicators for the low-carbon energy industries - definitions, indices and data sources, 2020. 

24 For an overview of missing data, see CETTIR (SWD(2020)953) chapter 5 
25 This report builds on and complements the assessment and country-specific guidance of the NECPs (COM/2020/564 

final), which include the topic of ‘research, innovation and competitiveness’. 

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slightly  slower  annual  average  rate  of  1.8%,  reflecting  the  sector’s  efforts  to  reduce  its 
energy footprint. Enabled by energy policy, the share of renewable energy in final energy 
consumption  rose  from  10%  towards  the  2020  target  of  20%.  The  share  of  renewable 
energy in the electricity sector rose to just over 32%. It increased to just over 21% in the 
heating and cooling sector, while the figure for the transport sector was slightly over 8%. 
This  shows  that  the  energy  system  has  been  shifting  gradually  towards  clean  energy 
technologies (see Figure 1).    

Figure 1 EU primary energy intensity, final energy intensity in industry, renewable energy share 
and targets, and net import dependency (fossil fuels)26 

Source 1 EUROSTAT 

During the last decade, industrial electricity prices in the EU27 have remained relatively 
stable, and are currently lower than Japan’s, but double those of the US and higher than 
those of most non-EU G20 countries. Though industrial gas prices28 have fallen, and are 
lower than those in Japan, China and Korea, they remain higher than those of most non-
EU G20 countries. Relatively high non-recoverable taxes and levies in the EU and price 
regulation and/or subsidies in the non-EU G20 play an important role in this difference. 

Despite a short-term improvement and reduction in energy import dependency between 
2008  and  2013,  the  EU  has  since  experienced  an  increase29.  In  2018,  net  import 
dependency was 58.2%, just over the 2005 level, and almost equalling the highest values 
over  the  period.  Resource  efficiency  and  economic  resilience  are  key  in  being 
competitive and enhancing the open strategic autonomy30 of the EU in the clean energy 
technology  market.  While  clean  energy  technologies  reduce  dependence  on  imports  of 
fossil fuels, they risk replacing this dependence with on raw materials. This creates a new 
type  of  supply  risk31.  However,  unlike  fossil  fuels,  raw  materials  have  the  potential  to 
stay in the economy through the implementation of circular economy approaches32, like 
extended  value  chains,  recycling,  reuse  and  design  for  circularity,  affecting  the  capital 
expenditures  and  decreasing  the  energy  need  for  extraction  and  processing  of  virgin 
materials  but  not  the  operational  expenditures  of  energy  production.  The  EU  is  very 
dependent  on  third  countries  for  raw  and  processed  materials.  For  some  technologies, 
however, it has a leading position in the manufacture of components and final products, 

26 Energy Union indicators EE1-A1, EE3, DE5-RES, and SoS1.  
27 EU weighted average (see COM(2020)951). 
28 EU weighted average (see COM(2020)951). 
29 Plausible reasons include the exhaustion of EU gas sources, weather variability, the economic crises and fuel shift. 
30 COM(2020) 562 final. 
31 COM(2020) 474 final and Critical Raw Materials  for Strategic  Technologies and Sectors in the EU  - A Foresight 

Study, https://ec.europa.eu/docsroom/documents/42882 

32  The  Circular  Economy  Action  Plan  puts  in  focus  the  creation  of  a  secondary  raw  material  market  and  design  for 

circularity (COM/2015/0614 final and COM/2020/98 final) 

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or  high  technology  components.  Specific,  often  high-tech  materials  show  high  supply 
concentration in  a handful  of countries. (For instance, China produces over 80% of the 
available rare earths for permanent magnet generators)33.  

2.2 Share of EU energy sector in EU GDP 

The  turnover  of  the  EU  energy  sector34  was  EUR  1.8  trillion  in  2018,  nearly  the  same 
level as in 2011 (EUR 1.9 trillion). The sector contributes 2% of total gross value added 
in the economy, a figure that has remained largely constant since 2011. The turnover of 
the  fossil  fuel  sector  shrank  from  36%  (EUR  702  billion)  of  the  overall  energy  sector 
turnover in 2011 to 26% (EUR 475 billion) in 2018. At the same time, the turnover from 
renewables increased over the same period from EUR 127 billion to EUR 146 billion35,36. 
The  value  added  of  the  clean  energy  sector  (EUR  112  billion  in  2017)  was  more  than 
double that of fossil fuel extraction and manufacturing activities (EUR 53 billion), having 
tripled  since  2000.  The  clean  energy  sector  thus  generates  more  value  added  that  stays 
within Europe than the fossil fuel sector. 

Over 2000-2017, annual growth in the gross value added of renewable energy production 
averaged 9.4%, while that of energy efficiency activities averaged 22.3%, far outpacing 
the rest of the economy (1.6%). The labour productivity of the EU (gross value added per 
employee)  has  also  improved  significantly  in  the  clean  energy  sector,  especially  in  the 
renewable energy production sector, where it has risen by 70% since 2000.  

Figure 2 Gross value added and value added per employee, 2000-2019, 2000=100 

Source 2 JRC based on Eurostat data: [env_ac_egss1], [nama_10_a10_e], [env_ac_egss2], 
[nama_10_gdp. 

2.3 Human capital  

Clean  energy  technologies  and  solutions  provide  direct  full-time  employment  for  1.5 
million people in Europe37, of which more than half million38 in renewables (growing to 

33  D.  T.  Blagoeva,  P.  Alves  Dias,  A.  Marmier,  C.C.  Pavel  (2016)  Assessment  of  potential  bottlenecks  along  the 
materials  supply  chain  for  the  future  deployment  of  low-carbon  energy  and  transport  technologies  in  the  EU. 
Wind  power,  photovoltaic  and  electric  vehicles  technologies,  time  frame:  2015-2030;  EUR  28192  EN; 
doi:10.2790/08169 

34 This is based on Eurostat’s Structural Business Statistics Survey. The following codes are included: B05 (mining of 
coal and lignite), B06 (extraction of crude petroleum and natural gas), B07.21 (mining uranium and thorium ores), 
B08.92 (extraction of peat), B09.1 (support activities for petroleum and natural gas extraction), C19 (manufacture 
of coke and refined petroleum products), and D35 (electricity, gas, steam and air conditioning supply).  

35 Eurostat [sbs_na_ind_r2] 
36 EurObserv'ER 
37 To give some perspective, direct employment in fossil fuel extraction and manufacturing (NACE B05, B06, B08.92, 
B09.1,  C19)  was  328,000  in  the  EU27  in  2018,  while  it  was  1.2  million  in  the  electricity,  gas,  steam  and  air 

6 

 
 
                                                 
 
1.5  million  when  indirect  jobs  are  also  included)  and  almost  1  million  in  energy 
efficiency activities (in 2017)39. Direct jobs in renewable energy production for the EU 
grew from 327,000 in 2000 to 861,000 in 2011, falling to 502,000 in 2017. As Figure 3 
shows,  there  was  a  decrease  after  201140,  probably  explained  by  the  effect  of  the 
financial crisis, including the subsequent relocation of manufacturing capacity, as well as 
by  increased  productivity  and  a  decrease  in  job  intensity.  The  number  of  direct  jobs  in 
energy  efficiency  increased  steadily  from  244,000  in  2000  to  964,000  in  2017.  Direct 
jobs  in  these sectors (RES and EE) represent  about  0.7% of total  employment  in  EU,41 
but  their  growth  has  outpaced  the  rest  of  the  economy,  with  average  annual  growth  of 
3.1% and 17.4% respectively42.   

conditioning sector (NACE D35), which supplies electricity  from both renewable and fossil energy sources. The 
total  figure  for  the  broad  energy  sector  has  remained  largely  stable,  although  employment  has  fallen  by  about 
80,000 in the mining of coal and lignite and by about 30,000 in the extraction of crude petroleum and natural gas. 
See: JRC120302, Employment in the Energy Sector Status Report 2020, EUR 30186 EN, Publications Office of 
the European Union, Luxembourg, 2020. 

38  If  indirect  jobs  are  also  taken  into  account,  the  renewable  energy  sector  employs  nearly  1.4  million  people  in  the 
EU27, according to EurObserv'ER.  EurObserv'ER includes in its estimate both direct and indirect employment. 
Direct employment includes renewable equipment manufacturing, renewable plant construction, engineering and 
management,  operation  and  maintenance,  biomass  supply  and  exploitation.  Indirect  employment  refers  to 
secondary  activities,  such  as  transport  and  other  services.  Induced  employment  is  outside  the  scope  of  this 
analysis. EurObserv'ER uses a formalised model to assess employment and turnover.  

39  Eurostat  Environmental  Goods  and  Services  Sector  (EGSS)  data  is  estimated  by  combining  data  from  different 
sources (SBS, PRODCOM, National Accounts). In EGSS, information is reported on the production of goods and 
services  that  have  been  specifically  designed  and  produced  for  the  purpose  of  environmental  protection  or 
resource  management.  The  unit of  analysis  in  EGSS  is  the  establishment.  The  establishment  is  an  enterprise or 
part of an enterprise that is situated in a single location and in which a single activity is carried out or in which the 
principal productive activity accounts for most of the value added. It is also tracked across all NACE codes. We 
use  CREMA  13A  Production  of  energy  from  renewable  sources  and  CREMA  13B  for  Heat/energy  saving  and 
management. 

40 This decrease can probably be explained by the effect of the financial crisis, including the subsequent relocation of 
manufacturing capacity, as well as by increased productivity and a decrease in job intensity (Sources: JRC120302 
Employment  in  the  Energy  Sector  Status  Report,  2020).  The  decrease  was  led  by  solar  PV  and  by  geothermal 
energy to a lesser extent. The effect of the crisis was seen in the drop in solar PV installations and relocation of 
manufacturing  to  Asia.  For  the  onshore  and  offshore  wind  energy  sector,  increased  productivity  and  thus 
decreased job intensity can be particularly observed. Comparing direct employment with the cumulative installed 
capacity  in  the  last  decade  unveils  a  decrease  of  47%  and  59%  in  specific  employment  for  the  onshore  and 
offshore  wind  sector,  respectively  (sources:  GWEC  2020,  Global  Offshore  Wind  Report,  2020;  WindEurope 
2020,  Update  of  employment  figures  based  on  WindEurope,  Local  Impact  Gl).  Based  on  EurObserv’ER,  job 
intensity  (jobs/MW)  fell  by  19%  in  wind  and  by  14%  in  solar  PV  over  2015-2018.  Dynamics  in  the  energy 
efficiency  sector  are  different  (e.g.  energy  saving  and  efficiency  has  a  direct  positive  impact  through  reduced 
costs), and the growth in EE jobs can partially be explained by strong growth of jobs in the heat pump sector since 
2012  (EurObservER).  Overall,  we  can  see  from  EurObserv’ER,  which  accounts  for  direct  and  indirect  jobs,  an 
increasing trend for RES employment in the EU27.   

41 Eurostat, EGSS. 
42 In the rest of the economy, average annual growth has been 0.5%. 

7 

 
                                                                                                                                                 
Figure 3 Direct employment in the clean energy sector vs the rest of the economy over 2000-
2018, 2000=100, and Renewable energy employment per technology, 2015-2018 

Source 3 (JRC based on Eurostat data [env_ac_egss1], [nama_10_a10_e]43 and 
EurObserv'ER) 

The  growing  trend  of  employment  in  the  clean  energy  sector  is  global,  although  the 
technologies  that offer  more employment opportunities vary by region. In  general,  jobs 
have  been  created  mainly  in  the  solar  PV  and  wind  energy  sectors.  China,  which  has 
almost 40% of all global jobs in renewables, employs most in solar PV, solar heating and 
cooling,  and  wind  energy;  Brazil’s  employment  is  in  the  bioenergy  sector;  and  the  EU 
employ most people in bioenergy (about half of all RES jobs) and wind energy (about a 
quarter), see Figure 4.  

Figure 4 Global employment in renewable energy technology (2012-2018)44 

Source 4 (JRC based on IRENA, 201945) 

The clean energy technology sector continues to face challenges, in particular availability 
of  skilled  workers  at  the  locations  where  they  are  in  demand.46,47The  skills  concerned 
include,  in  particular,  engineering  and  technical  skills,  IT  literacy  and  ability  to  utilise 
new  digital  technologies,  knowledge  of  health  and  safety  aspects,  specialised  skills  in 
carrying out work in extreme physical locations (for example at height or at depth), and 
soft  skills  like  team  work  and  communication,  as  well  as  knowledge  of  the  English 
language.  

As  regards  gender,  women  accounted  for  an  average  of  32%  of  the  workforce  in  the 
renewables  sector  in  201948.  This  figure  is  higher  than  in  the  traditional  energy  sector 

43  Renewable  energy  production  refers  to  Eurostat  EGSS  code  CREMA13A  and  energy  efficiency  activities  to 

CREMA13B.  

44 The employment figures per country are for 2017.  
45 IRENA. 2019. Renewable Energy and Jobs – Annual Review 2019.  
46 Strategy baseline to bridge the skills gap between training offers and industry demands of the Maritime Technologies 
https://www.projectmates.eu/wp-

value 
content/uploads/2019/07/MATES-Strategy-Report-September-2019.pdf 

September 

MATES 

Project. 

chain, 

2019 

- 

47  Alves  Dias  et  al.  2018.  EU  coal  regions:  opportunities  and  challenges  ahead.  https://ec.europa.eu/jrc/en/publi 

cation/eur-scientific-and-technical-research-reports/eu-coal-regions-opportunities-and-challenges-ahead.  

48 IRENA 2019: https://www.irena.org/publications/2019/Jan/Renewable-Energy-A-Gender-Perspective 

8 

 
 
 
                                                 
(25%49) but lower than the share across the economy (46.1%50) and furthermore gender 
balance differs to a higher extend for certain job profiles. 

2.4 Research and innovation trends 

In recent years, the EU has invested an average of nearly EUR 20 billion a year on clean 
energy R&I prioritised by the Energy Union51,52. EU funds contribute 6%, public funding 
from  national  governments  accounts  for  17%,  and  business  contributes  an  estimated 
77%. 

The  R&I  budget  allocated  to  energy  in  the  EU  represents  4.7%  of  total  spending  on 
R&I53.  In  absolute  terms,  however,  Member  States  have  reduced  their  national  R&I 
budgets for clean energy (Figure 5); in 2018 the EU spent half a billion less than in 2010. 
This trend is global. Public sector R&I spending on low-carbon energy technologies was 
lower in  2019 than in  2012, while countries continue to  allocate large  amounts of R&I 
funding to fossil fuels54. This is the opposite of what is needed: R&I investments in clean 
technologies need to increase if the EU and the world want to meet their decarbonisation 
commitments.  Today  the  EU  has  the  lowest  investment  rate  of  all  major  global 
economies  measured  as  a  share  of  GDP  (Figure  5).  EU  research  funds  have  been 
contributing  a  larger  share  of  public  funding  and  have  been  essential  in  maintaining 
research and innovation investment levels over the last four years.   

Figure 5 Public R&I financing of Energy Union R&I priorities55 

Source 5 JRC49 based on IEA56, MI57.  

49 Eurostat (2019), retrieved from https://ec.europa.eu/eurostat/web/equality/overview 
50 Eurostat [lfsa_egan2], 2019.  
51 COM(2015)80; renewables, smart system, efficient systems, sustainable transport, CCUS and nuclear safety. 
52 JRC SETIS https://setis.ec.europa.eu/publications/setis-research-innovation-data;  

JRC112127 Pasimeni, F.; Fiorini, A.; Georgakaki, A.; Marmier, A.; Jimenez Navarro, J. P.; Asensio Bermejo, J. 
M. (2018): SETIS Research & Innovation country dashboards. European Commission, Joint Research Centre 
(JRC) [Dataset] PID: http://data.europa.eu/89h/jrc-10115-10001, according to: 

JRC Fiorini, A., Georgakaki, A., Pasimeni, F. and Tzimas, E., Monitoring R&I in Low-Carbon Energy Technologies, 

EUR 28446 EN, Publications Office of the European Union, Luxembourg, 2017. 

JRC117092  Pasimeni,  F.,  Letout,  S.,  Fiorini,  A.,  Georgakaki,  A.,    Monitoring  R&I  in  Low-Carbon  Energy 

Technologies, Revised methodology and additional indicators, 2020 (forthcoming). 

53 Eurostat, Total GBAORD by NABS 2007 socio-economic objectives [gba_nabsfin07].  The energy socioeconomic 
objective includes R&I in the field of conventional energy. The Energy Union R&I priorities would also fall under 
other socioeconomic objectives.  
IEA 
2020#government-rd-funding  

https://www.iea.org/reports/clean-energy-innovation/global-status-of-clean-energy-innovation-in-

ETP 

54 

55 Excludes EU funds. 
56 Adapted from the 2020 edition of the IEA energy technology RD&D budgets database. 
57 Mission Innovation Tracking Progress http://mission-innovation.net/our-work/tracking-progress/ 

9 

 
 
 
 
                                                 
In the private sector, only a small share of revenue is currently being spent on R&I in the 
sectors most in need of large-scale adoption of low-carbon technologies51. The EU have 
estimated that private investment in Energy Union R&I priorities has been decreasing: it 
currently  amounts  to  around  10%  of  businesses’  total  expenditure  on  R&I58.  This  is 
higher than the US and comparable to Japan, but lower than China and Korea. A third of 
this  investment  goes  on  sustainable  transport,  while  renewables,  smart  systems  and 
energy efficiency receive about a fifth each. While the distribution of private R&I in the 
EU  has  changed  only  slightly  in  recent  years,  there  has  been  a  more  significant  shift 
globally towards industrial energy efficiency and smart consumer technologies59.   

Figure 6 Estimates of private R&I financing of Energy Union R&I priorities60 

Source 6 JRC49, Eurostat/OECD55 

On average, major listed companies and their subsidiaries make up 20-25% of the main 
investors, but account  for 60-70% of patenting activity and investments.  In the EU, the 
automotive  sector  is  the  biggest  private  R&I  investor  in  absolute  terms  in  the  Energy 
Union R&I priorities61, followed by biotechnology and pharmaceuticals. Figure 7 shows 
that  among  the  energy  industries,  the  oil  and  gas  sector  is  the  largest  investor  in  R&I. 
Other  energy  sectors,  such  as  electricity  or  alternative  energy  companies,  have  much 
lower budgets for R&I,  although they spend more of it on clean energy.  It  is worrying 
that a major share of the private budget for R&I in the energy sector is not spent on clean 
energy technologies. According to the IEA, less than 1% of oil and gas companies’ total 
capital expenditure has been outside their core business areas, on average62,63, and only 
8% of their patents are in clean energy64.  

Figure 7 EU R&I investment in Energy Union R&I priorities, by industrial sector65 

58 Contrasted with BERD statistics: Eurostat/OECD business expenditure on R&D (BERD) by NACE Rev. 2 activity 
and  source  of  funds  [rd_e_berdfundr2];  The  utilities  sector  includes  water  collection,  treatment  and  supply 
services; data not available for all countries. 

59 JRC118288 input to Mission Innovation (2019) ‘Mission Innovation Beyond 2020: challenges and opportunities’. 
60 Estimates for China are particularly challenging and uncertain, given differences in intellectual property protection 
(see  also  https://chinapower.csis.org/patents/),  and  the  difficulties  faced  in  mapping  company  structures  (e.g. 
state-backed companies) and financial reporting. 

61 This is a wider definition of what clean energy technology includes than that used in this report. For example, this 

broader definition includes R&I in energy efficiency in industry. 

62 With some leading individual companies spending around 5% on clean energy. 
63  The  oil  and  gas  industry  in  energy  transitions,  world  energy  outlook  special  report,  IEA,  January  2020, 
https://www.iea.org/reports/the-oil-and-gas-industry-in-energy-transitions 
64  The  Energy  Transition  and  Oil  Companies’  Hard  Choices  –  Oxford  Institute  for  Energy  Studies,  July  2019;  Rob 
West, Founder, Thundersaid Energy & Research Associate, OIES and Bassam Fattouh, Director, OIES, page 4. 
65  Top  contributing  sectors.  Five-year  average  (2012-2016)  per  sector;  a  third  of  companies  (non-listed,  smaller 

investors) cannot be allocated to a specific sector. 

10 

 
 
                                                 
Source 7 JRC49 

Venture capital (VC) investment in clean energy had been increasing in recent years, but 
remains  low  (just  over  6-7%)  compared  with  private-sector  investment  in  R&I.  So  far, 
2020  marks  a  significant  global  slowdown  in  VC  investment  in  clean  energy 
technologies66. 
Patenting activity in clean energy technologies67 peaked in 2012, and has been in decline 
since.68 Within this trend, however, certain technologies that are increasingly important 
for  the  clean  energy  transition  (e.g.  batteries)  have  maintained  or  even  increased  their 
levels of patenting activity.  

The EU and Japan lead among international competitors in high-value69 patents on clean 
energy technologies. Clean energy patents account for 6% of all high-value inventions in 
the EU. The EU’s share is similar to that of Japan, and higher than China (4%), the US 
and  the  rest  of  the  world  (5%),  and  second  only  to  Korea  (7%)  in  terms  of  competing 
economies.  The  EU  host  a  quarter  of  the  top  100  companies  in  terms  of  high-value 
patents  in  clean  energy.  The  majority  of  inventions  funded  by  multinational  firms 
headquartered in the EU are produced in Europe and, for the most part, by subsidiaries 
located  in  the  same  country.70  The  US  and  China  are  the  main  IPO  offices  –  and  by 
extension markets – targeted for protection of EU inventions.  

2.5 Covid-19 Recovery71 

During  the pandemic, the European energy system  has proved to be  resilient to  shocks 
stemming from the pandemic72 and a greener energy mix has emerged, with coal power 
generation in the EU falling by 34% and renewables providing 43% of power generation 

66JRC52and JRC analysis based on Pitchbook, and IEA data on CleanTech VC investments. 
67 Low-carbon energy technologies under the Energy Union’s R&I priorities. 
68 With the exception of China, where local applications keep increasing, without seeking international protection. (See 

also: Are Patents Indicative of Chinese Innovation? https://chinapower.csis.org/patents/) 

69 High-value patent families (inventions) are those containing applications to more than one office i.e. those seeking 

protection in more than one country / market.  

70 Incentives, language and geographical proximity explain major exceptions. 
71 Based on JRC work on the impacts of Covid-19 on the energy system and value chain.s 
72 SWD(2020) 104 - Energy security: good practices to address pandemic risks  

11 

 
 
 
                                                 
in Q2 2020, the highest share to date73. At the same time, the stock market performance 
of  the  clean  energy  sector  has  seemed  less  affected  and  recovered  more  quickly  than 
fossil-fuel sectors. Digitalisation has helped companies and sectors respond successfully 
to the crisis, also boosting the emergence of new digital applications.  

Although  the  EU  energy  value  chains  are  recovering,  the  crisis  has  brought  to  the 
forefront the question of optimising and potentially regionalising supply chains, to reduce 
exposure to future disruptions and improve resilience. In response, the Commission aims 
to  identify  the  critical  supply  chains  for  energy  technologies,  analyse  potential 
vulnerabilities  and  improve  their  resilience74.  The  key  energy  priorities  in  recovery  are 
energy  efficiency in particular through the renovation wave, renewable energy sources, 
hydrogen and energy system integration. There is a further concern that the pandemic is 
affecting investments in and resources available for R&I, as has demonstrably happened 
in previous economic crises. 

Recovery  measures  can  take  advantage  of  the  job  creation  potential  offered  by  energy 
efficiency and renewable energy75, including that of the R&I sector, to boost employment 
while  also  moving  towards  sustainability.  Support  for  R&I  investment,  including 
corporate  R&I,  has  a  greater  positive  impact  on  employment  in  medium-  to  high-
technology sectors such as cleaner energy technology76. At the same time, breakthrough 
low-carbon  technologies  are  needed,  for  instance  in  energy-intensive  industries,  which 
will require faster R&I investment for their demonstration and deployment.  

3.  FOCUS ON KEY CLEAN ENERGY TECHNOLOGIES AND SOLUTIONS 

In  the  section  below,  the  most  relevant  competitiveness  values  for  each  of  the  six 
technologies analysed above, and the status, value chain and global market are analysed, 
based on the indicators outlined in Table 1. The EU's performance is compared as far as 
possible  with  other  key  regions  (e.g.  USA,  Asia).  A  more  detailed  assessment  of  other 
important clean and low carbon energy technologies needed to reach climate neutrality is 
set  out  in  the  accompanying  Clean  Energy  Transition  –  Technologies  and  Innovation 
Report77.  

3.1 Offshore renewables – wind 

Technology:  the  EU  cumulative  installed  capacity  of  offshore  wind  (OW)  amounted  to 
12  GW  in  201978.  At  the  2050  time  horizon,  EU  scenarios  foresee  approximately  300 
GW of wind offshore capacity in the EU79. Globally, costs have fallen steeply in recent 
years, and demand has been stimulated by new tenders implemented worldwide and the 
building of subsidy-free wind parks. OW has benefited considerably from onshore wind 
developments,  especially  economies  of  scale  (e.g.  material  developments  and  common 

73  Quarterly  Report  on  European  Electricity  Markets,  Volume  13,  Issue  2.  https://ec.europa.eu/energy/data-

analysis/market-analysis_en?redir=1 

74 The analysis is supported by a study planned to deliver its conclusions in April 2021. 
75  It  is  estimated  that  the  same  level  of  spending  will  generate  nearly  three  times  as  many  jobs  as  in  fossil-fuelled 
industries  Source:  Heidi  Garrett-Peltier,  Green  versus  brown:  Comparing  the  employment  impacts  of  energy 
efficiency,  renewable  energy,  and  fossil  fuels  using  an  input-output  model, Economic  Modelling,  Volume  61, 2017, 
439-447 
76  EC  work  for  MI  Tracking  Progress:  The  Economic  Impacts  of  R&D  in  the  Clean  Energy  Sector  and  COVID-19, 

2020, MI Webinar, May 6, 2020 

77 SWD(2020)953 
78 GWEC, Global Wind Energy Report 2019 (2020). 
79 According to the CTP-MIX scenario from COM(2020) 562 final. 

12 

 
                                                 
components),  thereby  allowing  efforts  to  focus  on  the  technology’s  most  innovative 
segments  (such  as  floating  offshore  wind,  new  materials  and  components).  Recent 
offshore  wind  projects  have  observed  much  increased  capacity  factors.  The  average 
power  capacity  of  the  turbines  has  increased  from  3.7  MW  (2015)  to  6.3  MW  (2018), 
thanks to sustained R&I efforts. 

R&I  in  offshore  wind  revolves  mainly  around  increased  turbine  size,  floating 
applications  (particularly  substructure  design), 
infrastructure  developments,  and 
digitalisation. About 90% of EU R&I funding for wind comes from the private sector80. 
At EU level, offshore wind R&I has been supported since the 1990s. Offshore wind, in 
particular  floating,  have  received  substantial  funding  in  recent  years  (Figure  8).  These 
R&I  patterns  highlight  that  through  the  development  of  new  market  segments  the  EU 
could  establish  a  competitive  edge.  For  example,  a  fully-fledged  EU  OW  supply  chain 
(extended  also  to  untapped  EU  sea  basins),  leadership  in  floating  offshore  industry 
targeting  markets  with  deeper  waters  or  new  emerging  concepts  e.g.  airborne  wind 
systems  or  the  development  of  a  port  infrastructure  capable  to  deliver  the  ambitious 
targets  (and  synergies  to  other  sectors  e.g.  hydrogen  production  in  ports).  Patenting 
trends confirm Europe’s competitiveness in wind energy. EU players are leading in high 
value inventions81 and they protect their knowledge in other patent offices outside their 
home market.  

Figure 8 Evolution of EC R&I funding, categorised by R&I priorities for wind energy under FP7 
and H2020 programmes and the number of projects funded over 2009-2019. 

Source 8 JRC 202082 

Other recent innovations target the logistics/supply chain, e.g. the development of wind 
turbine gearboxes compact enough to fit into a standard shipping container83 as well as 
applying  circular  economy  approaches  along  the  life-cycle  of  installations.  Further 
innovations  and  trends  expected  to  increase  most  over  the  next  ten  years  include 
superconducting  generators,  advanced  tower  materials  and  the  added  value  of  offshore 
wind  energy  (system  value  of  wind).  The  SET  Plan  Group  on  OW  identified  most  of 

80 JRC Technology Market Report – Wind Energy (2019). 
81  This  means  that  the  patents  are  protected  in  other  patent  offices  outside  the  issuing  country  and  refer  to  patent 
families  that  include  patent  applications  in  more  than  one  patent  office.  About  60%  of  all  EU  wind-related 
inventions  were  protected  in  other  countries  (by  way  of  a  comparison,  only  2%  of  Chinese  inventions  were 
protected in other patent offices outside China). 

82  JRC  2020,  Low  Carbon  Energy  Observatory,  Wind  Energy  Technology  Development  Report  2020,  European 

Commission, 2020, JRC120709. 

83 SET-Plan, Offshore Wind Implementation Plan (2018). 

13 

 
 
 
                                                 
these areas  as key for Europe to  remain  competitive in  the future. Currently,  Europe is 
leading  in  all  parts  of  the  value  chain  of  sensing  and  monitoring  systems  for  OW 
turbines, including research and production84. 

Value  chain:  On  the  market  side,  EU  companies  are  ahead  of  their  competitors  in 
providing offshore generators of all power ranges, reflecting a well-established European 
offshore  market  and  the  increasing  size  of  newly  installed  turbines85.  Currently,  about 
93%  of  the  total  offshore  capacity  installed  in  Europe  in  2019  is  produced  locally  by 
European  manufacturers  (Siemens,  Gamesa  Renewable  Energy,  MHI  Vestas  and 
Senvion86).  

Figure 9 Newly installed wind capacity (onshore & offshore) - local vs imported, assuming an 
European single market 

Source 9 JRC 202087 

Global market: the EU88 share of global exports increased from 28% in 2016 to 47% in 
2018, and 8 out of the top 10 global exporters were EU countries, with China and India 
being  the  key  global  competitors.  Between  2009  and  2018,  the  EU89  trade  balance 
remained positive, showing a rising trend.  

In  terms  of  global  markets  projections,  within  Asia  (including  China),  offshore  wind 
capacity is expected to reach around 95 GW by 2030 (out of a projected global capacity 
of almost  233 GW by 2030)90. Nearly half of  global  offshore wind investment in  2018 
took place in China91. At the same 2030 time horizon, the CTP-MIX scenario projects 73 
GW  of  wind  offshore  capacity  in  the  EU.  Currently,  the  NECPs  project  55  GW  of 
offshore wind capacity by 2030.  

Floating  applications  seem  to  become  a  viable  option  for  EU  countries  and  regions 
lacking  shallower  waters  (floating  OW  farms  for  depths  between  50  and  1000  metres) 
and  could  open  up  new  markets  based  on  areas  such  as  the  Atlantic  Ocean,  the 

84 ICF, commissioned by DG Grow – Climate neutral market opportunities and EU competitiveness study (2020) 
85 JRC Technology Market Report – Wind Energy (2019). 
86 An even stronger market concentration can be expected following the insolvency of Senvion and the closure of its 

Bremerhaven turbine manufacturing plant at the end of 2019. 

87 JRC 2020, Facts and figures on Offshore Renewable Energy Sources in Europe, JRC121366 (upcoming). 
88 EU including UK. 
89 EU including UK. 
90 GWEC 2020, Global Offshore Wind Report, 2020. 
91 IRENA – Future of wind (2019, p. 52). 

14 

 
 
                                                 
Mediterranean  and,  potentially,  the  Black  Sea.  A  number  of  projects  are  planned  or 
underway that will lead to the installation of 350 MW of floating capacity in European 
waters by 2024. Moreover, the EU wind industry aims to install floating OW farms with 
150  GW  of  capacity  by  2050  in  European  waters  with  a  view  to  achieving  climate 
neutrality92.  The  global  market  for  energy  from  floating  OW  farms  represents  a 
considerable commercial opportunity for EU companies. A total of about 6.6 GW from 
this  source  are  expected  by  2030,  with  significant  capacities  in  certain  Asian  countries 
(South  Korea  and  Japan),  in  addition  to  the  European  markets  (France,  Norway,  Italy, 
Greece,  Spain)  between  2025  and  2030.  Since  China  has  abundant  wind  resources  in 
shallow waters, it is not expected to build floating wind farms with significant capacity in 
the  medium  term93.  Floating  applications  can  also  reduce  under-water  environmental 
impacts, notably during the construction phase. 

Offshore  wind  is  a  competitive  industry  on  the  global  market.  Emerging  global  market 
demands, such as that for energy generated by floating wind farms, may become key to 
EU industry if it is to be competitive in the growing offshore wind industry, and remain 
so.  A  key  consideration  is  whether  Member  States  will  commit  to  wind  energy.  The 
current mismatch between the 2030 NECP projection (55 GW of offshore wind) and the 
EU’s scenario (73 GW94) means that investment must be stepped up. The positive impact 
of  offshore  wind  development  on  supply  chains  in  sea  basins  is  relevant  to  regional 
development  (location  of  manufacturing,  assembly  of  turbines  close  to  the  market, 
impact on port infrastructure). The offshore renewable energy strategy95 will define a set 
of measures to overcome challenges and boost offshore prospects.  

3.2 Offshore renewables – Ocean energy  

Technology:  tidal  and  wave  energy  technologies  are  the  most  advanced  of  the  ocean 
energy technologies, with significant potential located in a number of Member States and 
regions96.  Tidal  technologies  can  be  considered  as  being  at  the  pre-commercial  stage. 
Design  convergence  has  helped  the  technology  develop  and  generate  a  significant 
amount of electricity (over 30 GWh since 201697). A number of projects and prototypes 
have  been  deployed  across  Europe  and  worldwide.  Most  of  the  wave  energy 
technological approaches, however, are at technology readiness level (TRL) 6-7, with a 
strong  focus  on  R&I.  Most  improvements  in  wave  energy  results  stem  from  ongoing 
projects  in  the  EU.  Over  the  past  five  years,  the  sector  has  shown  resilience98  and 
significant technology progress has been achieved thanks to the successful deployment of 
demonstration and first-of-a-kind farms.99  

The LTS scenarios foresee limited uptake of ocean energy technology. The high cost of 
wave  and  tidal  energy  converters  and  the  limited  information  available  on  the 
performance  limit  the  capture  of  ocean  energy  in  the  model100.  At  the  same  time,  the 

92 ETIPWind, Floating Offshore Wind. Delivering climate neutrality (2020). 
93 GWEC 2020, Global Offshore Wind Report, 2020. 
94 The CTP-MIX scenario from COM(2020) 562 final. 
95 It is anticipated that this will be published later in 2020. 
96 There is significant potential to develop tidal energy in France, Ireland and Spain, and localised potential in other 
Member States.  As regards  wave energy, high potential is to be found in the Atlantic, localised potential in the 
North Sea, the Baltic, the Mediterranean, and the Black Sea. 

97 Ofgem Renewable Energy Guarantees Origin Register. https://www.renewablesandchp.ofgem.gov.uk/ 
98 European Commission (2017) Study on Lessons for Ocean Energy Development, EUR 27984. 
99 Magagna & Uihllein (2015) 2014 JRC Ocean Energy Status Report.  
100 In the years to come, EU energy modelling results can be expected to reflect the validation and cost reduction of 

these technologies. 

15 

 
                                                 
European Green Deal emphasises the key role marine renewable energy will play in the 
transition  to  a  climate-neutral  economy,  with  a  significant  contribution  expected  under 
the  right  market  and  policy  conditions  (2.6  GW  by  2030101  and  100  GW  in  European 
waters  by  2050102).  Ongoing  demonstrations  show  that  costs  can  be  reduced  fast:  data 
from  Horizon  2020  projects  indicate that  the  cost  of  tidal  energy  fell by over  40% 
between 2015 and 2018103,104.  

Value  chain:  European  leadership  spans  the  whole  ocean  energy  supply  chain105  and 
innovation  system106.  The  European  cluster  formed  by  specialised  research  institutes, 
developers and the availability of research infrastructure has enabled Europe to develop 
and maintain its current competitive position.  

Global market: the EU maintains global leadership despite the UK’s withdrawal from the 
bloc  and  changes  in  the  market  for  wave  and  tidal  energy  technologies.  70%  of  global 
ocean  energy  capacity  has  been  developed  by  EU-based  companies107.  Over  the  next 
decade  it  will  be  vital  for  EU  developers  to  build  on  their  competitiveness  position. 
Global  ocean  energy  capacity  is  expected  to  increase  to  3.5  GW  within  the  next  five 
years, and an increase of up to 10 GW can be expected by 2030108. 

Figure 10 Installed capacity by origin of technology 

Source 10  JRC 2020109 

Within  the  EU110,  838  companies  in  26  countries  filed  patents  or  were  involved  in  the 
filing  of  patents  to  do  with  ocean  energy  between  2000  and  2015111.  The  EU  has  long 
maintained technological leadership in developing ocean energy technologies, thanks to 

101 European Commission (2018) Market study on ocean energy.2.2GW of tidal stream and 423MW of wave energy.  
102 European Commission (2017) Ocean energy strategic roadmap: building ocean energy for Europe. 
103 JRC (2019) Technology Development Report LCEO: Ocean Energy. 
104  In  addition,  R&I in  the  fields  of  advanced and hybrid  materials,  new  manufacturing processes  and  additive 
manufacturing employing  innovative 3D technologies could  enable  costs to  be  reduced  further.  It  could  also  help 
reduce  energy  consumption,  shorten  lead  times  and  improve  quality  associated  with  the production of  large 
cast components. 
105  JRC (2017) Supply chain of renewable energy technologies in Europe. 
106 JRC (2014) Overview of European innovation activities in marine energy technology. 
107 JRC (2020) -  Facts and figures on Offshore Renewable Energy Sources in Europe, JRC121366 (upcoming). 
108  EURActive  (2020)  https://www.euractiv.com/section/energy/interview/irena-chief-europe-is-the-frontrunner-on-

tidal-and-wave-energy/  

109 JRC (2020) -  Facts and figures on Offshore Renewable Energy Sources in Europe, JRC121366 (upcoming). 
110 EU including UK. 
111 JRC (2020) Technology Development Report Ocean Energy 2020 Update. 

16 

 
 
                                                 
the sustained support provided for R&I. Between 2007 and 2019, total R&I expenditure 
on  wave  and  tidal  energy  amounted  to  EUR  3.84  billion,  most  of  which  (EUR  2.74 
billion)  came  from  private  sources.  In  the  same  period,  national  R&I  programmes 
contributed  EUR  463  million  to  the  development  of  wave  and  tidal  energy,  while  EU 
funds  supported  R&I  to  the  tune  of  almost  EUR  650  million  (including  NER300  and 
Interreg  projects  (co-funded  by  the  European  Regional  Development  Fund))112.  On 
average, EUR 1 billion of public funding (EU113 and national) leveraged EUR 2.9 billion 
of private investments in the course of the reporting period. 

Significant cost reduction is still needed for tidal and wave energy technologies to exploit 
their potential in the energy mix, for which intensified (i.e. increased rate of projects in 
the  water)  and  continued  (i.e.  continuity  of  projects)  demonstration  activities  are 
necessary.  Despite  advances  in  technology  development  and  demonstration,  the  sector 
faces  a struggle in  creating a viable market.  National  support appears low, reflected by 
the limited commitment to  ocean energy capacity in  the NECPs compared to  2010 and 
the lack of clear dedicated support for demonstration projects or for the development of 
innovative remuneration schemes for emerging renewable technologies. This limits scope 
for developing a business case and for identifying viable ways to develop and deploy the 
technology.  Specific  business  cases  for  ocean  energy  therefore  need  more  focus,  in 
particular  when  its  predictability  can  enhance  its  value,  as  well  its  potential  for 
decarbonising small communities and EU islands114. The upcoming  offshore renewable 
energy  strategy  offers  an  opportunity  to  support  the  development  of  ocean  energy  and 
enable the EU to exploit its resources across the EU to the full. 

3.3 Solar photovoltaics (PV) 

Technology:  solar PV  has become the  world’s fastest-growing energy technology, with 
demand for solar PV spreading and expanding as it becomes the most competitive option 
for electricity generation in a growing number of markets and applications. This growth 
is supported by the decreasing cost of PV systems (EUR/W) and increasingly competing 
cost of electricity generated (EUR/MWh). 
The  EU115  cumulative  PV  installed  capacity  amounted  to  134  GW  in  2019,  and  it  is 
projected to grow to 370 GW in 2030, and to 1051 GW in 2050116. Given the significant 
projected growth of PV capacity in the EU and globally, Europe should have a sizeable 
role in the whole value chain. At the moment,  European companies perform differently 
across the various segments of the PV value chain (Figure 11).  

Figure 11 European players across the PV industry value chain 

112 JRC calculation, 2020. 
113 EU funds awarded up to 2020 included UK recipients. 
114 European Commission (2020), The EU Blue Economy Report, 2020. 
115 EU including UK. 
116 According to the projections in the Impact Assessment supporting the Climate Target Plan (COM(2020) 562 final.)  

17 

 
 
                                                 
Source 11 ASSET study on competitiveness 

Value chain: EU companies are competitive mainly in the downstream part of the value 
chain. In particular, they have managed to remain competitive in the monitoring, control 
and  balance  of  system  (BoS)  segments,  hosting  some  of  the  leaders  in  inverter 
manufacturing  and  in  solar  trackers.  EU  companies  have  also  maintained  a  leading 
position in the deployment segment, where established players like Enerparc, Engie, Enel 
Green  Power  or  BayWa.re  have  been  able  to  gain  new  market  share  worldwide117. 
Furthermore,  equipment  manufacturing  still  has  a  strong  base  in  Europe  (e.g.  Meyer 
Burger, Centrotherm, Schmid). 

Global  market:  the  EU  has  lost  its  market  share  in  some  of  the  upstream  parts  of  the 
value chain  (e.g. solar PV cell and module manufacturing). The highest  value added is 
located both a long way upstream (in basic and applied R&D, and design) and a long way 
downstream (in marketing, distribution, and brand management). Even though the lowest 
value-added  activities  occur  in  the  middle  of  the  value  chain  (manufacturing  and 
assembly),  companies  have  an  interest  in  being  well  positioned  in  these  segments,  to 
reduce  risks  and  financing  costs.  The  EU  still  hosts  one  of  the  leading  polysilicon 
manufacturers  (Wacker  Polysilicon  AG),  whose  production  alone  is  sufficient  to 
manufacture 20 GW of solar cells, and which exports a significant part of its polysilicon 
output  to  China118.  Currently,  global  production  of  PV  panels  is  valued  at  about  EUR 
57.8 billion, with the EU accounting for EUR 7.4 billion (12.8%) of that amount. The EU 
still  accounts  for  a  relatively  high  share  of  the  segment’s  total  value,  thanks  to  the 
production  of  polysilicon  ingots.  However,  it  has  fallen  back  dramatically  in  the 
manufacture of PV cells and modules. All the top 10 producers of PV cells and modules 
now produce most of their output in Asia119.  

117 ASSET Study on Competitiveness, 2020. 
118 JRC PV Status Report, 2011. 
119  Izumi  K., PV  Industry  in  2019 from  IEA  PVPS  Trends  Report, ETIP PV  conference  “Readying  for  the  TW  era, 

May 2019, Brussels 

18 

Market Size (M€)Equipment forPV manufacturingMonitoring & ControlsSolar PV panels​ (Silicon, Cells, Modules)EPCBalance of systemDeploymentKey playersEU•Valoe•Centrotherm•SCHMID•Hanwha Q-cells (Partially EU)•Wacker Chemie•3Sun•GreenPowerMonitoring•AlsoEnergy(partially EU)•Solar-log•Meteo&ControlInverters•SMATrackers•SoltecHighly fragmented market dominated by local players•Enel Green Power•Engie•BayWa.reMarket Growth OutlookR&D directed to HJTFocus on increasing cell efficiencyFocus diagnostics and optimisationIncreasing warranties and cost reductionFocus on factory vs field workAccess to low cost capital and leading technology is keyCritical materialsNoneSilver, CopperNoneNoneNoneNoneKey activities•PV manufacturing equipment•New PV technology development•Manufacturing of silicon ingots, cells and PV modules•Developing hardware and software to improve the performance of solar farm•All non-module hardware (Inverters, Trackers, Steel structures, cabling, etc.)•Engineering design•Construction •Lease & Insurance•Commissioning•Development•Finance•O&M57.8427.368EUGlobal1.32966GlobalEU2.694678GlobalEU25.7073.275EUGlobal17.9952.292EUGlobal26.9933.438GlobalEUEU:Global:Key playersRest oftheWorld•Meyer Burger•Trina Solar•Jinko Solar•GCL-Si•Hanwha Q-cells (Partially KR)•JA Solar•Longi•Tongwei•AlsoEnergy(Partially US)•InaccessInverters•Huawei•SunGrowTrackers•Nextracker•Array TechHighly fragmented market dominated by local players•Nexterra•BP Lightsource>15%>10%>5%>0%Legend:(10 yearCAGR)EU:Global:EU:Global:EU:Global:EU:Global:EU:Global: 
 
                                                 
Capital expenditure costs for polysilicon, solar cell and module manufacturing plants fell 
dramatically between 2010 and 2018. Together  with  innovations  in  manufacturing,  this 
should  offer  an  opportunity  for  the  EU  to  take  a  fresh  look  at  the  PV  manufacturing 
industry and reverse the situation120.  

The EU’s presence in the far upstream and far downstream parts of the value chain could 
well  provide  a  basis  for  rebuilding  the  PV  industry.  This  would  require  a  focus  on 
specialisation or high-performance/high-value products, such as equipment  and inverter 
manufacturing  and  PV  products  tailored  to  the  specific  needs  of  the  building  sector, 
transport  (vehicle  integrated  PV)  and/or  agriculture  (dual  land  use  with  AgriPV),  or  to 
the demand for high-efficiency/high-quality solar power installations to optimize use of 
available surfaces and of resources. The modularity of the technology makes it easier to 
integrate  PV  in  a  number  of  applications,  especially  in  the  urban  environment.  These 
novel PV technologies, which are now reaching the commercial phase, could offer a new 
basis for rebuilding the industry121. The strong knowledge of the EU research institutions, 
the skilled labour force,  and the existing and emerging industry players provide a basis 
for  re-establishing  a  strong  European  photovoltaic  supply  chain122.  To  remain 
competitive,  such  industry  needs  to  develop  a  global  outreach.  Building  a  sizeable  EU 
PV manufacturing industry would also reduce the risk of supply disruptions and quality 
risks.  

3.4 Renewable hydrogen production through electrolysis 

This  section  focuses  on  renewable  hydrogen  production  and  on  the  competitiveness  of 
this  first  segment  of  the  hydrogen  value  chain123.  Hydrogen  is  key  to  to  store  energy 
produced  by  renewable  electricity  and  to  decarbonise  sectors  that  are  hard  to  electrify. 
The  aim  of  the  EU  hydrogen  strategy  is  to  integrate  40  GW  of  renewable  hydrogen124 
electrolysers and the production of up to 10 Mt of renewable hydrogen in the EU energy 
system  by  2030,  with  direct  investment  of  between  EUR  24  billion  and  EUR  42 
billion125,126. 

Technology: the capital cost of electrolysers has fallen by 60% in the last decade, and is 
expected  to  halve  again  by  2030,  compared  to  the  present  day,  thanks  to  economies  of 

120  Arnulf  Jäger-Waldau,  Ioannis  Kougias,  Nigel  Taylor,  Christian Thiel,  How  photovoltaics  can  contribute  to  GHG 

emission reductions of 55% in the EU by 2030, Renewable and Sustainable Energy Reviews, 

Volume 126, 2020, 109836, ISSN 1364-0321 
121  Here  are  a  few  examples  of  the  most  relevant  PV  manufacturing  initiatives  in  Europe.  i)  The  H2020  ‘Ampere’ 
project supporting the construction of a pilot line to produce heterojunction silicon solar cells and modules. The 3Sun 
Factory (Catania, Italy) produces one of the most efficient PV technologies based on this approach. ii) The Oxford PV 
initiative  for  manufacturing  PV solar  cells  based  on perovskite  materials,  receiving  an  EIB  loan  under  the  InnovFin 
EDP facility. iii) Meyer Burger’s patent-protected heterojunction/SmartWire technology, which is more efficient than 
the current standard mono-PERC, as well as other heterojunction technologies currently available. 
122 Assessment of Photovoltaics (PV) Final Report, Trinomics (2017). 
123 On-site hydrogen production for co-located consumption in industrial applications appears to be a promising pattern 
which could enable the scale for the wider introduction of the carrier in the energy system to be reached fast, in 
line with the ambition of a climate-neutral economy and the hydrogen strategy. The competitiveness of the other 
supply chain segments, such as the  transport of hydrogen, its storage and its conversion in end-use applications 
(e.g.  mobility,  buildings)  is  not  dealt  with  in  this  report.  The  Commission  has  set  up  the  European  Clean 
Hydrogen Alliance as a stakeholder platform to bring the relevant players together. 

124  Renewable  hydrogen  (often  referred  to  as  ‘green  hydrogen’)  is  hydrogen  produced  by  electrolysers  powered  by 
renewable electricity, through a process in which water is dissociated into hydrogen and oxygen. 
125 A hydrogen strategy for a climate-neutral Europe, https://ec.europa.eu/energy/sites/ener/files/hydrogen_strategy.pdf  
126 In addition, from now to 2030, an amount between EUR 220bn and EUR 340bn would be required to scale up and 
connect 80-120 GW of solar and wind generators to the electrolysers to supply the necessary electricity.  

19 

 
 
 
 
                                                 
scale127. The cost of renewable hydrogen128 currently lies between EUR 3 and EUR 5.5 
per kilo, making it more expensive than non-renewable hydrogen (EUR 2 (2018) per kilo 
of hydrogen129).  

Today,  less  than  1%  of  world  hydrogen  production  comes  from  renewable  sources130. 
Projections  for  2030  locate  the  cost  of  renewable  hydrogen  in  the  range  of  EUR  1.1-
2.4/kg131,  which  is  cheaper  than  low-carbon  fossil-based  hydrogen132,  and  nearly 
competitive with fossil-based hydrogen133.   

Between  2008  and  2018,  the  Fuel  Cells  and  Hydrogen  Joint  Undertaking  (FCH  JU) 
supported  246  projects  across  several  hydrogen-related  technological  applications, 
reaching  a  total  investment  figure  of  EUR  916  million,  complemented  by  EUR  939 
million of private and national/regional investments. Under the Horizon 2020 programme 
to  developing  electrolysers, 
(2014-2018),  over  EUR  90  million  was  allocated 
complemented  by  EUR  33.5  million  of  private  funds134,135.  At  national  level,  Germany 
has  deployed  most  resources,  with  EUR  39  million136  allocated  to  projects  devoted  to 
electrolyser  development  between  2014  and  2018137.  In  Japan,  Asahi  Kasei  received  a 
multimillion dollar grant supporting the development of their alkaline electrolyser138.  

Asia (mostly China, Japan and South Korea) dominates the total number of patents filed 
between  2000  and  2016  for  the  hydrogen,  electrolyser  and  fuel  cell  groupings. 
Nevertheless, the EU performs very well and has filed the largest number of ‘high-value’ 
patent families in the fields of hydrogen and electrolysers. Japan, however, has filed the 
largest number of ‘high-value’ patent families in the field of fuel cells.  

127 From the hydrogen strategy: based on cost assessments by the IEA, IRENA and BNEF. Electrolyser costs to decline 
from EUR 900/kW to EUR 450/KW or less in the period after 2030, and EUR 180/kW after 2040. The costs of 
carbon capture and storage increase the costs of natural gas reforming from EUR 810/kWH2 to EUR 1512/kWH2. 
For 2050, the costs are estimated at EUR 1152/kWH2 (IEA, 2019).   

128  State  of  art  for  alkaline  electrolyser  efficiency  is  around  50  kWh/kgH2  (about  67%  based  on  hydrogen  lower 
heating  value  (LHV))  and  55  kWh/kgH2  (about  60%  based  on  hydrogen  LHV)  for  PEM  electrolysis.  Energy 
consumption for SOE is lower (of the order of 40 kWh/kgH2), but a source of heat is required in order to provide 
the 
(>600°C). 
https://www.fch.europa.eu/sites/default/files/MAWP%20final%20version_endorsed%20GB%2015062018%20%
28ID%203712421%29.pdf 

temperatures 

necessary 

high 

129 

https://www.iea.org/data-and-statistics/charts/hydrogen-production-costs-using-natural-gas-in-selected-regions-

2018-2 Original figure 1.7 USD - Conversation rate used: (EUR 1 = USD 1.18) 
130 International Energy Agency, Hydrogen Outlook, June 2019, p. 32 – 2018 estimates. 
131 COM(2020) 301 final 
132  Refers  to  fossil-based  hydrogen  with  carbon  capture’  which  is  a  subpart  of  fossil-based  hydrogen,  but  where 

greenhouse gases emitted as part of the hydrogen production process are captured. 

133 Refers to hydrogen produced through a variety of processes using fossil fuels as feedstock COM(2020) 301 final. 
134JRC 2020‚ Current status of Chemical Energy Storage Technologies’, p. 63. 

https://publications.jrc.ec.europa.eu/repository/bitstream/JRC118776/current_status_of_chemical_energy_storage
_technologies.pdf   

135 Compared with EUR 472 million for FCH JU funding overall and EUR 439 million for other sources of funding. 
136 This includes both private and public funds. 
137JRC 
of 

Technologies’, 

Chemical 

‚Current 

Storage 

Energy 

status 

2020 

p. 

63 

https://publications.jrc.ec.europa.eu/repository/bitstream/JRC118776/current_status_of_chemical_energy_storage
_technologies.pdf   

138  Yoko-moto,  K.,  Country  Update:  Japan,  in  6th  International  Workshop  on  Hydrogen  Infrastructure  and 

Transportation, 2018. 

20 

 
                                                 
Value  chain:  the  main  water  electrolysis  technologies  are  alkaline  electrolysis  (AEL), 
polymer  electrolyte  membrane  electrolysis  (PEMEL)  and  solid  oxide  electrolysis 
(SOEL)139:  

-  AEL is a mature technology with operational costs driven by electricity costs and high 
capital  cost.  The  research  challenges  are  high-pressure  operation  and  the  coupling 
with dynamic loads.  

-  PEMEL can reach signiﬁcantly higher current densities140 than AEL and SOEL, with 
the potential to further reduce capital cost.  In recent  years, several large (MW-scale) 
plants  have  been  installed  in  the  EU  (in  Germany,  France,  Denmark,  and  the 
Netherlands),  enabling  the  EU  to  catch  up  on  AEL.  It  is  a  market-ready  technology 
with research mainly focused on increasing aerial power density, while guaranteeing 
the simultaneous reduction of critical raw material use141 and durability performance.  
-  SOEL exhibits greatest efficiency. However, plants are relatively smaller, usually still 
in the 100 kW capacity range, require steady operation, and need to be coupled to  a 
heat source142. Overall, SOEL is still in the development phase, although it is possible 
to order products on the market.  

In 2019, the EU had around 50 MW of water electrolysis capacity installed143 (about 30% 
AEL and 70% PEMEL), of which about 30 MW were located in Germany in 2018144. 

AEL has no critical components in its supply chain. Thanks to technical similarities with 
the  chlor-alkali  electrolysis  industry,  which  deploys  much  larger  installations,  it  can 
exploit  technology  overlap  and  benefit  from  well-established  value  chains.145.  PEMEL 
and SOEL share some cost and supply risks with the respective fuel cell value chains146. 
This applies in particular to critical raw materials147 in the case of PEMEL, and to rare 
earths in the case of SOEL.  

PEMEL has to withstand corrosive environments and therefore requires the use of more 
expensive  materials,  such  as  titanium  for  bipolar  plates.  The  main  system-cost 
contributors  are  the  electrolyser  stack148  (40-60%),  followed  by  the  power  electronics 
(15-21%).  The  core  components  driving  up  the  stack  cost  are  the  layers  of  membrane 
electrode assemblies  (MEA), which contain noble metals149. Cell components  based on 
rare earths that are used for SOEL electrodes and electrolyte are the main contributors to 

139  A  novel  type  of  high  temperature  electrolyser,  at  a  very  low  TRL,  is  under  development:  proton  ceramic 
Eeectrolysers (PCEL), with the potential advantage of producing pure dry pressurised hydrogen at the maximum 
pressure of the electrolyser, unlike other electrolyser technologies. 

140  Electrolysis  is  a  surface-based  process.  Therefore,  upscaling  an  electrolyser  stack  cannot  take  advantage  of  a 
favourable  surface/volume  ratio  as  for  volume-based  processes.  All  other  things  remaining  equal,  doubling  or 
tripling  the  size  of  an  electrolysis  stack  will  almost  double  or  triple  the  investment  cost,  with  limited  direct 
economies  coming  from  the  scale-up.  This  is  why  the  increased  areal  power  density  allowed  in  the  PEMEL 
approach is relevant. Obtaining higher hydrogen production for a given surface area of the electrolyser reduces the 
capital cost and the overall footprint of the installation. 
141 Mainly platinum group metals (PGMs), iridium in particular. 
142 A recently started European project142 is currently aiming to install 2.5 MW in an industrial environment. 
143 https://iea.blob.core.windows.net/assets/a02a0c80-77b2-462e-a9d5-1099e0e572ce/IEA-Hydrogen-Project-

Database.xlsx 

144 https://www.dwv-info.de/wp-content/uploads/2015/06/DVGW-2955-Brosch%C3%BCre-Wasserstoff-RZ-

Screen.pdf 

145 https://www.fch.europa.eu/sites/default/files/Evidence%20Report%20v4.pdf 
146 https://publications.jrc.ec.europa.eu/repository/handle/JRC118394 
147 Iridium is currently crucial for PEM electrolysis only, but not for fuel cell systems. Since it is one of the rarest 

elements in the earth’s crust, it is likely that any strain brought about by an increased additional demand will have 
strong repercussions on availability and price.    

148 A stack is the sum of all the cells. 
149 https://www.fch.europa.eu/sites/default/files/Evidence%20Report%20v4.pdf 

21 

 
                                                 
stack  cost.  It  is  estimated  that  stacks  account  for  about  35%  of  overall  SOEL  system 
cost150.  

Global market: European companies are well-placed to benefit from market growth. The 
EU  has  producers  of  all  three  main  electrolyser  technologies151,  and  is  the  only  region 
offering  a  well-defined  market  product  for  SOEL.  The  other  players  are  located  in  the 
UK, Norway, Switzerland, the US, China, Canada, Russia and Japan.  

The  global  turnover  for  water  electrolyser  systems  is  currently  estimated  to  be  in  the 
range  of  EUR  100  to EUR  150  million  per  year.  According  to  2018  estimates,  water 
electrolysis production could reach a capacity of 2 GW per year (globally), within a very 
short space of time (one to two years). European manufacturers could potentially supply 
about one third of this increased global capacity152.  

The  aim  of  the  EU’s  hydrogen  strategy  is  to  achieve  a  significant  renewable  hydrogen 
production capacity by 2030. This will require a tremendous effort to scale up from the 
50  MW  of  water  electrolysis  capacity  currently  installed  to  40  GW  by  2030,  with  the 
setting  up  of  the  capacity  required  for  a  sustainable  value  chain  in  the  EU.  This  effort 
should build on the innovation potential offered by the whole spectrum of the electrolyser 
technologies  and  on  the  leading  position  EU  companies  have  in  electrolysis  in  all 
technology  approaches,  along  the  whole  value  chain,  from  component  supply  to  final 
integration  capability.  Important  cost  reductions  are  expected  as  a  result  of  scaling  up 
industrial scale manufacturing of electrolysers. 

3.5 Batteries 

Batteries  are  a  key  enabler  for  the  transition  to the  climate-neutral  economy  we  aim  to 
reach  by  2050,  for  the  roll-out  of  clean  mobility,  and  for  energy  storage  to  enable  the 
integration of increasing shares of variable renewables. This analysis focuses on lithium 
ion (Li-ion) battery technology. There are several reasons for this: 

- 
- 
- 
- 

the very advanced state of this technology and its market readiness;  
its high round trip efficiency;  
its considerable projected demand; and  
its  expected  broader  use,  be  it  in  electric  vehicles,  future  electric  (maritime  and 
airborne)  vessels,  or  in  stationary  and  other  industrial  applications,  leading  to 
considerable market opportunities.  

Technology:  global demand for Li-ion batteries is projected to increase from about 200 
GWh in 2019 to about 800 GWh in 2025, and to exceed 2 000 GWh by 2030. Under the 
most optimistic scenario, it could reach 4 000 GWh by 2040153.  

150 https://www.hydrogen.energy.gov/pdfs/16014_h2_production_cost_solid_oxide_electrolysis.pdf 
151 AEL is provided by nine EU producers (four in Germany, two in France, two in Italy and one in Denmark), two in 
Switzerland and one in Norway, two in the US, three in China, and three in other countries (Canada, Russia and 
Japan). PEMEL is provided by six EU suppliers (four in Germany, one in France and one in Denmark), one 
supplier from the UK and one from Norway, two suppliers from the US, and two suppliers from other countries. 
SOEL are provided by two suppliers from the EU (Germany and France). 
152 https://www.now-gmbh.de/content/service/3-publikationen/1-nip-wasserstoff-und-

brennstoffzellentechnologie/181204_bro_a4_indwede-studie_kurzfassung_en_v03.pdf 

153 Source: JRC Science for Policy Report: Tsiropoulos I., Tarvydas D., Lebedeva N., Li-ion batteries for mobility and 
stationary storage applications – Scenarios for costs and market growth, EUR 29440 EN, Publications Office of 
the European Union, Luxembourg, 2018, doi:10.2760/87175. 

22 

 
 
 
                                                 
Figure 12 Historical and projected annual Li-ion battery demand, by use 

Source 12 Bloomberg Long-Term Energy Storage Outlook, 2019:  Bloomberg NEF, Avicenne for 
consumer electronics 

The projected growth, mainly based on electric vehicles (especially passenger vehicles), 
comes  from  the  strong  technological  improvements  that  are  expected  and  further 
decreases  in  cost.  Lithium-ion  battery  prices,  which  were  above  USD  1  100/kWh  in 
2010,  have  fallen  87%  in  real  terms  to  USD  156/kWh  in  2020154.  By  2025,  average 
prices are expected to be close to USD 100/kWh155. As regards performance, lithium-ion 
energy  density  has  increased  significantly  in  recent  years,  tripling  since  their 
commercialisation in 1991151. Further potential for optimisation is expected with the new 
generation of Li-ion batteries156. 

Value  chain:  Figure  14  shows  the  value  chain  for  batteries  together  with  the  EU’s 
position in the various segments. EU industry is investing in mining, raw and advanced 
materials  production  and  processing  (cathode,  anode  and  electrolyte  materials),  and  in 
modern  cell,  pack  and  battery  production.  The  aim  is  to  become  more  competitive 
through quality, scale and, in particular, sustainability.  

Figure 13 Assessment of EU position along the battery value chain, 2019 

154  L.  Trahey,  F.R.  Brushetta,  N.P.  Balsara,  G.  Cedera,  L.  Chenga,  Y.-M.  Chianga,  N.T.  Hahn,  B.J.  Ingrama,  S.D. 
Minteer, J.S. Moore, K.T. Mueller, L.F. Nazar, K.A. Persson, D.J. Siegel, K. Xu, K.R. Zavadil, V. Srinivasan, and 
G.W.  Crabtree,  ‘Energy  storage  emerging:  A  perspective  from  the  Joint  Center  for  Energy  Storage  Research’, 
PNAS, 117 (2020) 12550–12557. 

155 BNEF 2019 Battery Price Survey 
156 Forthcoming JRC (2020) Technology Development Report LCEO: Battery storage. 

23 

05001,0001,5002,0002,50020162018202020222024202620282030GWhE-busesConsumer electronicsStationary storageCommercial EVsPassenger EVs 
 
 
                                                 
Source 13 InnoEnergy (2019). 

Global market: the global market for Li-ion batteries for electric cars is currently worth 
EUR 15 billion/year (of which the EU accounts for EUR 450 million/year (2017)157). A 
conservative  estimate  foresees  that  the  market  will  be  EUR  40-55  billion/year  in  2025 
and EUR 200 billion/year in 2040158. In 2018, the EU had only about 3% of the global 
production  capacity  of  Li-ion  cells,  while  China  had  about  66%159.  European  industry 
was perceived as being strong in the downstream, value-driven segments, such as battery 
pack  manufacturing  and  integration  and  battery  recycling,  and  generally  weak  in 
upstream, 
cell 
manufacturing160,161.  The  marine  battery  market  is  growing  and  estimated  to  be  worth 
more than €800 million/year by 2025, more than half within Europe and a technological 
sector where Europe currently leads162. 

as  materials, 

components 

cost-driven 

segments 

such 

and 

Recognising the urgent need for the EU to recover competitiveness in the battery market, 
the Commission launched the European Battery Alliance in 2017 and adopted a strategic 
action  plan  for  batteries  in  2018163.  This  is  a  comprehensive  policy  framework  with 
regulatory  and  financial  instruments  to  support  the  establishment  of  a  complete  battery 

157 https://ec.europa.eu/jrc/sites/jrcsh/files/jrc114616_li-ion_batteries_two-pager_final.pdf 
158 Bloomberg Long Term Energy Storage Outlook 2019, p55-56 
159 Manufacturing capacity; Bloomberg Long-Term Energy Storage Outlook, 2019, pp. 55-56 
160  JRC  Science  for  Policy  report:  Steen  M.,  Lebedeva  N.,  Di  Persio  F.,  Boon-Brett  L.,  EU  Competitiveness  in 
Advanced Li-ion Batteries for E-Mobility and Stationary Storage Applications – Opportunities and Actions, EUR 
28837 EN, Publications Office of the European Union, Luxembourg, 2017 doi:10.2760/75757. 

161  JRC  Science  for  Policy  report:  Lebedeva,  N.,  Di  Persio,  F.,  Boon-Brett,  L.,  Lithium  ion  battery  value  chain  and 
related opportunities for Europe, EUR 28534 EN, Publications Office of the European Union, Luxembourg, 2016, 
doi:10.2760/6060.  

162 https://www.marketsandmarkets.com/Market-Reports/marine-battery-market-210222319.html 
163  COM  2019  176  Report  on  the  Implementation  of  the  Strategic  Action  Plan  on  Batteries:  Building  a  Strategic 
Battery Value Chain in Europe. https://ec.europa.eu/transparency/regdoc/rep/1/2019/EN/COM-2019-176-
F1-EN-MAIN-PART-1.PDF 
Actions  include  a)  strengthening  the  Horizon  2020  programme  through  additional  battery  research  funding,  b) 
creating a specific technology platform, the ETIP ‘Batteries Europe’ tasked with coordination of R&D&I efforts 
at  regional,  national  and  European  levels,  c)  preparing  specific  instruments  for  the  next  Research  Framework 
Programme  Horizon  Europe,  d)  preparing  new  sustainability  regulation,  and  e)  stimulating  investment  through 
Important  Project  of  Common  European  Interest  (IPCEI).  Press  release  IP/19/6705,  ‘State  aid:  Commission 
approves €3.2 billion public support by seven Member States for a pan-European research and innovation project 
in 
2019. 
value 
of 
https://ec.europa.eu/commission/presscorner/detail/en/ip_19_6705. 

December 

segments 

battery 

chain’, 

the 

all 

9 

24 

 
                                                 
value chain  ecosystem in Europe. At the same time, large-scale battery and battery cell 
manufacturers are starting to establish new production plants (e.g. Northvolt). Currently, 
there  have  been  announcements  for  investments  in  up  to  22  battery  factories  (some  of 
which are under construction), with a projected capacity of 500 GWh by 2030164.  

Figure 14 Li-ion cell manufacturing capacity by region of plant location 

Source 14 BloombergNEF, 2019 

The  EU  has  strengths  which  it  can  build  on  to  catch  up  in  the  battery  industry, 
particularly  in  advanced  materials  and  battery  chemistries,  and  in  recycling,  where  EU 
pioneering  legislation  has  made  it  possible  to  develop  a  well-structured  industry.  The 
Batteries Directive is currently under revision. However, to capture a significant market 
share  of  the  new  and  fast-growing  rechargeable  battery  market,  sustained  action  is 
needed over an extended period to ensure more investment in production capacity. This 
needs  to  be  supported  by  R&I  to  improve  the  performance  of  batteries,  while  also 
guaranteeing that they meet EU-level quality and safety standards, as well as to guarantee 
the  availability  of  raw  and  processed  materials  and  the  reuse  or  recycling  and 
sustainability  of  the  whole  battery  value  chain.  There  also  needs  to  be  a  new 
comprehensive EU legislative framework that sets out robust standards for performance 
and sustainability for batteries placed on the EU market. This will help industry to plan 
investments and ensure high standards of sustainability in line with the objectives of the 
European Green Deal. A Commission proposal will be adopted shortly. 

While improving the position on Li-ion technology is likely to be a core interest stream 
over  the  next  few  decades,  there  is  also  a  need  to  look  into  other  new  and  promising 
battery  technologies  (such  as  all-solid  state,  post  Li-ion  and  redox  flow  technology). 
These  are  important  for  applications  whose  requirements  cannot  be  met  by  Li-ion 
technology.  

3.6 Smart electricity grids  

Electrification  increases  in  all  scenarios  for  2050165,  so  a  smart  electricity  system  is 
essential if the EU is to achieve its Green Deal ambitions. A smart system enables a more 
efficient  integration  of  increasing  shares  of  renewable  electricity  production  and  of 
increasing  electricity  storage  and/or  consuming  devices  (e.g.  electric  vehicles)  in  the 

164 EBA 2020. 
165  ‘The  share  of  electricity  in  final  energy  demand  will  at  least  double,  bringing  it  up  to  53%,  and  electricity 
production  will  increase  substantially  to  achieve  net-zero  greenhouse  gas  emissions,  up  to  2.5  times  of  today's 
levels depending on the options selected for the energy transition’, Communication on ‘A Clean Planet for all - A 
European strategic long-term vision for a prosperous, modern, competitive and climate neutral economy’, p. 9. 

25 

366 1,207 02004006008001,0001,2001,40020192023GWhOtherJapanSouth KoreaU.S.EuropeChina 
 
 
                                                 
energy  system.  The  same  applies  to  the  growing  numbers  of  devices  that  run  on 
electricity, such as  electric vehicles. Through comprehensive control and monitoring of 
the  grid,  smart  systems  also  create  value  by  reducing  the  need  for  curtailment  of 
renewables  and  enabling  competitive  and  innovative  energy  services  for  consumers. 
According to the IEA, investment in enhanced digitalisation would reduce curtailment in 
Europe  by  67  TWh  by  2040166.  In  Germany  alone,  6.48  TWh  was  curtailed  in  2019, 
while grid stabilisation measures cost EUR 1.2 billion167. Such systems need to be cyber-
secure, which requires sector-specific measures.168 

Investments in digital grid infrastructure are dominated by hardware such as smart meters 
and electric vehicle  chargers.  In Europe, investments  remained stable in  2019 at  nearly 
EUR  42  billion169,  with  a  larger  portion  of  spending  allocated  to  upgrading  and 
refurbishing the existing infrastructure. 

Figure 15 (left) Global investment in smart grids by technology area, 2014-2019170 (billion USD) 
Figure 16 (right) Smart grid investment by European TSOs in recent years, by category (2018)171 

The main source of support for R&I  investments  in  smart  grids at  EU level  is  Horizon 
2020, which provided almost EUR 1 billion between 2014 and 2020. EUR 100 million 
was  invested  in  dedicated  digitalisation  projects,  and  many  other  smart  grid  projects 
assign a considerable proportion of their budget to digitalisation.172 Figure 16 shows that 
public investments in smart grids, including those made through Horizon 2020, account 
for a significant share of total investments by transmission system operations (TSOs). It 
is  noteworthy  that  budgets  for  R&I  by  TSOs  are  low,  at  around  0.5%  of  their  annual 
budget173,174. 
The TEN-E Regulation also supports investments in smart electricity grids as one of the 
12 priority areas, but investments in (cross-border) smart grids could benefit from higher 
levels  of  support  from  regulatory  authorities  through  inclusion  in  national  network 

166  with 

demand-response 

accounting 

for 

22  TWh 

and 

storage 

accounting 

for 

45  TWh 

- 

https://www.iea.org/reports/digitalisation-and-energy 

167 including costs of curtailment, redispatch and procuring reserve power. These costs are higher in Germany than 
elsewhere in Europe, but nevertheless give a good indication of the cost of curtailment. Zahlen zu Netz- und 
Systemsicherheitsmaßnahmen - Gesamtjahr 2019, BNetzA, 
https://www.bundesnetzagentur.de/DE/Sachgebiete/ElektrizitaetundGas/Unternehmen_Institutionen/Versorgungssicher
heit/Netz_Systemsicherheit/Netz_Systemsicherheit_node.html, p3 
168 In particular, real-time requirements (e.g. a circuit breaker must react within a few milliseconds), cascading effects 
and the mix of legacy technologies with smart/state of the art technology. See the Commission’s Recommendation 
on cybersecurity in the energy sector, C(2019) 2400 final. 

169 Source figure is US$ 50bn; https://www.iea.org/reports/tracking-power-2020 
170 https://www.iea.org/reports/tracking-energy-integration-2020/smart-grids 
171 https://ses.jrc.ec.europa.eu/sites/ses.jrc.ec.europa.eu/files/publications/dsoobservatory2018.pdf 
172 Estimated to be at least half of that total Horizon 2020 support for smart grids. 
173 This is further supported by figures on sub-markets dealt with in CETTIR (SWD(2020)953), see section 3.17. 
174 ENTSO-E RDI Roadmap 2020-2030, July 2020, p. 25. 

26 

 
 
 
                                                 
development  plans  and  eligibility  for  EU  financial  assistance  in  the  form  of  grants  for 
studies  and  works  as  well  as  innovative  financial  instruments  under  the  Connecting 
Europe Facility (CEF). From 2014 to 2019, CEF has provided up to EUR 134 million of 
financial assistance related to different smart electricity grids projects across the EU. 

The  following  two  key  technologies  are  assessed  in  more  detail:  High-voltage  direct 
current (HVDC) systems, and digital solutions for grid operations and for the integration 
of renewables.  

i) 

High-voltage direct current (HVDC) systems 

Technology: higher demand for cost-effective solutions to transport electricity over long 
distances,  particularly,  in  the  EU,  to  bring  power  generated  by  offshore  wind  to  land, 
increases  demand  for  HVDC  technologies.  According  to  Guidehouse  Insights,  the 
European market for HVDC systems will grow from EUR 1.54 billion in 2020 to EUR 
2.74 billion in 2030, at a growth rate175 of 6.1%176,177. The global market is expected to 
be around EUR 12.5 billion (2020), with the main investments in HVDC taking place in 
Asia, where much of the market is taken up by Ultra-HVDC178. HVDC equipment is very 
costly, and projects to build HVDC connections are therefore very expensive. Given the 
technological  complexity  of  HVDC  systems,  their  installation  is  generally  managed  by 
manufacturers179. 

Value  chain  analysis:  the  value  chain  for  HVDC  grids  can  be  segmented  along  the 
different  hardware  components  needed  to  realise  an  HVDC  connection180.  The  cost  of 
HVDC  systems  is  accounted  for  largely  by  converters  (about  32%)  and  cables  (about 
30%)181.  In  the  converter  stations’  value  chain,  power  electronics182  play  a  key  role  in 
determining  the  efficiency  and  the  size  of  the  equipment.  Energy-specific  applications 
represent only a small part of the global market in electronic components183, but offshore 
grids and wind turbines depend on their functioning well under offshore conditions. R&I 

175 Growth rates in this chapter are reported as compounded annual growth rates (CAGR). 
176  Guidehouse  Insights  (2020)  Advanced  Transmission  &  Distribution  Technologies  Overview.    Retrieved  at 

https://guidehouseinsights.com/reports/advanced-transmission-and-distribution-technologies-overview 

177 EU energy models (e.g. Primes) do not model HVDC separately, so no longer-term figures are available. However, 
it  is  clear  that  the  HVDC  market  is  expected  to  grow  consistently,  especially  given  the  growth  of  the  offshore 
energy market. 

178 UHVDC is not used in the EU. It is of particular use in transporting electricity over very long  distances, which is 
less  important  in  the  EU.  UHVDC  is  also  less  attractive  in  the EU  as  permitting  is  more  difficult,  for  example 
because  cable  towers  are  higher  than  normal  high-voltage  transmission  cable  towers.  The  global  market  for 
UHVDC is estimated at EUR 6.5 billion, mostly in China.  

179 By way of comparison, turnkey HVAC systems are often delivered by engineering, procurement, and construction 

firms.  

180 Major converter station components include the transformers, converters, breakers, and power electronics used to 
convert power from AC to DC and back again. Line-commutated converters (LCCs), also known as current source 
converters  (CSCs),  and  voltage-source  converters  (VSCs)  are  the  primary  commercial  HVDC  converter 
technologies.  Both  LCC  and  VSC  stations,  being  more  complex  than  HVAC  substations,  are  also  more 
expensive180. Despite the integration of common technologies, HVDC transformers and converter stations are not 
standardised, and designs and costs are highly dependent on local project specifications. 

181 In the EU the costs of cables are typically higher: Competitiveness report by ASSET for the European Commission. 
182  Power  electronics  is  an  essential  technology  to  integrate  direct-current  (DC)  generation  and  consumption  that  is 
used  in  many  parts  of  the  (future)  energy  system,  such  as  PV  installations,  windmills,  batteries,  and  HVDC 
converters. Power electronics technology is based on semiconductor technology and allows control of voltage or 
current,  for  example,  to  manage  the  grid  and  convert  electricity  between  AC  and  DC.  It  could,  therefore,  be 
addressed in many parts of this report, but because of a specific challenge to do with offshore wind and grids, it is 
dealt with here. 

183 The total market for power electronics, i.e. passive, active, electromechanical components, was estimated at EUR 
in  2019:  Global  active  electronic  components  market  share,  by  end  user,  2018. 

316  billion 
www.grandviewresearch.com  

27 

 
 
                                                 
investments  in  HVDC  technologies  are  mainly  private.  Public  funding  at  EU  level 
through  Horizon  2020  is  modest,  but  has  been  boosted  by  the  recently  finished 
Promotion project184.  

Global  market:  the  global  HVDC  market  is  led  primarily  by  three  companies,  namely 
Hitachi ABB Power Grids, Siemens, and GE185. Siemens and Hitachi ABB Power Grids 
have  around  50%  of  the  market  in  most  market  segments,  whereas  cable  companies186 
make up around 70% of the market in the EU, and the main competitors are Japanese. In 
China, a further vendor, China XD Group, dominates the market.  

So far, vendors have sold turnkey systems independently, as they were installed as point-
to-point  HVDC  connections.  In  the  more  interconnected  offshore  grid  of  the  future, 
HVDC systems from different manufacturers will need to be interconnected. This brings 
technological challenges to maintaining grid control187 and, in particular, to ensuring the 
interoperability of HVDC equipment and systems. Moreover, as all components need to 
be installed on offshore platforms, it is important to reduce their size, and there is a need 
to develop power electronic solutions specifically for offshore energy applications. 

ii) 

Digital solutions for grid operations and for the integration of renewables 

Technology & value chain:  the market  for  grid  management technologies  is  forecast  to 
grow  very  rapidly.  The  IEA  has  estimated  potential  savings  from  these  specific 
technologies  at  almost  USD  20  billion  globally  in  cost  reduction  of  operation  and 
maintenance (O&M) and almost USD 20 billion in avoided network investment188. The 
market consists of different technologies and services in a value chain that is difficult to 
separate  clearly,  which  seem  to  be  integrating  as  the  need  increases  for  integrated 
solutions to manage storage, demand response, distributed renewables and the grid itself. 
This reports highlights two aspects. 

Software- and data-based energy services, which are key to optimising integration of 
renewables, including at local level, through remote control of different technologies, in 
particular  renewables  and virtual  power plants  (VPP)189. This  is  a fast-growing market, 
forecast  to  increase  from  EUR  200  million  (globally190)  in  2020  to  EUR  1  billion  in 
2030191,192. It forms the basis of a new industry that provides energy services to energy 
businesses  (including  network  operators)  as  well  as  to  business  and  household  energy 
consumers.  Thanks  to  a  combination  of  increase  in  shares  of  renewables  and  market-
supporting policies, Europe has been the driving force behind virtual power plant (VPP) 
markets, accounting for nearly 45% of global investments in 2020. Most of this in North-

184 https://www.promotion-offshore.net/ 
185  Guidehouse  Insights  (2020)  Advanced  Transmission  &  Distribution  Technologies  Overview.    Retrieved  at 

https://guidehouseinsights.com/reports/advanced-transmission-and-distribution-technologies-overview 

186 Prysmian, Nexans, and NKT Cables are the three major European cable companies. 
187 Key technologies in this area include grid forming converters and DC circuit breakers. 
188 https://www.iea.org/reports/digitalisation-and-energy 
189  This  includes  Distributed  energy  resources  management  system  (DERMS), Virtual Power  Plant  (VPP)  and  DER 

Analytics. Please see section 3.17.4 in CETTIR (SWD(2020)953) for a more detailed description. 

190 Figures for the EU are unfortunately not available. 
191  Competitiveness  report  by  ASSET  for  the  European  Commission  -  Chapter  10.3.2  Grid  management  (Digital 

Technologies) 

192 These are considerable markets as is clear when comparing this to more established markets like the EU’s Building 
Energy Management System (BEMS) market that has a size of EUR 1.2 billion in 2020 (source: Competitiveness 
report by ASSET for the European Commission). In CETTIR (SWD(2020)953) section 3.17.4, this technology is 
described together with the Home Energy Management System (HEMS) and the market of  energy aggregators. 
These markets could also be expected to slowly integrate with the markets described here.  

28 

 
                                                 
West  Europe,  including  the  Nordic  countries.  Within  Europe,  Germany  is  forecast  to 
capture about one-third of the total VPP market’s annual capacity by 2028.  

Digital technologies for improved grid operation and maintenance (O&M), which is 
a  market  focused  particularly  on  network  operators.  This  is  also  a  growing  market, 
expected  to  reach  EUR  0.2  billion  in  the  EU  by  2030  for  software  platforms  for 
predictive  maintenance,  and  EUR  1.2  billion  for  Internet-of-Things  (IoT)  sensors.  The 
IoT market is expected to grow at 8.8% between 2020 and 2030. 

Global  market:  the  EU  holds  a  strong  position  in  both  parts.  Many  of  the  global 
companies are European (Schneider Electric SE and Siemens). Competition is strongest 
from US companies, including several innovative start-ups. The Internet-of-Things (IOT) 
sensor  and  monitoring  device  hardware  market  consists  of  several  major  players  with 
broad  portfolios,  and  dozens  of  medium  and  small  companies  in  niche  markets.  A 
handful of global companies (Hitachi ABB193, IBM, Schneider Electric SE, Oracle, GE, 
Siemens, and C3.ai) dominate the market for software solutions, which it is hard for new 
players to enter. The global market for digital services is shown in figure 17. 

Figure 17: Top key market players and market share for digital services, Global, 2020 

Source 15 ASSET study on competitiveness 

Several oil and gas and other energy providers are making strategic investments in grid 
management technologies, in particular services, and have invested in or acquired smaller 
startups in the European and US markets. Shell and Eneco have invested in the German 
companies Sonnen194 and Next Kraftwerke respectively195 and Engie has invested in the 
UK’s Kiwi Power196. This trend seems to be confirmed by the fact that out of 200 recent 

193  The  consequences  of  the  divestment  of  ABB  to  Hitachi  (https://new.abb.com/news/detail/64657/abb-completes-

divestment-of-power-grids-to-hitachi) still need to be analysed further. 

194  Shell  owns  100%  of  the  shares  of  Sonnen:  https://www.shell.com/media/news-and-media-releases/2019/smart-

energy-storage-systems.html, 15 February 2019.  

195 Eneco owns a 34% minority share: https://www.next-kraftwerke.com/news/eneco-group-invests-in-next-kraftwerke, 

8 May 2017. 

196 Engie owns just under 50% of the shares, but is the largest shareholder: https://theenergyst.com/engie-acquires-dsr-

aggregator-kiwi-power/, 26 November 2018. 

29 

 
 
 
                                                 
ventures that oil and gas companies have invested in, 65 were in the area of digitalisation, 
being the third sector after upstream conventional ventures and renewables197. 

While software platforms are reaching maturity, the applications for digital technologies 
to provide grid services continue to push innovation in the market space. Data volumes 
are relatively small compared to other sectors, so the innovation challenge is not in the 
data volumes or the data analysis technologies198. It lies in the availability of and access 
to  different  and  distributed  sources  of  data  for  the  software  providers  to  be  able  to 
provide  integrated  solution  to  their  customers.  Market-wide  interoperable  platforms  for 
easy data access and data exchange are therefore key.  

3.7  Further  findings  on  other  clean  and  low  carbon  energy  technologies  and  

solutions  

As  described  in  the  accompanying  Staff  Working  Document,  the  EU  holds  a  strong 
competitive position in onshore wind and hydropower technologies. For onshore wind, 
the large scale of the market199 and increasing  capacity outside Europe offer promising 
prospects  to  a  relatively  well  positioned  EU  industry  in  the  wind  value  chain200. 
Similarly, for hydropower the importance of the market201 and the EUs weight in global 
exports (48%) are key elements for a competitive industry. Yet, for both technologies, a 
key  challenge  moving  forward  is  focus  research  to  seize  the  opportunity  of 
repowering/refurbishment of the oldest installations for increasing their social acceptance 
and  reduced  footprint.  For  renewable  fuels,  the  key  issue  is  to  shift  from  first202  to 
second and third generation fuels to expand the feedstock sustainability and optimise its 
use. To do so, scale up and demonstration projects will be important moving forward.   

In  the  geothermal  energy  technologies  (market  of  approx.  1  EUR  billion)  and  solar 
thermal  power  technologies  (market  of  approx.  EUR  3  billion)  markets,  in  order  to 
increase  the  EU’s  market  share,  the  challenge  is  to  further  deployment  in  existing  and 
new  heat  applications  for  both  buildings  (especially  for  geothermal)  and  industry 
(especially  for  solar  thermal  power),  and  to  further  advance  the  innovation  potential  to 
integrate these technologies at scale. The development of Carbon Capture and Storage 
(CCS)  technologies  is  currently  hampered  by  the  lack  of  viable  business  models  and 
markets.  With  regard  to  nuclear  energy  technologies,  EU  companies  are  competitive 
across  the  whole  value  chain.  Current  competitiveness  focus  is  set  on  developing  and 
constructing  on  schedule,  and  on  guaranteeing  safety  for  the  entire  nuclear  life  cycle, 
with special regard to the disposal of the radioactive waste and the decommissioning of 
closing  plants.  Technological  innovations  such  as  Small  Modular  Reactors  are  being 
developed to maintain EU’s competitiveness in the nuclear domain. 

A key sector when it comes to reducing energy consumption are buildings, representing 
40% of the EU’s energy usage. The EU has a strong position in certain sectors203 such as 

197  The  Energy  Transition  and  Oil Companies’  Hard  Choices  –  Oxford  Institute  for  Energy  Studies, July  2019;  Rob 
West, Founder, Thundersaid Energy & Research Associate, OIES and Bassam Fattouh, Director, OIES, p. 6. 

198 See CETTIR (SWD(2020)953) section 3.17 for more information. 
199 EU wind industry revenues in 2019: EUR 86.1 billion 
200 European manufacturers represent around 35%; Chinese manufacturers almost 50% 
201 Current EU28 market: EUR 25 billion 
202 The EU27 biofuels industry turnover was 14 billion EUR in 2017 – mostly first generation feedstocks. 
203  Not  all  sectors  have  been  covered  in  this  first  report  due  to  data  availability  constraints.  Further  sectors  top  be 

analysed include the buildings enveloppe and construction techniques/modelling/design. 

30 

 
                                                 
prefabricated  building  components204,  district  heating  systems,  heat  pump  technologies 
and home/buildings energy management systems (HEMS/BEMS). In the energy efficient 
lighting industry205 the EU has a long tradition in designing and supplying innovative and 
high efficient lighting systems. The competitiveness challenge lies in the large scale mass 
production  which  is  possible  for  the  solid  state  based  lighting  devices.  Asian  suppliers 
are  in  a  more  favourable  position  because  they  can  scale  up  to  much  higher  capacity 
(economies of scale). Whereas, high skills in innovative design and new approaches are 
traditionally part of the European industrial sector. 

Lastly,  the  energy  transition  is  not  all  about  technologies,  but  also  about  fitting  these 
technologies  into  the  system.  Succeeding  in  moving  towards  net-zero  economies  and 
societies  requires  placing  citizens  at  the  heart  of  all  actions206  by  closely  looking  into 
main  motivational  factors  and  strategies  to  engage  them  and  situating  the  energy 
consumer  in  a  broader  social  context.  The  current  legal  framework  at  the  EU  level 
represents  a  clear  opportunity  for  energy  consumers  and  citizens  taking  the  lead  and 
clearly  benefit  from  the  energy  transition.  On  the  basis  of  the  observed  urbanization 
trends, cities can play a key role in developing a holistic and integrated approach207 to the 
energy  transition,  and  its  link  with  other  sectors,  such  as  mobility,  ICT,  and  waste  or 
water management. This, in turn, requires research and innovation in technologies as well 
as  in  processes,  knowledge  and  capacity  growth  involving  city  authorities,  businesses 
and citizens. 

CONCLUSIONS 

First and foremost, this report shows the economic potential of the clean energy sector. 
This  outcome  is  also  supported  by  the  recent  Impact  Assessment  of  the  2030  Climate 
Target  Plan208.  It  reinforces  the  argument    how  the  European  Green  Deal  has  a  clear 
potential  to  be  the  EU’s  growth  strategy  through  the  energy  sector.  In  this  analysis, 
evidence shows that the clean energy technologies sector is outperforming conventional 
energy  sources  and  in  comparison  is  creating  more  value-added,  employment  and 
productive labour. The clean energy sector is gaining importance in the EU economy, in 
line with the increased demand for clean technologies.  

At  the  same  time,  public  and  private  investments  in  clean  energy  R&I  are  decreasing, 
putting at risk the development of key technologies needed to decarbonise the economy 
and reach the ambitious objectives of the European Green Deal. This decline would also 
have  a  negative  impact  on  the  economic  and  employment  growth  observed  until  now. 
Furthermore, the energy sector is not investing much in R&I compared to other sectors, 
and within the energy industry, those investing most in R&I are oil and gas companies. 
Although there are positive signs, with  oil and  gas  companies increasingly  investing in 

204 EU 28 production value increased from EUR 31.85 billion (in 2009) to EUR 44.38 billion (in 2018). Within the 
same period, EU28 exports to the rest of the world increased from EUR 0.83 billion to EUR 1.88 billion. On the 
other hand, imports have been relatively stable around EUR 0.18 billion in 2009 to EUR 0.26 billion in 2018 with 
a low of EUR 0.15 billion in 2012-13. 

205 The European lighting market is expected to grow from EUR 16,3 billion in 2012 to EUR 19,8 billion in 2020 - CBI 

Ministry of Foreign Affairs, Electronic Lighting in the Netherlands, 2014 

206  The  engagement  strategies  have  to  be  both  individual  and  community-oriented,  aiming  not  only  at  providing 
economic  incentives,  but  also  at  changing  individual  behaviours  tapping  into  non-economic  factors,  such  as  by 
providing energy consumption feedback appealing to social norms. 

207  Including  technologies,  holistic urban  planning,  a  combination of  large-scale  public  and  private  investments,  and 

co-creation between policy makers, economic actors and citizens 

208 COM(2020) 562 final. 

31 

 
                                                 
clean energy technologies (e.g. wind, PV, digital), such technologies are still a minor part 
of their activities.  

This trajectory is not sufficient for the EU to become the first climate-neutral continent 
and lead the global clean energy transition. A considerable increase in R&I investment, 
both  public  and  private,  is  needed  to  keep  the  EU  on  its  decarbonisation  path.  The 
upcoming investments in economic recovery will provide a particularly good opportunity 
for  this.  At  the  national  level,  the  Commission  will  encourage  the  Member  States  to 
consider  setting  national  targets  for  investments  in  R&I  to  support  clean  energy 
technologies as part of the overall call for increased public R&I investments in climate 
ambition.  The  Commission  will  also  work  with  private  sector  to  step  up  their  R&I 
investments. 

Second, the EU’s targets for CO2 emission reduction, renewables and energy efficiency 
have triggered investments in new technologies and innovations that have led to globally 
competitive industries. This shows that a strong home market is a key factor in industrial 
competitiveness in clean energy technologies and that it will drive investments in R&I.  
However,  key  characteristics  of  the  energy  market  (in  particular  the  high  capital 
intensity,  long  investment  cycles,  new  market  dynamics,  coupled  with  a  low  rate  of 
return on investment) make it difficult to attract sufficient levels of investment into this 
sector, which affects its ability to innovate.   

Experience  with  solar  PV  manufacturing  in  the  EU  shows  that  a  strong  home  market 
alone is not enough. In addition to setting targets to create demand for new technologies, 
there need to be policies to support EU industry’s ability to respond to this demand. This 
includes  the  development  of  industrial-based  cooperative  platforms  for  specific 
technologies (e.g. on batteries and on hydrogen). Further such actions may be needed for 
other technologies, in cooperation with Member States and industry.  

Third,  specific  conclusions  can  be  drawn  from  the  six  technologies  analysed  that  are 
expected to play an increasing role in the EU’s 2030 and 2050 energy mix. In the solar 
photovoltaic  industry,  considerable  market  opportunities  exist  in  the  segments  of  the 
value  chain  where  specialisation  or  high  performance/high  value  products  are  key. 
Similarly, for batteries, the EU’s ongoing competitive recovery in the cell manufacturing 
segment  through  initiatives  such  as  the  European  Batteries  Alliance  complements  the 
more established European industry’s position in the downstream, value-driven segments 
such  as  battery  pack  manufacturing  and  integration,  and  battery  recycling.  Regaining  a 
competitive  edge  in  both  technologies  is  essential,  given  their  projected  demand, 
modularity and spillover potential (e.g. integration of PV in buildings, vehicles or other 
infrastructure).  

In  the  ocean  energy,  renewable  hydrogen  and  wind  industry,  the  EU  currently  holds  a 
first mover advantage. Nevertheless, the expected, multi-fold increase in the capacity size 
of  the  markets  suggests  that  the  industry’s  structure  will  inevitably  change:  expertise 
needs to be pooled across companies, and the Member States and the private sector have 
to re-structure and pool their value chains to realise the required economies of scale and 
positive  spillovers.  For  instance,  the  EU’s  current  leading  position  on  the  electrolysers 
market,  along  the  whole  value  chain  from  component  supply  to  final  integration 
capability, offers significant spillover potential between batteries, electrolysers and fuel 
cells.  The  announced  European  Clean  Hydrogen  Alliance  will  further  strengthen 
Europe’s  global  leadership  in  this  domain.  As  regards  ocean  energy,  technologies  have 

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yet to become commercially viable, and financial support schemes need to be identified 
to maintain and expand the EU’s current leading position. 

The  offshore  wind  industry,  with  its  established  innovative  capacity  that  pushes  the 
boundaries of the technology (e.g. floating offshore wind farms), needs the perspective of 
a  growing  home  market  as  well  as  sustained  R&I  funding  to  benefit  from  growth  in 
global  markets.  The  EU  smart  grid  and  HVDC  industries  are  also  doing  well,  and 
although a small market compared to wind or solar PV, it is important as it creates value 
for  everything  connected  to  the  grid.  Given  its  regulated  nature,  governments  and 
regulators in the EU play a key role in exploiting the benefits of this industry. 

Fourth,  a  move  towards  the  clean  technologies  also  shifts  the  EU  import-dependency 
from  fossil  fuel  to  increasing  use  of  critical  raw  materials  in  energy  technologies.  
However,  their  dependency  is  less  direct  than  it  is  for  the  fossil  fuel  as these  materials 
have  the  potential  to  stay  in  the  economy  through  re-using  and  recycling.  This  can 
improve the resilience of clean energy technology supply chains and therewith enhance 
EU’s open strategic autonomy. There is a clear need for R&I and investments to design 
the clean energy technology components to be more reusable and recyclable, in order for 
the  materials  to  be  kept  in  the  economy  for  as  long  as  possible  at  as  a  high 
value/performance  as  possible.  Related  to  moving  towards  further  circularity,  the  EU’s 
engagement  in  international  fora  such  as  G20,  Clean  Energy  Ministerial  and  Mission 
Innovation  will  allow  the  EU  to  drive  the  creation  of  environmental  standards  for  new 
technologies  and  further  strengthen  its  global  leadership,  and  will  mitigate  the  risk  of 
supply disruptions, technologies’ sustainability and quality.   

Fifth,  the  European  Commission  will  further  develop  the  competitiveness  assessment 
methodology in cooperation with the Member States and the stakeholders. The aim is to 
improve  the  macro-economic  analysis  of  the  clean  energy  sector,  including  the 
prerequisite  of  more  data.  An  improved  methodology  will  support  designing  an  energy 
R&I  policy  helping  to  create  a  competitive,  dynamic  and  resilient  clean  technology 
industry.  The  annual  assessment  of  competitiveness  of  the  clean  energy  sector  will  be 
complementary  with  the  framework  of  the  National  Energy  and  Climate  Plans,  the 
Strategic  Energy  Technology  Plan  and  the  Clean  Energy  Industrial  Forum.  The  aim  of 
the continued and improved assessment is for the clean energy sector to play its full role 
in making the European Green Deal, an EU growth strategy in practice.  

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