Study on promoting energy system integration through the increased role of renewable electricity, decentralised assets and hydrogen : final report.
Date: 2024-07-03
Institutions: Directorate-General for Energy
Subjects: EU energy policy, digitisation, electrical energy, energy cooperation, energy grid, energy storage, energy supply, energy transport, gas, hydrogen, hydrogen production, information security, reduction of gas emissions, renewable energy, report, security of supply

Study on promoting energy system 
integration through the increased 
role of renewable electricity, 
decentralised assets and hydrogen 

Final Report 

Written by the consortium of Trinomics, DNV, LBST, E3M and Schönherr 
March – 2024 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

Directorate-General for Energy   
Directorate C — Green Transition and Energy System Integration 
Unit C1— Renewables and Energy System Integration Policy 

E-mail:  ENER-C1-SECRETARIAT-1@ec.europa.eu 

European Commission 
B-1049 Brussels 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Manuscript completed in March 2024  

First edition 

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This document has been prepared for the European Commission however it reflects the views only of the authors, and the 
European Commission is not liable for any consequence stemming from the reuse of this publication. More information on the 
European Union is available on the Internet (http://www.europa.eu). 

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ISBN 978-92-68-18112-6 

Doi 10.2833/560304  MJ-05-24-482-EN-N 

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2024 

MJ-05-24-482-EN-N 

Directorate-General for Energy  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Study on promoting energy system integration through the increased role of renewable electricity, 
decentralised assets and hydrogen 

Study on promoting energy system 
integration through the increased 
role of renewable electricity, 
decentralised assets and hydrogen 

Final Report 

4 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contract details 

EUROPEAN COMMISSION 

European Commission, DG Energy (C1) 
ENER/C1/2022-530 under framework contract MOVE/ENER/SRD/2020/OP/0008 Lot-3 
Study on promoting energy system integration through the increased role of renewable electricity, decentralised 
assets and hydrogen (ENER/C1/2022-530) 

Authors 

(Trinomics) 
Wietze Lise  
(Trinomics) 
Mohammad Ansarin 
(Trinomics) 
Victor de Haas 
Csinszka Bene 
(Trinomics) 
João Gorenstein Dedecca  (Trinomics) 

Elena Henriquez   
Harish Krishnappa 

Miltos Aslanoglou  
Kostas Kavvadias  
Pantelis Capros 

Matthias Altmann  
Leo Diehl 
Franz Lust 
Frederik vom Scheidt 

(DNV) 
(DNV) 

(E3M) 
(E3M) 
(E3M) 

(LBST) 
(LBST) 
(LBST) 
(LBST) 

Janos Böszörmenyi  

(Schönherr) 

Contact person 

Mr. Dr. Wietze Lise 
T: +31 (0)6 3302 6344 
T: +90 (0)507 788 0632 
E: Wietze.Lise@trinomics.eu 

Date 

Rotterdam, 25 March 2024

2024 

MJ-05-24-482-EN-N 

Directorate-General for Energy  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 Study on promoting energy system integration through the increased role of renewable electricity, 
decentralised assets and hydrogen 

Table of Contents 

List of abbreviations ................................................................................................ 8 

Abstract ................................................................................................................... 11 

Résumé ................................................................................................................... 11 

Executive Summary ............................................................................................... 12 

Résumé Exécutif .................................................................................................... 19 

1.  The role of system integration in the context of the REPowerEU plan ...... 27 

1.1.  Overview of the EU Energy System Integration Strategy and its links with the 
study  27 

1.2.  EU energy system trends .................................................................................. 29 

1.3.  Current status of implementation of actions of the EU Energy System 
Integration Strategy ...................................................................................................... 31 

1.4.  Overview of energy system integration barriers and specific 
recommendations of this study ................................................................................... 33 

2.  Electrification of end-uses and decentralised renewable energy integration

37 

2.1. 

Introduction ....................................................................................................... 37 

2.2.  Barriers to electrification and decentralised RES integration ........................ 39 

2.3.  Recommendations on electrification and decentralised RES integration ..... 53 

3.  Uptake of renewable and low-carbon hydrogen (and other low-carbon 
gases) ...................................................................................................................... 66 

3.1. 

Introduction ....................................................................................................... 66 

3.2.  Barriers to the uptake of hydrogen .................................................................. 66 

3.3.  Recommendations on the update of hydrogen ............................................... 77 

3.4.  Additional aspects analysed concerning the uptake of hydrogen and other 
low-carbon gases .......................................................................................................... 92 

4.  Utilisation of waste heat ............................................................................... 103 

4.1. 

Introduction ..................................................................................................... 103 

4.2.  Barriers to the utilisation of waste heat ......................................................... 105 

4.3.  Recommendations on the utilisation of waste heat ...................................... 131 

4.4.  Case studies on the utilisation of waste heat ................................................ 143 

5.  Cross-cutting topics on energy system integration .................................. 150 

5.1. 

Introduction ..................................................................................................... 150 

5.2.  Barriers to a more integrated energy infrastructure ..................................... 151 

5.3.  Barriers to energy storage .............................................................................. 159 

5.4.  Barriers to digitalisation and innovation in the energy sector ..................... 163 

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5.5.  Monitoring and reporting ................................................................................ 165 

5.6.  Pillars and challenges not addressed in the EU ESI Strategy ...................... 166 

6.  Annexes ......................................................................................................... 170 

6.1.  Overview of recommendations ....................................................................... 170 

6.2.  Stakeholder survey.......................................................................................... 178 

6.3.  Stakeholders interviewed................................................................................ 194 

6.4.  Stakeholder workshop poll results ................................................................ 194 

6.5.  Status of actions in the EU Energy System Integration Strategy ................. 208 

6.6.  Uptake of hydrogen - Details on environmental impacts of hydrogen imports

213 

6.7.  Waste heat utilisation case studies ................................................................ 219 

6.8.  Selected energy system integration studies considered .............................. 231 

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 Study on promoting energy system integration through the increased role of renewable electricity, 
decentralised assets and hydrogen 

LIST OF ABBREVIATIONS 

Alternating Current 
AC 
European Union Agency for the Cooperation of Energy Regulators 
ACER 
The Alternative Fuels Infrastructure Directive 
AFID 
Alternative Fuels Infrastructure Regulation 
AFIR 
Automatic Frequency Restoration Reserve 
aFRR 
Application Programming Interface 
API 
Autothermal reforming 
ATR 
Battery electric vehicle 
BEV 
Battery Management System 
BMS 
BtM 
Behind-the-meter 
CAN  Controller Area Network 

CAPEX  Capital Expenditures 

CBAM  Cross-border adjustment mechanism 

CCS  Combined Charging System 
CCU  Communication Control Unit 

CCU/S  Carbon Capture, Utilisation and Storage 

CBA  Cost-Benefit Analysis 

CEER  Council of European Energy regulators 

CfD  Contract-for-differences 
CHP  Combined Heat and Power 
CIM  Common information model 
CPO  Charging Point Operator 
CSV  Comma Separated Values 
D4E  Data for Energy 
DC  Direct Current 

DEP  Data Exchange Platform 
DER  Distributed Energy Resources 
DG ENER  Directorate General of Energy 

DHC  District Heating and Cooling 

DR  Demand Response 

DSO  Distribution System Operator 

EC 
ECJ 
ECU 
EED 
EHPA 
EMD 
EMS 
EMSP 
ENISA 
ENTSO-E 
ENTSOG 
EPBD 
ESABCC 
ESCOs 
ESI 
ETD 
ETS 
EV 
EVSE 
EU 

European Commission 
European Court of Justice 
Energy control units 
Energy Efficiency Directive 
European Heat Pump Association 
Electricity Market Design 
Energy Management Systems 
E-Mobility Service Provider 
The European Union Agency for Cybersecurity 
European Network of TSOs for electricity 
European Network of TSOs for natural gas 
Energy Performance of Buildings Directive 
European Scientific Advisory Board on Climate Change 
Energy Service Companies 
Energy System Integration 
Energy Taxation Directive 
Emission Trading System 
Electric Vehicle 
Electric Vehicle Supply Equipment 
European Union 

8 

 
FCEV 
FCR 
FSP 
FTP 

Fuel cell electric vehicle 
Frequency Containment Reserve 
flexibility service provider 
File Transfer Protocol 

GDPR  General Data Protection Regulation 

GHG  Greenhouse Gas 
GPS  Global Positioning System 

HEMS  Home Energy Management System 

HMI  Human Machine Interface 
HP  Heat pump 

HVAC  Heating, Ventilation, and Air Conditioning 

ICT 
IEC 
IRENA 
JRC 
LCOH 
mFRR  Manual Frequency Restoration Reserve 

Information and Communications Technology 
International Electrotechnical Commission 
International Renewable Energy Agency 
Joint Research Centre 
Levelised cost of hydrogen production 

MS  Member State 
MW  Megawatt 

MWh  Megawatt-hour 

NCCS  Network Code on Cyber Security 
NRA  National Regulatory Authority 
OBD  On-board Diagnostics 
OCPI  Open Charge Point Interface 
OCPP  Open Charge Point Protocol 

OEM  Original Equipment Manufacturer 

OPEX  Operational Expenditures 

primary energy factor 
Proton Exchange Membrane 
Power Purchase Agreement 

PEF 
PEM 
PPA 
RCF  Recycled Carbon Fuels 
RED  Renewable Energy Directive 
RES  Renewable Energy Resource 

RFNBO  Renewable Fuels of Non-Biological Origin 

RR  Replacement Reserves 

SMR 
SOC 
SOE 
SOH 
SOP 
SOX 
tbc 
TEN-T 
TLS 
TP 
TPA 
TSO 
USA  United States of America 

Steam Methane Reforming 
State of Charge 
Solid oxide electrolyser 
State of Health 
State of Power 
State of X 
To be confirmed 
Trans-European Transport Network 
Transport Layer Security 
transparency platform 
third-party access 
Transmission System Operator 

V2G 

Vehicle to Grid (bi-directional charging and discharging capability based on the 
standardised protocol) 
Vehicle to Home 
Vehicle to Load 
Vehicle to everything 

V2H 
V2L 
V2X 
WHU  Waste Heat Utilisation 

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 Study on promoting energy system integration through the increased role of renewable electricity, 
decentralised assets and hydrogen 

WH/C  Waste heat and cold 

XML 

Extensible Markup Language 

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 Study on promoting energy system integration through the increased role of renewable electricity, 
decentralised assets and hydrogen 

ABSTRACT 

Full decarbonisation of the EU economy will require a significant transformation of the energy 
system. System integration can help achieve this in a cost-efficient manner. The EU Energy 
System Integration Strategy1 “proposes concrete policy and legislative measures at EU level 
to  gradually  shape  a  new  integrated  energy  system.”  The  main  objective  of  this  study  is  to 
assess the progress of energy system integration in the EU by looking into existing barriers 
as well as identifying solutions and providing recommendations to address these barriers. The 
assessment analyses three topics in-depth, namely electrification of end-uses (with a specific 
focus  on  transport,  industry,  buildings)  and  decentralised  renewable  energy  integration, 
uptake  of  renewable  and  low-carbon  hydrogen  (but  also  biogas  and  biomethane),  and 
utilisation  of  waste  heat.  The  assessment  also  covers  cross-cutting  topics  such  as  energy 
infrastructure, energy storage, and digitalisation.  

RÉSUMÉ 

La décarbonisation complète de l'économie de l'UE nécessite une transformation profonde du 
système énergétique. Une intégration optimale de ce système peut contribuer à atteindre cet 
objectif de manière plus efficace. La stratégie d'intégration du système énergétique de l'UE2 
"propose des mesures politiques et législatives concrètes au niveau de l'UE pour développer 
progressivement un nouveau système énergétique intégré". L'objectif principal de cette étude 
est d'évaluer les progrès dans le domaine de l'intégration des systèmes énergétiques dans 
l'UE en examinant les obstacles existants, en identifiant des solutions et en proposant des 
recommandations  pour  surmonter  ces  obstacles.  Le  rapport  analyse  trois  sujets  en 
profondeur, à savoir l'électrification des utilisations finales (avec un accent particulier sur les 
transports, 
renouvelables 
décentralisées,  le  déploiement  de  l'hydrogène  renouvelable  et  à  faible  teneur  en  carbone 
(mais aussi le biogaz/biométhane), et l'utilisation de la chaleur résiduelle. L'évaluation couvre 
également  des  sujets  transversaux  tels  que  l'infrastructure  énergétique,  le  stockage  de 
l'énergie et la numérisation.  

l'intégration  des  énergies 

les  bâtiments)  et 

l'industrie, 

1 COM(2020) 299 Final, page 2. Powering a climate-neutral economy: An EU Strategy for Energy System Integration 
2 COM(2020) 299 Final, page 2. Alimenter une économie neutre sur le plan climatique : Une stratégie européenne pour 
l'intégration des systèmes énergétiques 

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 Study on promoting energy system integration through the increased role of renewable electricity, 
decentralised assets and hydrogen 

EXECUTIVE SUMMARY 

Full decarbonisation of the EU economy will require a significant transformation of the 
energy  system.  System  integration  can  help  achieve  this  in  a  cost-efficient  manner 
while  providing  the  needed  flexibility  to  the  energy  system.  Net  decarbonisation  will 
require  a  reduction  in  energy  demand,  further  electrification  of  energy  needs,  and  the 
deployment of renewable and low-carbon fuels for the sectors where electrification is not an 
option. Renewable heat is also important for decarbonisation, even though it is not the focus 
of this study. Flexibility needs to accelerate at the same pace as renewable rollout by 2030, 
as both demand and supply must react to changing conditions to keep the system constantly 
in  balance.  Accordingly,  decarbonisation  will  require  deeper  integration  between  sectors, 
greater involvement of consumers, greater utilisation of assets for demand-side flexibility and 
adequacy  services  as  well  as  energy  trade  across  all  markets,  and  a more  innovative  and 
enabling regulatory framework.  

The  EU  Energy  System  Integration  (ESI)  Strategy  was  published  by  the  European 
Commission  in  July  2020  and  “proposes  concrete  policy  and  legislative  measures  at  EU 
level to gradually shape a new integrated energy system,” with various actions addressing all 
elements  mentioned  above  which  are  necessary  for  the  decarbonisation  of  the  EU  energy 
system in line with the European Green Deal. 

The  objective  of  this  study  is  to  conduct  an  assessment  of  the  progress  of  energy 
system  integration  in  the  EU.  This  is  done  by  looking  into  existing  barriers  as  well  as 
providing  recommendations  to  address  these  barriers.  The  assessment  of  barriers  was 
conducted based on a literature review and extensive stakeholder consultations (through a 
survey, interviews, and workshops). This study is structured as follows: 

✓  Chapter  1  presents  the  structure  of  the  analysis,  including  an  overview  of  the  EU 

Energy System Integration Strategy; 

✓  Chapter  2  presents  the  analysis  for  topic  1:  electrification  of  end-uses  and 

decentralised renewable energy integration; 

✓  Chapter 3 presents the analysis for topic 2: uptake of hydrogen; 
✓  Chapter 4 presents the analysis for topic 3: utilisation of waste heat; 
✓  Chapter 5 presents the assessment of cross-cutting topics which were not analysed 
in  the  previous  chapters  (notably  infrastructure,  energy  storage,  and  digitalisation  & 
innovation).  

Implementation  challenges  towards  electrification  of  end-uses  and  integration  of 
decentralised resources. 

The  barriers  for  advancing  the  electrification  of  end-uses  and  integration  of 
decentralised  renewable  energy  were  identified,  along  with  recommendations  to 
address these barriers. Regarding electrification, the scope includes the direct electrification 
of  end-use  applications  for:  (i)  heating  in  buildings,  (ii)  industrial  processes,  and  (iii) 
transportation using electric vehicles (EVs). The addition of decentralised renewable energy 
assets and storage, including EVs, will also allow for bi-directional electricity flows, which is 
an additional challenge for ESI.  

Electrification  brings  multiple  benefits,  including  increased  energy  savings,  as 
electricity  is  more  efficient  than  other  energy  carriers  and  cleaner,  as  electricity  is 
produced  increasingly  from  renewable  energy.  Furthermore,  electricity  empowers 
consumers with access to cleaner energy options. Electricity injected into the grid and 

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 Study on promoting energy system integration through the increased role of renewable electricity, 
decentralised assets and hydrogen 

taken from the grid can adjust to specific load profiles as needed by the grid to reduce 
variability, backup capacity needs and costs. Moreover, combined with decentralised 
renewable energy generation and various local storage systems, electricity can bring 
higher benefits to the energy users, the energy system, and decarbonisation. When both 
electrification and decentralised renewable electricity generation increases, the synergy can 
mitigate  grid  congestion,  reduce  the  need  for  scarce  -centrally  procured-  power  reserve 
capacity, and increase the efficiency of investments in the grids, eventually reducing per unit 
investment  needs.  In  this  manner,  decentralised  renewables  with  storage  and  demand 
response can become a source of high-value flexibility services for the grid and the energy 
system in general.  

Significant  technical,  economic  &  financial,  legislative  &  regulatory,  and  societal 
barriers  remain  for  either  electrification  of  end-uses  or  integration  of  decentralised 
renewable energy or both: 

•  Technical barriers mainly stem from the increasing balancing needs between power 
supply  and  demand  due  to  the  further  penetration  of  variable  renewable  energy 
sources  and  the  complexity  they  bring  to  networks’  operation.  The  integration  of 
distributed  energy  resources  poses  operational  challenges  and  benefits  to  the 
electricity  grid,  requiring  a  revised  approach  on  the  way  distribution  systems  are 
designed, developed and operated, employing innovative technical solutions. On the 
demand-side, technical interventions and upgrades required on the building stock (i.e., 
electric panels, wiring, etc.) face limited space availability for new equipment in urban 
areas.  

•  Economic  and  financial  barriers  can  be  seen  as  the  main  barriers,  rather  than 
technical, which is consistent with the literature and the survey results. Energy prices 
and  differences  in  the  capital  expenditures  (CAPEX)  of  equipment  are  the  chief 
determinants  of  the  relative  economics  of  electric  compared  to  non-electric 
technologies. The additional investment to the already massive investments needed to 
upgrade ageing networks, may put pressure on consumers due to the increased costs. 
These  are  supplemented  by  large-scale  competitive  investments  in  new  storage 
facilities,  further  increasing  the  costs  for  consumers.  From  the  consumers’  point  of 
view,  high  upfront  cost,  including  long  project  lead  times,  are  slowing  down  the 
electrification process. Innovative approaches to electricity supply (i.e., dynamic tariffs, 
multiple suppliers, combination of products to better manage supply cost, remuneration 
of  flexibility)  are  not  yet  widely  offered,  affected  by  delayed  smartening  of  the  grid.  
Taxation  and  existing  policies  that  favour  fossil  fuels  can  impede  progress  towards 
electrification and decarbonisation. 

•  Legal and regulatory barriers cause delays implementing detailed market rules for 
the  active  participation  of  distributed  energy  resources  (DERs)  in  market  operation. 
Furthermore, they are enabling them to offer flexibility and balancing services, affect 
their  operational  efficiency,  hindering  the  opportunities  to  generate  revenues  from 
market products and services offered. Permitting processes related to the installation 
of  infrastructure,  such  as  grid  extensions  and  reinforcements,  solar  PV,  wind  and 
storage facilities, or even charging points can also be a challenge as implementation 
of simplified and accelerated permitting processes at national level lags behind. The 
revised  REDII  sets  specific  requirements  regarding  the  acceleration  of  the  permit-

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 Study on promoting energy system integration through the increased role of renewable electricity, 
decentralised assets and hydrogen 

granting process for installation of renewable energy production, co-located storage, 
and heat pumps as well as the related grid connections. Most of the permitting-related 
rules will have to be transposed into national law by 1 July 2024. Until then, Council 
Emergency Regulation 2022/2577 is already accelerating permitting, and the validity 
of several of its stipulations has been prolonged until mid-2025. 

•  Societal barriers need to be overcome for the success of electrification and renewable 
energy  integration.  Lack  of  public  support  can  lead  to  opposition  to  infrastructure 
projects  and  policies  that  support  electrification  and  renewable  energy.  Raising 
people’s awareness is a critical prerequisite for the effective scaling up of electrification 
and  decentralised  energy  generation.  The  limited  availability  of  a  properly  trained 
workforce  is  another  key  barrier  as  electrification  and  local  energy  management 
require new skills and qualifications. 

Several  new  provisions  to  advance  the  electrification  and  decentralised  renewable 
energy  integration  in  the  EU  have  been  introduced in  the revised  Renewable  Energy 
Directive (REDII), Energy Performance of Buildings Directive (EPBD), Alternative Fuels 
Infrastructure Regulation (AFIR) and in the revised Energy Efficiency Directive (EED). 
These new provisions already address some of the recommendations from stakeholders put 
forward  in  the  survey  as  well  as  in  various  studies  and  policy  papers  and  are  expected  to 
address  partially  or  fully  some of  the  barriers  identified.  The Wind Power  Package  and the 
Grid Package published end 2023 also contribute to address these topics. 

However,  some  barriers  potentially  remain,  and  grid  users,  such  as  consumers  and 
DERs, should be able to benefit from further initiatives to alleviate the main barriers. 
The lack of adequate grid capacity to timely connect new load and injection facilities remains 
a  key  barrier.  The  implementation  of  the  EU  Action  Plan  for  Grids  will  help  in  this  regard, 
notably to incentivise anticipatory development of the electricity networks at distribution level. 
In  line  with  the  aspects  highlighted  in  the  EU  Action  Plan  for  Grids  in  this  regard,  national 
authorities  could  mandate  electricity  TSOs  and  DSOs  to  properly  anticipate  expected 
developments  at  supply  and  demand  side  and  take  them  into  account  in  their  investment 
plans.  

A key recommendation for electrification is to provide guidelines for maximising the 
benefits  from  smart  metering  networks.  Providing  guidelines  on  how  to  enable  different 
value  propositions  for  the  utilisation  of  smart  meter  networks  and  maximise  benefits  for 
consumers and energy systems, will make more efficient use of the lessons learned from the 
implementation of rollout programmes to date.   

Another key recommendation emerging from the stakeholder engagement process is 
to formulate  an  actionable  Strategy  for  Electrification.  There  is  a  need  for  a  dedicated 
Electrification action  plan  to  accelerate the  uptake of  direct,  smart  electrification in Europe. 
According to stakeholders, concrete actions would include a reform of grid planning both for 
transmission  and  distribution  networks  to  improve  coordination  and  political  oversight, 
programmes to attract skilled workers, the prioritisation of direct and smart electrification in 
the EU’s funding and financing programmes, and the empowerment of end-users to utilise the 
full  potential  of  demand  side  management.  It  was  recommended  the  strategy  also  include 
specific regulatory and price-based incentives and mechanisms to further increase the rate of 
electrification. 

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 Study on promoting energy system integration through the increased role of renewable electricity, 
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Uptake of renewable and low-carbon hydrogen 

The uptake of renewable and low-carbon hydrogen to address the decarbonisation in 
hard-to-abate sectors and the increased system flexibility is an essential pillar of the 
energy transition. Significant technical, economic & financial, legislative & regulatory, 
and societal barriers remain for the uptake of hydrogen: 

•  Technical  barriers  include  inadequate  hydrogen  infrastructure,  i.e.  the  pipeline 
network and the lack of storage facilities. In addition, a hydrogen import infrastructure 
(from overseas) is still dependent on technical issues to be resolved in all the options 
discussed. Further, a rapid introduction of hydrogen may face production bottlenecks 
for electrolysers. The lack of experience and infrastructure for CCS in Europe could 
significantly delay the use of low-carbon hydrogen. 

•  Economic  and  financial  barriers  are  identified  as  most  important  and  include  the 
cost gap and bankability issues. Despite activities to address the cost gap, e.g. through 
the European Hydrogen Bank, stakeholders emphasise the remaining gap with fossil 
alternatives.  This  leads  to  competitiveness  challenges  and  consequently  bankability 
remains difficult to achieve for many projects. 

•  Legislative and regulatory barriers remain for low-carbon hydrogen, and a lack of 
clarity on how to interpret the requirements of the Delegated Acts to define renewable 
hydrogen creates barriers to imports. And permitting remains a challenge for hydrogen 
projects across Europe. 

•  Societal barriers are the lack of trained personnel and potentially low acceptance of 

some derivatives as well as CCS. 

The regulatory framework is considered to be almost complete, and measures are being 
implemented tackling both major and minor barriers, however the effectiveness of the 
respective  measures  remains  to  be  assessed  individually.  A  significant  number  of 
recommendations  (22)  emerged  from  both  the  literature  and  stakeholders,  the  majority  of 
which addresses hydrogen independent from its production route (14). Important overarching 
recommendations are:  

1.  Towards  2040  a  high-level  hydrogen  ambition  could  further  foster  the  uptake  of 

renewable and low-carbon hydrogen.  

2.  The  measure  of  highest  impact  to  address  the  cost  gap  between  renewable/  low-
carbon hydrogen and current fossil-based hydrogen is to phase out subsidies for fossil 
fuels; 

3.  To address bankability issues for projects, differentiated and more ambitious demand 
quotas  are  seen  as  an  appropriate  lever  to  provide  the  required  offtake  certainty 
financiers seek; 

4.  The lack of existing infrastructure can be addressed through appropriate risk-sharing 
and  comprehensive  integrated  infrastructure  planning,  potentially  including  storage 
targets,  while  ensuring  third  party  access  to  transport  and  large-scale  storage 
infrastructures. 

The uptake of low-carbon hydrogen from natural gas with carbon capture and storage (CCS) 
is  especially  dependent  on  the  build-out  of  CCS  infrastructure,  while  renewable  hydrogen 
needs  even  higher  acceleration  of  renewable  electricity  deployment,  as  well  as  access  to 
water.  

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decentralised assets and hydrogen 

Detailed recommendations range from improving IT systems on permitting procedures 
for  encouraging  the  EU  to  engage  globally  in  harmonising  GHG  calculation 
methodologies. Two detailed paragraphs on the feasibility and costs for reaching the targets 
in the short term by 2030 and on the GHG footprint of hydrogen imports, conclude that the 
above-mentioned  barriers  need to  be  addressed to  reach the  ambitious national  targets  by 
2030, and that the imports should focus on renewable hydrogen or low-carbon hydrogen with 
certified lifecycle analysis.  

Utilisation of waste heat 

This  section  identifies  barriers  to  and  provides  recommendations  on  advancing  the 
utilisation  of  waste  heat  and  cold  in  the  EU.  The  scope  of  waste  heat  sources  and 
applications considered differ from the definition in the revised REDII  and is detailed in the 
chapter. In addition, four in-depth case studies have been developed to analyse barriers, best 
practices and recommendations in specific waste heat and cold applications. 

There is significant waste heat and cold potential in the EU (from industrial as well as 
non-conventional  sources).  The  better  use  of  this  potential  could  allow  to  decarbonise  a 
significant portion of the EU’s current heating and cooling needs. Total waste heat potential 
(as defined by the REDII) could exceed 3000 TWh/year, with industry and power generation 
responsible for much of it (even considering a significant decrease in thermal inputs for power 
generation  towards  2040),  but  with  non-conventional  sources  such  as  data  centres, 
wastewater treatment facilities, and tertiary buildings offering an important potential. Future 
sources of waste heat will also arise, including electrolysis and methanation among others. 
Moreover,  while  waste  heat  utilisation  is  usually  focused  on  district  heating  applications 
(including  industrial use),  indirect  applications such  as  waste  heat  to  power  should  also  be 
considered. 

Significant  technical,  economic  &  financial,  legislative  &  regulatory,  and  societal 
barriers exist for waste heat utilisation: 

•  Technical  barriers  are  driven  by  the  temporal,  locational,  and  temperature  quality 
mismatch between waste heat and cold sources and potential, which will always exist 
to  a  certain  extent.  These  mismatches  can  however  be  managed  through  existing 
technical solutions and appropriate policies and measures. Moreover, how waste heat 
is represented in energy system models and scenarios could be improved; 

•  Economic and financial barriers are related to internal factors that affect the costs 
of projects and reduce their revenues (such as capital intensiveness of assets for waste 
recovery and district heating and cooling networks, and low valuation of waste heat), 
as  well  as  external  factors  which  distort  the  competition  with  other  heating  options 
(particularly  the  non-internalisation  of  negative  externalities  of  competing  heating 
sources).  Moreover,  project  uncertainty,  complexity  and  the  risk  aversion  of  actors 
compound these factors; 

•  Legislative and regulatory barriers are related most of all to the lack of appropriate 
governance and planning frameworks in the geographical (from the EU to the national 
and local levels) and planning dimensions (with heating and cooling, broader energy & 
climate,  and  spatial  planning).  The  limited  replicability  of  solutions  and  gaps  in  the 
accounting  of  climate  and  environmental  footprints  of  waste  heat  also  impact  its 
competitiveness; 

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•  Societal  barriers  include  the  lack  of  knowledge  and/or  acceptance  of  various 
stakeholders, including authorities (EU, national and local), waste heat suppliers, heat 
network operators and consumers. In this category the lack of sufficient skills to plan 
and implement waste heat and cold projects is also included. 

A main recommendation of this chapter is for policymakers to give higher priority to 
waste heat and cold. Recently adopted policies such as the revised REDII and EED should 
already address (fully or partially) many of the barriers. These new legal provisions are in the 
phase  of  implementation.  However,  stakeholders  can  benefit  from  further  clarity  regarding 
policy principles for waste heat and cold recovery and utilisation in the long run.  

Member States should be at the forefront of actions to advance waste heat utilisation. 
In this regard, many of the recommendations to the Commission concern providing assistance 
and exchanging best practices so the Member States can implement relevant measures (with 
a  number  of  related  initiatives  already  ongoing).  More  concrete  actions  remain,  such  as 
improving the representation of waste heat in energy system models, including it specifically 
in  energy  statistics,  providing  funding  for  planning  and  feasibility  studies,  improving  skills-
related initiatives, and expanding the energy source mix disclosure obligation from electricity 
to also gas and heat suppliers. At national level, in general Member States should improve 
their planning of the energy system and support to waste heat recovery and utilisation, while 
removing market distortions. 

Cross-cutting aspects of energy system integration 

An  additional  analysis  focuses  on  challenges  that  are  not  covered  in  detail  in  the 
analysis of specific aspects but are considered as important challenges. These need to 
be addressed to further advance energy system integration in the EU. The following aspects 
are focused on: 

1.  Integrated energy infrastructure planning and operation 
2.  Energy storage; 
3.  Digitalisation and innovation; 
4.  Monitoring and frameworks; 
5.  Other aspects, particularly critical raw materials and skills. 

insufficient  utilisation  of 

interconnector  capacities  and  the 

Overall  findings  show  that  for  integrated  energy  infrastructure,  issues  such  as  the 
currently 
lacking 
interoperability  of  grid  technology  solutions  need  to  be  addressed.  Overall  better 
coupling of different energy vectors is needed. The recommendations also emphasise 
the  importance  of  addressing  the  increasing  complexity  of  balancing  distribution 
systems, necessitating improved coordination between DSOs and TSOs. The need to 
accelerate  the  expansion  and  reinforcement  of  the  electricity  networks,  and  to  enable 
investments in decentralised renewable electricity generation as well in demand-side assets, 
is  identified  as  a  key  factor  to  tackle  delays  to  further  electrification  and  DER  integration. 
Additional integration benefits can be reaped in collaboration is fostered between ENTSO-E 
and ENTSOG (and in the future ENNOH), with a focus on revising their respective models to 
include short and long-term resolutions. 

To  facilitate  cross-border  trading  and  create  a  level-playing  field  for  market 
participants, the harmonisation of regulatory frameworks is needed, including rules on 
grid access, tariffs, trading, and capacity allocation; as well as rules for compliance, 
permitting and licensing for cross-border projects. The Commission should also support 

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Member  States  in  the  implementation  of  regulatory  frameworks  and  investments  into 
dedicated cross-border CO2 transport infrastructure.  

Concerning  energy  storage,  the  most  important  barriers  are  the  long  permitting 
procedures,  the  lack  of  consideration  of  the  double  role  of  storage  and  inadequate 
capacity  mechanisms.  An  update  of  existing  regulatory  frameworks  combined  with  lifting 
economic barriers for energy storage is recommended. As an economic driver, the value of 
storage could be more transparent if adequate assessments and valuations of storage needs 
would be undertaken.   

While digitalisation  in the  energy  sector is  already underway  and  a series  of  actions 
have  been  defined  on  EU  level,  the  implementation  of  these  can  benefit  from  the 
harmonisation of legislative acts, standards and regulations on the EU and MS level. 
This  will  help  to  create  a  safe  European-level  data-sharing  infrastructure  to  support  a  vast 
integrated energy system.  

For many topics of the study as well as for the cross-cutting issues, the focus should 
be on an adequate implementation and follow-up of policies and measures. A monitoring 
framework to assess the effectiveness of the measures is recommended, with indicators that 
focus  on  electricity  grids,  energy  storage  and  digitalisation.  Periodic  reports  could  be 
distributed to aid stakeholders in understanding progress and identifying required actions. As 
many  of  the  specific  recommendations  of  this  study,  e.g.  regarding  the  deployment  of 
distributed energy resources, will have socio-economic impacts – positive or negative – further 
attention from the Commission is necessary to ensure public acceptance and accelerate the 
deployment of the technologies while minimising potential negative impacts. 

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RÉSUMÉ EXÉCUTIF 

La  décarbonisation  complète  de  l'économie  de  l'UE  nécessite  une  transformation 
profonde  du  système  énergétique.  Une  intégration  optimale  de  ce  système  peut 
contribuer  à  atteindre  cet  objectif  de  manière  plus  efficace  tout  en  apportant  la 
flexibilité nécessaire au système énergétique. La décarbonisation nécessite une réduction 
de  la  demande  d'énergie,  la  poursuite  de  l'électrification  des  usages  énergétiques  et  le 
déploiement de vecteurs énergétiques renouvelables ou à faible teneur en carbone dans les 
secteurs  où  l'électrification  n'est  pas  envisageable.  La  chaleur  renouvelable  est  également 
importante pour la décarbonisation, même si elle ne fait pas l'objet de la présente étude. La 
flexibilité dans le système électrique doit être développée au même rythme que les énergies 
renouvelables  intermittentes;  tant  la  demande  que  l'offre  doivent  en  effet  s’adapter  aux 
conditions  changeantes  pour  que  le  système  reste  à  tout  moment  en  équilibre.  En 
conséquence, la décarbonisation nécessite une intégration plus poussée entre les secteurs, 
une plus grande implication des consommateurs, une plus grande utilisation des ressources 
permettant de fournir des services de flexibilité et d'adéquation du côté de la demande, ainsi 
que l’échange d'énergie sur tous les marchés, et un cadre réglementaire plus innovant et plus 
propice.  

La stratégie de l'UE pour l'intégration du système énergétique (ESI) a été publiée par la 
Commission européenne en juillet 2020 et "propose des mesures politiques et législatives 
concrètes  au  niveau  de  l'UE  pour  développer  progressivement  un  nouveau  système 
énergétique  intégré",  avec  diverses  actions  portant  sur  tous  les  éléments  mentionnés  ci-
dessus  qui  sont  nécessaires  pour  la  décarbonisation  du  système  énergétique  de  l'UE 
conformément au Green Deal européen. 

L'objectif de cette étude est d'évaluer les progrès dans le domaine de l'intégration des 
systèmes  énergétiques  dans  l'UE.  Pour  ce  faire,  elle  examine  les  obstacles  existants  et 
propose des recommandations pour y remédier. L'évaluation des obstacles a été réalisée sur 
la base d'une analyse documentaire et d'une vaste consultation des parties prenantes (par le 
biais d'une enquête, d'entretiens et d'ateliers). Ce report est structuré comme suit: 

✓  Le chapitre 1 présente la structure de l'analyse, y compris une vue d'ensemble de la 

stratégie d'intégration du système énergétique de l'UE; 

✓  Le chapitre 2 présente l'analyse du thème 1 : électrification des utilisations finales 

et intégration des énergies renouvelables décentralisées; 

✓  Le chapitre 3 présente l'analyse du thème 2 : déploiement de l'hydrogène; 
✓  Le chapitre 4 présente l'analyse du thème 3 : utilisation de la chaleur résiduelle; 
✓  Le  chapitre  5  présente  l'évaluation  de  thèmes  transversaux  qui  n'ont  pas  été 
analysés dans les chapitres précédents (notamment les infrastructures énergétiques, 
le stockage de l'énergie, la numérisation et l'innovation).  

Défis  liés  à  l'électrification  des  utilisations  finales  et  l'intégration  des  ressources 
énergétiques décentralisées. 

Les obstacles à l'électrification des utilisations finales et à l'intégration des énergies 
renouvelables  décentralisées  ont  été  identifiés,  et  des  recommandations  ont  été 
formulées  pour  les  surmonter.  En  ce  qui  concerne  l'électrification,  l’analyse  porte  sur 
l'électrification directe des applications d'utilisation finale pour : (i) le chauffage des bâtiments, 
(ii) les processus industriels, et (iii) le transport par le biais de véhicules électriques (VE). Le 
déploiement  d’installations  de  production  d’énergies  renouvelables  décentralisées  et  de 

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stockage, y compris les VE, permettra également des flux d'électricité bidirectionnels, ce qui 
constitue un défi supplémentaire pour l'ESI.  

L'électrification présente de multiples avantages, notamment des économies d'énergie 
accrues, l'électricité étant plus efficace que les autres vecteurs énergétiques, et plus 
durable,  l'électricité  étant  de  plus  en  plus  produite  à  partir  de  sources  d’énergies 
renouvelables.  En  outre,  l'électricité  permet  aux  consommateurs  d'accéder  à  des 
options énergétiques plus appropriées. L'électricité injectée dans le réseau et prélevée 
du  réseau  peut  s'adapter  à  des  profils  de  charge  spécifiques,  selon  les  besoins  du 
système, afin de réduire la variabilité, les besoins en capacité de secours et les coûts. 
En outre, combinée à une production décentralisée d'énergie renouvelable et à divers 
systèmes de stockage locaux, l'électricité peut apporter des avantages importants aux 
utilisateurs  d'énergie,  au  système  énergétique  et  à  la  décarbonisation.  Lorsque 
l'électrification  et  la  production  décentralisée  d'électricité  renouvelable  augmentent,  la 
synergie entre les différentes composantes du système peut atténuer la congestion du réseau, 
réduire le besoin de capacité de réserve d'énergie – contracté au niveau central par le TSO - 
et augmenter l'efficacité des investissements dans les réseaux, tout en réduisant les besoins 
globaux  d'investissement  par  unité.  De  cette  manière, 
les  énergies  renouvelables 
décentralisées couplées avec le stockage et la gestion de la demande peuvent devenir une 
source de services de flexibilité de grande valeur pour le réseau et le système énergétique en 
général.  

législatifs  et 
techniques,  économiques  et 
D'importants  obstacles 
réglementaires, et sociétaux subsistent pour l'électrification des utilisations finales ou 
l'intégration des énergies renouvelables décentralisées, ou les deux : 

financiers, 

•  Les  obstacles  techniques  découlent  principalement  des  besoins  croissants 
d'équilibrage entre l'offre et la demande d'électricité en raison de la pénétration accrue 
des  sources  d'énergies  renouvelables  variables  et  de  la  complexité  que  celles-ci 
apportent  à  l'exploitation  des  réseaux.  L'intégration  des  ressources  énergétiques 
distribuées pose des défis opérationnels et présente également des avantages pour 
le  réseau  électrique,  ce  qui  nécessite  de  revoir  la  manière  dont  les  systèmes  de 
distribution  sont  conçus,  développés  et  exploités,  en  recourant  à  des  solutions 
techniques  innovantes.  Du  côté  de  la  demande,  les  interventions  techniques  et  les 
mises à niveau nécessaires dans le parc immobilier (panneaux électriques, câblage, 
etc.) se heurtent au manque d'espace disponible pour les nouveaux équipements dans 
les zones urbaines.  

•  Les  obstacles  économiques  et  financiers  ont  un  impact  plus  important  que  les 
obstacles  techniques  et  peuvent  donc  être  considérés  comme  les  principaux 
obstacles, ce qui est cohérent avec la littérature et les résultats de l'enquête. Les prix 
de  l'énergie  et  les  différences  dans  les  dépenses  d'investissement  (CAPEX)  des 
équipements  sont  les  principaux  déterminants  de  la  compétitivité  des  technologies 
électriques  par  rapport  aux  technologies  non  électriques.  Les  investissements 
supplémentaires,  qui  s'ajoutent  aux  investissements  déjà  massifs  nécessaires  pour 
moderniser 
les 
consommateurs en raison de l'augmentation des coûts. En plus des investissements 
requis  dans  les  équipements  et  réseaux,  des  investissements  importants  sont 
nécessaires dans de nouvelles installations de stockage, ce qui augmente encore les 
coûts  globaux  pour  les  consommateurs.  Du  point  de  vue  des  consommateurs,  les 

les  réseaux  vieillissants,  peuvent  exercer  une  pression  sur 

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coûts initiaux élevés, y compris les longs délais d'exécution des projets, ralentissent le 
processus  d'électrification.  Les  approches  innovantes  en  matière  de  fourniture 
d'électricité (tarifs dynamiques, fournisseurs multiples, combinaison de produits pour 
mieux gérer les coûts d'approvisionnement, rémunération de la flexibilité) ne sont pas 
encore largement proposées, ce qui s'explique notamment par le retard pris dans la 
mise  en  place  d'un  réseau  intelligent.  La  fiscalité  et  les  politiques  existantes  qui 
favorisent encore l’utilisation des combustibles fossiles peuvent entraver les progrès 
vers l'électrification et la décarbonisation. 

•  Les obstacles juridiques et réglementaires entraînent des retards dans la mise en 
œuvre de règles de marché appropriées pour la participation active des ressources 
énergétiques  distribuées  au  fonctionnement  du  marché,  ce  qui  ne  leur  permet  pas 
d'offrir des services de flexibilité et d'équilibrage, affecte leur efficacité opérationnelle 
et  entrave  les  possibilités  de  générer  des  revenus  à  partir  des  produits  et  services 
offerts  sur  le  marché.  Les  processus  d'autorisation  ou  de  permis  pour  de  nouvelles 
infrastructures,  telles  que  les  extensions  et  les  renforcements  de  réseaux,  les 
installations solaires photovoltaïques, éoliennes et de stockage, ou même les bornes 
de  recharge,  peuvent  également  constituer  un  défi,  car  la  mise  en  œuvre  de 
procédures simplifiées et accélérées au niveau national doit être renforcée. La REDII 
révisée fixe des exigences spécifiques concernant l'accélération du processus d'octroi 
de  permis  pour  des  'installations  de  production  d’électricité  sur  base  d'énergies 
renouvelables, des systèmes de stockage et de production d’électricité couplés et des 
pompes à chaleur, ainsi que les raccordements concernés au réseau. La plupart des 
règles relatives aux autorisations devront être transposées dans le droit national d'ici 
le 1er juillet 2024. D'ici là, le règlement d'urgence 2022/2577 du Conseil accélère déjà 
l'octroi des autorisations et la validité de plusieurs de ses dispositions a été prolongée 
jusqu'à la mi-2025. 

•  Les  obstacles  sociétaux  doivent  être  surmontés  pour  assurer  le  succès  de 
l'électrification et de l'intégration des énergies renouvelables. Le manque de soutien 
public peut conduire à une opposition aux projets d'infrastructure et aux politiques qui 
soutiennent  l'électrification  et  le  déploiement  des  énergies  renouvelables.  La 
sensibilisation  de  la  population  est  une  condition  préalable  essentielle  à  l'extension 
effective de l'électrification et de la production d'énergie décentralisée. La disponibilité 
limitée  d'une  main-d'œuvre  correctement  formée  est  un  autre  obstacle  majeur,  car 
l'électrification et la gestion locale de l'énergie requièrent de nouvelles compétences 
et qualifications. 

Plusieurs  nouvelles  dispositions  visant  à  faire  progresser 
l'électrification  et 
l'intégration  des énergies  renouvelables  décentralisées  dans l'UE  ont  été introduites 
dans  la  directive  révisée  sur  les  énergies  renouvelables  (REDII),  la  directive  sur  la 
performance  énergétique  des  bâtiments  (EPBD),  le  règlement  sur  les  infrastructures 
pour les carburants alternatifs (AFIR) et la directive révisée sur l'efficacité énergétique 
(EED).  Ces  nouvelles  dispositions  répondent  déjà  à  certaines  des  recommandations 
formulées  par  les  parties  prenantes  dans  l'enquête  ainsi  que  dans  diverses  études  et 
documents d'orientation, et devraient permettre de lever partiellement ou totalement certains 
des  obstacles  identifiés.  Le  paquet  "European  Wind  Power"  et  le  "Grid  Action  Plan" 

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publiés  fin  2023  contribuent  également  à  alléger  certains  problèmes  évoqués  dans 
cette étude. 

Toutefois, certains obstacles peuvent subsister, et les utilisateurs du réseau, tels que 
les  consommateurs  et  les  producteurs  décentralisés  d’électricité,  devraient  pouvoir 
bénéficier de nouvelles initiatives visant à réduire les principaux obstacles. Le manque 
de capacité adéquate du réseau pour connecter en temps voulu les nouvelles charges et les 
installations d'injection reste un obstacle majeur. La mise en œuvre du plan d'action de l'UE 
pour  les  réseaux  sera  utile  à  cet  égard,  notamment  en  encourageant  le  développement 
anticipé  des  réseaux  électriques  au  niveau  de  la  distribution.  Conformément  aux  aspects 
soulignés à cet égard dans le plan d'action de l'UE pour les réseaux, les autorités nationales 
pourraient  demander  aux  GRT  et  GRD  d'électricité  d'anticiper  correctement 
les 
développements attendus du côté de l'offre et de la demande et d'en tenir compte dans leurs 
plans d'investissement.  

Une recommandation clé pour l'électrification est de fournir des lignes directrices pour 
maximiser les avantages des réseaux et compteurs intelligents. En disposant de lignes 
directrices sur les différentes possibilités pour valoriser et optimiser l'utilisation des réseaux et 
des compteurs intelligents et pour maximiser les avantages pour les consommateurs et les 
systèmes  énergétiques, les parties  prenantes  pourront  utiliser  plus  efficacement  les  leçons 
tirées de la mise en œuvre des programmes de déploiement à ce jour.   

Une  autre  recommandation  clé  issue  du  processus  d'engagement  des  parties 
prenantes est de formuler une stratégie d'électrification appropriée. Il est nécessaire de 
mettre  en  place  un  plan  d'action  dédié  à  l'électrification  afin  d'accélérer  le  déploiement  de 
l'électrification  directe  et  intelligente  en  Europe.  Selon  les  parties  prenantes,  les  actions 
concrètes devraient comprendre une réforme de la planification des réseaux de transport et 
de  distribution  afin  d'améliorer  la  coordination  et  la  supervision  politique,  des  programmes 
visant à attirer des travailleurs qualifiés, la priorisation de l'électrification directe et intelligente 
dans les programmes de financement de l'UE, et la responsabilisation des utilisateurs finaux 
afin  d'utiliser  le  plein  potentiel  de  la  gestion  de  la  demande.  Il  a  été  recommandé  que  la 
stratégie comprenne également des incitations et des mécanismes réglementaires et tarifaires 
spécifiques afin d'augmenter le taux d'électrification. 

Déploiement de l'hydrogène renouvelable et à faible teneur en carbone 

Le  déploiement  de  l'hydrogène renouvelable et  à  faible  teneur  en  carbone  pour  faire 
face à la décarbonisation des secteurs difficiles à décarboner et à l'augmentation des 
besoins  en  flexibilité  du  système  est  un  pilier  essentiel  de  la transition  énergétique. 
D'importants  obstacles 
législatifs  et 
techniques,  économiques  et 
réglementaires, et sociétaux subsistent pour le déploiement de l'hydrogène: 

financiers, 

•  Les  obstacles  techniques  comprennent 

l'inadéquation  de 

l'infrastructure  de 
l'hydrogène,  c'est-à-dire  le  manque  d’un  réseau  de  gazoducs  et  d'installations  de 
stockage.  En  outre,  une  infrastructure  d'importation  d'hydrogène  reste  tributaire  de 
questions techniques  à  résoudre  dans  toutes  les  options  examinées.  En  outre,  une 
introduction  rapide  de  l'hydrogène  pourrait  se  heurter  à  des  goulets  d'étranglement 
dans 
filière  de  production  d'électrolyseurs.  Le  manque  d'expérience  et 
d'infrastructure  en  matière  de  capture  et  stockage  du  carbone  (CSC)  en  Europe 
pourrait  retarder  considérablement  l'utilisation  de  l'hydrogène  à  faible  teneur  en 
carbone. 

la 

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•  Les obstacles économiques et financiers sont considérés comme les barrières les 
plus importantes et comprennent notamment les coûts élevés et le financement des 
projets. Malgré les initiatives visant à combler l'écart de coût, par exemple par le biais 
de la Banque européenne de l'hydrogène, les parties prenantes soulignent l'écart qui 
subsiste avec les solutions conventionnelles basées sur l’utilisation de combustibles 
fossiles.  Cela  entraîne  des  problèmes  de  compétitivité  et,  par  conséquent,  le 
financement reste difficile pour de nombreux projets. 

•  Des  obstacles  législatifs  et  réglementaires  subsistent  pour  l'hydrogène  à  faible 
teneur en carbone, et le manque de clarté sur la manière d'interpréter les exigences 
des  actes  délégués  pour  définir  l'hydrogène  renouvelable  crée  des  obstacles  aux 
importations. De plus, l'octroi de permis reste un défi pour les projets d'hydrogène dans 
toute l'Europe. 

•  Les obstacles sociétaux sont le manque de personnel formé et l'acceptation publique 

potentiellement faible pour l’utilisation de certains dérivés ainsi que du CSC. 

Le cadre réglementaire est considéré comme quasiment complet et des mesures sont 
mises en œuvre pour remédier aux obstacles majeurs et mineurs, mais l'efficacité des 
mesures respectives doit encore être évaluée individuellement. Un nombre important de 
recommandations  (22) ont  été formulées  dans la  littérature et  par  les parties prenantes,  la 
majorité d'entre elles portant sur l'hydrogène indépendamment de son mode de production 
(14). Les principales recommandations sont les suivantes :  

1.  À  l'horizon  2040,  une  ambition  de  haut  niveau  en  matière  d'hydrogène  pourrait 

favoriser le déploiement de l'hydrogène renouvelable et à faible teneur en carbone ;  

2.  La  mesure  la  plus  efficace  pour  combler  l'écart  de  coût  entre  l'hydrogène 
renouvelable/à faible teneur en carbone et l'hydrogène actuel d'origine fossile consiste 
à supprimer progressivement les subventions aux combustibles fossiles ; 

3.  Pour  résoudre  les  problèmes  de  financement  des  projets,  des  quotas  de  demande 
différenciés et ambitieux sont considérés comme un levier approprié pour garantir une 
demande certaine telle que recherchée par les financiers ; 

4.  Le  manque  actuel  d'infrastructures  existantes  peut  être  résolu  par  un  partage 
approprié  des  risques  et  une  planification  globale  et  intégrée  des  infrastructures, 
incluant  éventuellement  des  objectifs  de  stockage,  tout  en  garantissant  l'accès  des 
tiers aux infrastructures de transport et de stockage à grande échelle. 

Le  déploiement  de  l'hydrogène  à  faible  teneur  en  carbone  issu  du  gaz  naturel  avec  CSC 
dépend particulièrement de la mise en place de l'infrastructure CSC, tandis que l'hydrogène 
renouvelable  nécessite  une  accélération  encore  plus  forte  du  déploiement  de  l'électricité 
renouvelable, ainsi que l'accès à l'eau.  

Les  recommandations  détaillées  comprennent  notamment  une  amélioration  de  la 
digitalisation  pour les procédures d'autorisation et une incitation de l'UE à s'engager 
au niveau mondial pour harmoniser les méthodes de calcul des émissions des GES. 
Deux paragraphes détaillés sur la faisabilité et les coûts pour atteindre les objectifs à court 
terme à l'horizon 2030 et sur l'empreinte GES des importations d'hydrogène concluent que 
les principaux obstacles mentionnés ci-dessus doivent être levés pour atteindre les objectifs 
nationaux ambitieux en 2030, et que les importations devraient se concentrer sur l'hydrogène 
renouvelable  ou  l'hydrogène  à  faible  teneur  en  carbone  avec  une  analyse  du  cycle  de  vie 
certifiée. 

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Utilisation de la chaleur résiduelle 

Cette  section  identifie  les  obstacles  et  fournit  des  recommandations  pour  faire 
progresser  l'utilisation  de  la  chaleur  et  du  froid  résiduels  dans  l'UE.  L'étendue  des 
sources  de  chaleur  résiduelle  et  des  applications  considérées  diffère  de  la  définition  de  la 
REDII révisée et est détaillée dans le chapitre. En outre, quatre études de cas ont été réalisées 
pour  analyser  les  obstacles  ainsi  que  les  meilleures  pratiques  et  pour  formuler  des 
recommandations concernant des applications spécifiques de la chaleur et du froid résiduels. 

L'UE dispose d'un important potentiel de chaleur et de froid résiduels (provenant de 
sources industrielles  et  non conventionnelles).  Une meilleure  utilisation  de  ce  potentiel 
pourrait permettre de décarboniser une part importante des besoins actuels de l'UE en matière 
de chauffage et de refroidissement. Le potentiel total de chaleur résiduelle (tel que défini par 
la  REDII)  pourrait  dépasser  3  000  TWh/an,  l'industrie  et  la  production  d'électricité  étant 
responsables d'une grande partie de ce potentiel (même en tenant compte d'une diminution 
significative  de  la  production  d'électricité  thermique  vers  2040),  mais  les  sources  non 
conventionnelles telles que les centres de données, les installations de traitement des eaux 
usées  et  les  bâtiments  tertiaires  offrent  également  un  potentiel  important.  De  nouvelles 
sources  de  chaleur  résiduelle  apparaîtront  également,  notamment  l'électrolyse  et  la 
méthanisation. En outre, alors que l'utilisation de la chaleur résiduelle est généralement axée 
sur les applications de chauffage urbain (y compris l'utilisation industrielle), des applications 
indirectes  telles  que  la  production  d'électricité  à  partir  de  la  chaleur  résiduelle  devraient 
également être envisagées. 

L'utilisation  de  la  chaleur  résiduelle  se  heurte  à  d'importants  obstacles  techniques, 
économiques et financiers, législatifs et réglementaires, et sociétaux : 

•  Les obstacles techniques sont dus à l'inadéquation temporelle, géographique et de 
qualité entre les sources de chaleur et de froid résiduels disponibles et leur utilisation 
potentielle,  qui  existera  toujours  dans  une  certaine  mesure.  Ces  inadéquations 
peuvent  toutefois  être  gérées  grâce  aux  solutions  techniques  existantes  et  aux 
politiques  et  mesures  appropriées.  En  outre,  la  façon  dont  la  chaleur  résiduelle  est 
représentée dans les modèles et les scénarios de systèmes énergétiques pourrait être 
améliorée ; 

•  Les  obstacles  économiques  et  financiers  sont  liés  à  des  facteurs  internes  qui 
affectent  les  coûts  des  projets  et  réduisent  leurs  revenus  (tels  que  l'intensité 
capitalistique des actifs pour la valorisation des déchets et les réseaux de chauffage 
et de refroidissement urbains, et la faible valorisation de la chaleur résiduelle), ainsi 
qu'à  des  facteurs  externes  qui  faussent  la  concurrence  avec  d'autres  options  de 
chauffage (en particulier la non-internalisation de certaines externalités négatives des 
sources  de  chauffage  conventionnelles).  En  outre,  l'incertitude  et  la  complexité  des 
projets, ainsi que l'aversion au risque des acteurs, aggravent ces facteurs ; 

•  Les obstacles législatifs et réglementaires sont surtout liés à l'absence de cadres 
de gouvernance et de planification appropriés aux différents niveaux géographiques 
(de  l'UE  aux  niveaux  national  et  local)  et  de  planification  (avec  le  chauffage  et  le 
refroidissement, l'énergie et le climat au sens large, et l'aménagement du territoire). La 
reproductibilité  limitée  des  solutions  et  les  lacunes  dans  la  comptabilisation  des 
empreintes climatiques et environnementales de la chaleur résiduelle ont également 
un impact sur sa compétitivité ; 

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•  Les  obstacles  sociétaux  comprennent 

le  manque  de  connaissances  et/ou 
d'acceptation  des  différentes  parties  prenantes,  notamment 
les  autorités 
(européennes, nationales et locales), les fournisseurs potentiels de chaleur résiduelle, 
les  opérateurs  de  réseaux  de  chaleur  et  les  consommateurs.  Cette  catégorie 
d'obstacles comprend également le manque de compétences suffisantes pour planifier 
et mettre en œuvre des projets dans le domaine de la chaleur et du froid résiduels. 

L'une des principales recommandations de ce chapitre est que les décideurs politiques 
accordent  une  plus  grande  priorité  à  la  chaleur  et  au  froid  résiduels.  Les  politiques 
récemment adoptées, telles que la REDII révisée et la DEE, devraient déjà lever (totalement 
ou  partiellement)  un  grand  nombre  d'obstacles.  Dans  une  large  mesure,  ces  nouvelles 
dispositions  politiques  sont  en  phase  de mise en œuvre.  Cependant,  les  parties  prenantes 
peuvent  bénéficier  d'une  plus  grande  clarté  concernant  les  principes  politiques  pour  la 
récupération et l'utilisation de la chaleur et du froid résiduels à long terme.  

Les États membres devraient être à l'avant-garde des actions visant à faire progresser 
l'utilisation  de  la  chaleur  résiduelle.  À  cet  égard,  bon  nombre  des  recommandations 
adressées à la Commission concernent la proposition d’une guidance et l’échange de bonnes 
pratiques afin que les États membres puissent mettre en œuvre des mesures pertinentes (un 
certain nombre d’initiatives sont déjà en cours). Il reste des actions plus concrètes à mener, 
telles  que  l’amélioration  de  la  représentation  de  la  chaleur  résiduelle  dans  les  modèles  de 
systèmes  énergétiques,  l’inclusion  de  cette  source  spécifique  dans  les  statistiques 
énergétiques, le financement des études de planification et de faisabilité, l’amélioration des 
initiatives liées aux compétences et l’extension de l’obligation aux fournisseurs de gaz et de 
chaleur de publier l’information relative aux sources d’énergie fournie. Au niveau national, les 
États membres devraient en général améliorer leur planification du système énergétique et 
leur soutien à la récupération et l’utilisation de la chaleur résiduelle, tout en supprimant les 
distorsions du marché. 

Aspects transversaux de l’intégration des systèmes énergétiques 

Une  analyse  supplémentaire  se  concentre  sur  les  défis  qui  ne  sont  pas  couverts  en 
détail  dans  l’analyse  des  aspects  spécifiques  mais  qui  sont  considérés  comme  des 
défis importants. Ces défis doivent être relevés pour faciliter et accélérer l’intégration des 
systèmes énergétiques dans l’UE. L’accent est mis sur les aspects suivants: 

1.  Planification et exploitation intégrées des infrastructures énergétiques ; 
2.  Stockage de l’énergie ; 
3.  Numérisation et innovation ; 
4.  Suivi et cadres régulatoires ; 
5.  D’autres  aspects,  en  particulier  les  matières  premières  et  les  compétences 

essentielles. 

Les  résultats  globaux  montrent  que  pour  accroitre  l'intégration  de  l’infrastructure 
énergétique,  des  questions  telles  que  l'utilisation  actuellement  insuffisante  des 
capacités  d'interconnexion  et 
le  manque  d'interopérabilité  des  solutions 
technologiques de réseau doivent être abordées. D'une manière générale, un meilleur 
couplage des différents vecteurs énergétiques est nécessaire. Les recommandations 
soulignent également l'importance d'aborder la complexité croissante de l'équilibrage 
des  systèmes  de  distribution,  ce  qui  nécessite  une  meilleure  coordination  entre  les 
GRD  et  les  GRT.  La  nécessité  d'accélérer  l'expansion  et  le  renforcement  des  réseaux 

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électriques, et de faciliter des investissements dans la production décentralisée d'électricité 
renouvelable ainsi que dans les équipements du côté de la demande, est identifiée comme 
un  facteur  clé  pour  réduire  les  retards  dans  l'électrification  et  l'intégration  des  sources 
d'énergie  renouvelables.  Des  avantages  supplémentaires  en  matière  d'intégration  peuvent 
être  récoltés  par  une  collaboration  plus  étroite  entre  ENTSO-E  et  ENTSOG  (et  à  l'avenir 
ENNOH), en mettant l'accent sur la révision de leurs modèles respectifs pour y inclure des 
objectifs et trajets à court et à long terme. 

Pour faciliter les échanges transfrontaliers et créer des conditions équitables pour les 
acteurs du marché, il est nécessaire d'harmoniser les cadres réglementaires nationaux, 
notamment  les  règles  relatives  à  l'accès  au  réseau,  aux  tarifs,  aux  échanges  et  à 
l'attribution des capacités, ainsi que les règles de conformité, d'autorisation et d'octroi 
de permis pour les projets transfrontaliers. La Commission devrait également soutenir les 
États membres dans la mise en œuvre de cadres réglementaires et d'investissements dans 
des infrastructures transfrontalières dédiées au transport de CO2.  

En ce qui concerne le stockage de l'énergie, les obstacles les plus importants sont la 
lenteur  des procédures d'autorisation, l'absence de prise en compte du double rôle du 
stockage et l'inadéquation des mécanismes de capacité. Il est recommandé de mettre à 
jour les cadres réglementaires existants et de lever les obstacles économiques au stockage 
de  l'énergie.  En  tant  que  moteur  économique,  la  valeur  du  stockage  pourrait  être  plus 
transparente si des évaluations adéquates des besoins de stockage étaient réalisées.   

Bien  que  la  numérisation  du  secteur  de  l'énergie  soit  déjà  en  cours  et  qu'une  série 
d'actions aient été définies au niveau de l'UE, leur mise en œuvre peut bénéficier d’une 
harmonisation des actes législatifs, des normes et des réglementations au niveau de 
l'UE et des États membres. Cela permettra de créer une infrastructure sûre de partage des 
données au niveau européen pour soutenir un vaste système énergétique intégré.  

De manière générale, l'accent devrait être mis sur la mise en œuvre adéquate et le suivi 
des  politiques  et  mesures.  Un  cadre  de  suivi  pour  évaluer  l'efficacité  des  mesures  est 
recommandé, avec des indicateurs axés sur les réseaux électriques, le stockage de l'énergie 
et la numérisation. Des rapports périodiques pourraient être mis à disposition pour aider les 
parties prenantes à connaître les progrès réalisés et à identifier les actions nécessaires. Étant 
donné que bon nombre des recommandations spécifiques de cette étude, par exemple en ce 
qui concerne le déploiement des ressources énergétiques distribuées, auront des incidences 
socio-économiques - positives ou négatives - une attention accrue de la part de la Commission 
est  nécessaire  pour  améliorer  l'acceptation  publique  et  accélérer  le  déploiement  des 
technologies tout en réduisant au minimum les incidences négatives potentielles. 

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1.  The role of system integration in the context of the 

REPowerEU plan 

The objective of this study is to assess the progress of energy system integration in the EU by 
looking into existing barriers as well as identifying solutions and providing recommendations 
to  address  the  barriers.  The  outputs  of  the  analysis  aim  to  support  various  Commission 
workstreams. 

This  chapter  introduces  the  structure  of  the  analysis,  providing  an  overview  and  holistic 
analysis of the EU Energy System Integration Strategy linking the various insights developed 
in the analysis of the specific study topics. 

The remaining chapters of this report are structured according to the main topics of analysis, 
as follows: 

✓  Chapter 2 presents the analysis for topic 1: electrification of end-uses and 

decentralised renewable energy integration; 

✓  Chapter 3 presents the analysis for topic 2: uptake of hydrogen; 
✓  Chapter 4 presents the analysis for topic 3: utilisation of waste heat; 
✓  Chapter 5 presents the assessment of cross-cutting topics which were not 
analysed in the previous chapters (notably energy storage, infrastructure, 
digitalisation, and innovation).  

✓  The annex presents: 

o  Overview of recommendations; 
o  Stakeholder survey; 
o  Stakeholders interviewed; 
o  Stakeholder workshop poll results; 
o  Status of actions in the EU Energy System Integration Strategy 
o  Uptake of hydrogen - Details on environmental impacts; 
o  Waste heat utilisation case studies; and 
o  Selected energy system integration studies considered. 

1.1.  Overview of the EU Energy System Integration Strategy 

and its links with the study 

The  EU  Energy  System  Integration  (ESI)  Strategy3  was  published  by  the  European 
Commission  in  July  2020  and  “proposes  concrete  policy  and  legislative  measures  at  EU 
level  to  gradually  shape  a  new  integrated  energy  system”,  aiming  to  support  the  Fit-for-55 
package of legislative actions which was proposed in the following year. 

The Strategy contains sections on its objectives, the definition and benefits of energy 
system integration, and on an action plan to advance energy system integration in the 
EU, organised in six pillars. As indicated by the Strategy, energy system integration is the 
‘planning and operation of the energy system “as a whole”, across multiple energy carriers, 
infrastructures,  and  consumption  sectors,  by  creating stronger  links  between them  with the 

3 COM(2020) 299 Final. Powering a climate-neutral economy: An EU Strategy for Energy System Integration 

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objective of delivering low-carbon, reliable and resource-efficient energy services, at the least 
possible cost for society’. 

The Strategy then introduces the hierarchy for cost-effective decarbonisation: 

•  A  ‘circular’  energy  system  with  energy  efficiency  as  the  core  principle 
should be prioritised, with reduction of energy demand and use of unavoidable 
waste materials and energy when these cannot be reduced further; 

•  Greater  direct  electrification  of  end-uses  leveraging  the  rapidly  decreasing 
costs  of  renewable  electricity  sources  and  the  high  source-to-sink  efficiencies 
from electricity generation to consumption; 

•  The  use  of  renewable  and  low-carbon  fuels  for  hard-to-decarbonise 
applications  where  direct  electrification  is  not  feasible  due  to  low  efficiency 
and/or high costs. 

The process of switching from technologies or processes that use fossil fuels to those 
that use electricity, preferably from renewable or low-carbon sources, is referred to as 
electrification. Electrification is one of the most important and effective strategies for reducing 
CO2  emissions  from  energy,  and  in  general,  it  can  result  in  improved  efficiency  and  lower 
costs. 

In  addition  to  the  three  mentioned  approaches  to  decarbonise  the  EU  sector,  the  strategy 
indicates another characteristic of a highly integrated energy system: 

•  Consumers play a greater role in energy supply within a ‘multi-direction’ 
energy  system,  both  vertically  (decentralised  generation  and  provision  of 
flexibility  by  consumers)  and  horizontally  (exchanges  of  energy  between 
consumers across sectors). 

In the main sections presenting an EU action plan for advancing energy system integration, 
the Strategy addresses the following six pillars: 

1.  A more circular energy system, with ‘energy-efficiency-first’ at its core; 
2.  Accelerating  the  electrification  of  energy  demand,  building  on  a  largely 

renewables-based power system; 

3.  Promote  renewable  and  low-carbon  fuels,  including  hydrogen,  for  hard-to-

decarbonise sectors; 

4.  Making energy markets fit for decarbonisation and distributed resources; 
5.  A more integrated energy infrastructure; 
6.  A digitalised energy system and a supportive innovation framework. 

The  six  pillars  of  the  Strategy  are  directly  related  to  the  hierarchy  for  cost-effective 
decarbonisation  of  the  energy  system.  Pillar  1  addresses  the  priority  solution  in  the 
hierarchy,  of  increasing  the  circularity  of  the  energy  system  and  advancing  the  energy 
efficiency first principle.  This is related not only to energy efficiency but also to the necessary 
and complementary concept of energy sufficiency. While not mentioned in the ESI Strategy, 
energy  sufficiency  has  since  been  gaining  traction  with  EU  policymakers  and  stakeholders 
more broadly. There is not a single definition of energy sufficiency, but it can be defined as “a 
level  of  energy  service  consumption  that  is  consistent  with  equity,  well-being  and 

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environmental  limits  and  as  a  strategy for reducing  energy  service  consumption  to  achieve 
that goal”.4 

Pillar 2 addresses electrifying end-uses when energy demand cannot be reduced further, and 
pillar 3 addresses the last solution, leveraging renewable and low-carbon fuels when energy 
demand can neither be reduced nor electrified at a reasonable cost or performance. Pillars 4 
to 6 in the ESI Strategy support the multidirectional aspects of energy system integration. 

Thus, the three solutions in the hierarchy to decarbonise the energy system as stated in the 
EU Energy System Integration Strategy (circularity and energy efficiency, direct electrification, 
and use of renewable and low-carbon fuels) are related to the three main topics analysed in 
this report  (waste  heat  utilisation,  electrification  of  end-uses  and  decentralised  renewables, 
and  uptake  of  hydrogen,  respectively).  The  remaining  pillars  of  the  strategy  address  all 
solutions. However, energy system integration as well as the specific topics analysed in this 
study  are  complex.  There  is  therefore  not  a  full  one-to-one  relationship  between  the  ESI 
Strategy and the chapters of this study, as illustrated in Figure 1-1. 

Figure 1-1 Relationship between the EU ESI Strategy and the chapters of this study 

1.2.  EU energy system trends 

Figure 1-2 illustrates the anticipated- final energy consumption trajectory of EU energy 
system  to  2050  broken  down  by  the  main  energy  carriers.  This  stylised  trajectory  is 
compatible with the latest 2040 climate target plan of the EU.5 A substantial shift is evident in 
the overall energy landscape. It is crucial to recognise that these projections are subject to 
evolution  over  time  due  to  technological  advancements,  evolving  policies,  and  emerging 
challenges.  

4 Sorrell, quoted in Beltoldi (2022) Policies for energy conservation and sufficiency: Review of existing policies and 
recommendations for new and effective policies in OECD countries 
5 Impact assessment report “Europe's 2040 climate target and path to climate neutrality by 2050 building a sustainable, just and 
prosperous society” {SWD(2024) 64 final 

29 

1. A more circular energy system, with ‘energy-efficiency-first’ at its core2. Accelerating the electrification of energy demand3. Promote renewable and low-carbon fuels, including hydrogen for hard-to-decarbonise sectors4. Making energy markets fit for decarbonisationand distributed resources5. A more integrated energy infrastructure6. A digitalisedenergy system andasupportive innovation frameworkChapter 2: Electrification of end-uses and decentralisedrenewable energy integrationChapter3:Uptake of hydrogenChapter4:Utilisation of waste heatChapter 5: Other barriers toenergy system integrationPillars of the ESI StrategyAspects analysed inPart Iof the study  
 
 
 Study on promoting energy system integration through the increased role of renewable electricity, 
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Figure 1-2 Final energy consumption broken down in different energy carriers. 
Shown in (a) absolute values (TWh) and (b) relative shares (%) 

Source: Stylised projections based on 2040 Climate target plan. SWD (2024) 63 final 

A  prominent  trend  in  future  energy  consumption  is  the  focus  on  enhancing  energy 
efficiency  across  various  sectors,  following  the  first  pillar  of  the  EU  ESI  Strategy. 
Projections indicate a nearly 50% reduction in total energy consumption by 2050 compared to 
current levels. The related "energy efficiency first" principle can be applied not only to energy 
consumption, but across the energy sector. It involves for example the adoption of advanced 
technologies,  improved  insulation  in  the  built  environment,  and  more  efficient  industrial 
processes,  but  also  maximising  the  utilisation  of  energy  infrastructure  and  flexibility  assets 
across the energy value chain. This broader understanding of energy efficiency brings new 
challenges related to the application of the energy efficiency first principle to new stages of 
the value chain beyond consumption. On the other hand, energy efficiency, mitigates the vast 
changes and infrastructure needs that will happen due to mass electrification, as it effectively 
reduces the energy and subsequently the electricity needs to satisfy end-uses.6 

Following the 2nd pillar of the Strategy, an EU-wide trend is noticeable in the gradual 
replacement  of  existing solid,  gaseous,  and liquid  hydrocarbons with other  sources, 
particularly through the electrification of end-uses across all sectors, which accelerates 
from  around  2025  onwards.  The  share  of  electricity  as  a  final  energy  carrier  in  the  overall 
energy mix is expected to increase to more than 50% by 2050, complemented by contributions 
from  other  renewable  and  low-carbon  carriers.  In  absolute  terms  electricity  consumption  in 
end-use sectors will increase by more than 50% till 2050. This trend will require an important 
transformation  of  the  energy  system,  by  scaling  up  established  technologies  but  also 
deploying electrification to more challenging applications such as in industry and in sectors 
that  currently  the  consumption  of  electricity  is  almost  non-existent,  such  as  the  transport 
sector.  Following  the  above  projections,  Figure  1-3  presents  the  expected  evolution  of 
electricity  generation.  Compared  to  today,  electricity  in  households  is  expected  to  rise  by 
approximately 30% (with also an important rise in the tertiary sector), and in the industry sector 
by  25%.  Note  that  apart  from  the  electricity  needed  for  final  energy  consumption,  the  total 

6 The commission announced their revised carbon emission target in February 2024, namely to reach 90% reduction by 2040: 
https://ec.europa.eu/commission/presscorner/detail/en/ip_24_588  
There will also be an important role for CCU/S to reach this target, as pointed out in the factsheet Industrial Carbon Management: 
https://ec.europa.eu/commission/presscorner/detail/en/fs_24_587  

30 

05,00010,00015,000Final Energy Consumption [TWh] -EU270%20%40%60%80%100%Final Energy Consumption [%] -EU27010,000Final Energy Consumption [TWh] -EU27ElectricityFossil Fuels and feedstock (solids)Fossil Fuels and feedstock (liquid)Fossil Fuels and feedstock (gas)Clean Hydrogen and other e-fuelsDistrict heatingAmbient HeatOther RESBiomass 
 
 
 Study on promoting energy system integration through the increased role of renewable electricity, 
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electricity  needs  will  almost  double  as  large  amounts  will  be  needed  in  order  to  produce 
hydrogen and other alternative fuels. 

Figure 1-3 Electricity demand broken down by use shown in (a) absolute values (TWh) 
and (b) relative shares (%) 

Source: Stylised projections based on 2040 Climate target plan. SWD (2024) 63 final 

In line with the 3rd pillar of the strategy, clean fuels, including hydrogen, are gaining 
traction  as  viable  clean  energy  carriers,  especially  in  sectors  where  direct  electrification 
poses  challenges,  such  as  heavy  industry  and  long-haul  transportation.  The  widespread 
adoption of these alternatives is anticipated to become more evident post-2030, thus following 
the electrification of end-uses which will have gained speed earlier. Other energy carriers such 
as heat and biofuels will also play an important role in the future, particularly ambient heat (in 
combination with electricity for the operation of heat pumps). 

1.3.  Current  status  of  implementation  of  actions  of  the  EU 

Energy System Integration Strategy 

The ESI Strategy lists 42 key actions associated with the six pillars, but further actions 
have been undertaken since. Tracking indicates that the majority of the actions as of October 
2023  were  either  implemented/partly  implemented  (28  actions  out  of  the 42)  or  on track (4 
actions), with 2 actions dropped,7 and 8 being continuous actions, as detailed in the Annex 
section 6.5. 

Many actions that the Commission and other EU bodies have initiated before and after 
the  EU  Energy  System  Integration  Strategy  publication  already  address  barriers  to 
energy  system  integration.  We  analyse  in  this  study  recent  and  planned  policies  and 
measures  in  the  context  of  recent  socio-economic  and  policy  developments  which  fully  or 
partly address the barriers identified in this study under the analysis for each topic, such as 
the: 

✓  Amended Renewable Energy Directive (EU) 2018/2021; 
✓  Alternative Fuels Infrastructure Regulation (AFIR); 
✓  Carbon Border Adjustment Mechanisms (CBAM) Implementing Regulation; 

7 The dropped and delayed actions were the following: A) Establishing minimum mandatory green public procurement criteria 
and targets in relation to renewable electricity as part of the RED II revision, supported by capacity building under the LIFE 
programme; B) Organising a transversal public event dedicated to Energy System Integration. 

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✓  FuelEU Maritime Regulation; 
✓  Revision of the Energy Efficiency Directive 2023/1791; 
✓  Provisionally agreed revision of the Energy Performance of Buildings Directive; 
✓  Provisionally agreed Gas and Hydrogen market decarbonisation package; 
✓  Provisionally agreed reform of the EU electricity market design; 
✓  EU regulation for the development of the market for CO2 transport and storage under 

discussion; 

✓  ReFuelEU Aviation Regulation; 
✓  Revised EU Emissions Trading Scheme 
✓  New EU Emissions Trading Scheme (ETS 2) 
✓  Carbon Capture and Storage Directive 
✓  Council Regulation 2022/2577 (Emergency Regulation); 
✓  EU Taxonomy; 
✓  Proposed revision of the Energy Taxation Directive; 
✓  Proposed Net Zero Industry Act; 
✓  Renovation Wave Strategy; 
✓  EU Hydrogen Strategy 
✓  EU Heating and Cooling Strategy 
✓  EU Heat Pump Action Plan under preparation; 
✓  EU Action Plan for Grids; 
✓  REPowerEU Plan 
✓  European Hydrogen Bank 
✓  Clean Hydrogen Partnership 
✓  European Hydrogen Academy  
✓  Various other EU financing mechanisms for the energy sector 

The reader is referred to the specific sections in chapters 2 to 4 for further details and other 
specific  initiatives,  where  the  provisions  impacting  the  specific  topics  of  this  study  are 
analysed.  Furthermore,  a  (non-exhaustive)  list  of  energy  system  integration-related  studies 
considered in the analysis is presented in annex section 6.8. 

Further pillars or challenges that are relevant for energy system integration in the EU 
are not included in the ESI Strategy but have led to increased attention more recently 
from  policymakers.  As  such  topics  do  not  fall  under  the  specific  topics  of  this  study 
(electrification and decentralised renewables, hydrogen and waste heat), they are discussed 
in the  dedicated  chapter  5.  This  includes the  topics  of resource  efficiency,  competitiveness 
and raw material dependency issues linked with certain key energy technologies, biogas and 
biomethane  integration, and skilled  workforce  and  employment.  Again, these  are  of  course 
areas  that  have  gained  increased  attention  from  EU  and  national  policymakers  since  the 
publication of the EU ESI Strategy in 2020. 

The EU also supports energy system integration through various funding mechanisms, 
including  the  Framework  Research  Programmes  for  Research  and  Innovation. 
Examples  of  EU-funding  research  which  has  advanced  knowledge  on  energy  system 
integration-related  aspects  and  identified  best  practices  which  can  be  replicated  across 
Member  States  include  the  projects  INTERRFACE,  CoordiNet,  COMPILE,  MUSE  GRIDS, 
TRINITY,  and  X-FLEX.  These  projects  have  addressed  various  aspects,  particularly  for 

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addressing the challenges that arise from increasing electrification of end-uses and integration 
of decentralised renewables (covered under chapter 2). 

1.4.  Overview  of  energy  system  integration  barriers  and 

specific recommendations of this study 

This study identifies technical, financial and economic, legislative and regulatory, and 
societal barriers for the three specific topics studied in-depth. Our analysis indicates that 
important barriers remain in all categories, as listed in Table 1-1 and detailed in the respective 
chapters: electrification of end-uses and decentralised RES (chapter 2), uptake of hydrogen 
(chapter 3), waste heat utilisation (4) and other aspects (chapter 5). They are specific to each 
topic, but also frequently exhibit interactions with the broader energy system, as discussed 
below. This illustrates an important challenge of the present study and of advancing system 
integration more broadly, where barriers (and associated solutions) are often specific while 
needing to consider many complex interactions. 

Table 1-1 Key barriers identified for the three specific topics of this study 

Barrier type 

Barrier 

Technical 

Economic and 
financial 

Legislative 
and regulatory 

Societal 

Economic and 
financial  

Electrification of end-uses and decentralised renewables8 

Insufficient distribution network expansion and reinforcement 

1. 
2.  Delays in the rollout of smart metering equipment 
3. 
Insufficient digitalisation at distribution level 
4.  Delays in grid connection and permitting 
5.  Upfront costs for equipment and installation 
6.  Operational costs for equipment 

7.  Adjusting regulation at national level 

8.  Lack of professional experience and skills 
9.  Lack of consumer awareness and/or knowledge 

Uptake of hydrogen 

1.  Cost gap of renewable and low-carbon H2 towards costs of fossil-based 

hydrogen 

2.  Complex use of additional revenue streams, such as balancing market 

services 

3.  Reaching bankability for hydrogen related projects 
4.  Competition from non-EU sources of hydrogen 
5.  Lack of H2 transportation and storage infrastructure  

Technical 

6. 

Insufficient manufacturing capacities for electrolysers9 

Legislative 
and regulatory 

7.  Missing international regulation and import policy 
8.  Long, complex, unstandardised permitting processes for RES and H2 

projects 

9.  Lack of a skilled workforce e.g. for H2 project management and H2 

project permitting 

8 Additional sector-specific barriers are analysed in the chapter. 
9 Nameplate manufacturing capacities have in the meantime surpassed the demand from project developers (e.g. recent report 
by  BNEF  (https://www.hydrogeninsight.com/electrolysers/severe-overcapacity-the-global-supply-of-electrolysers-far-outstrips-
demand-from-green-hydrogen-projects-bnef/2-1-1618327), thus making it unlikely to face insufficiencies in the medium term. 

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Barrier type 

Societal 

Barrier 
10. Lacking acceptance of derivatives of hydrogen such as ammonia (high 

toxicity) or methanol and safety issues 
Utilisation of waste heat 

Technical 

1.  Location/temporal/quality mismatch between heat supply and demand 
2.  Technical performance of waste heat recovery and district 

heating/cooling systems 

Economic and 
financial 

3.  Profitability/long payback period 
4. 
Inadequate pricing signals 
5.  Project uncertainty, complexity, and risk aversion of DHC operators/split 

incentives 

Legislative 
and regulatory 

6.  Limited replicability of solutions and lack of standardised contracts/tools 
7.  Lack of governance and planning, including information on potentials 

and integration across carriers and with urban planning 

8.  Accounting of climate and environmental footprint/benefits of waste 

heat utilisation 

Societal 

9.  Knowledge/capacity of actors 
10. Acceptance and behavioural issues 

Complete decarbonisation of the EU economy will require a significant transformation 
of  the  energy  system.  –  System  integration  can  help  achieve  it  in  a  cost-efficient 
manner.  The  trends  illustrated  in  Figure  1-2  are  well  known  and  acknowledged  by  a  wide 
range of stakeholders as necessary to achieve the net decarbonisation of the EU economy. 
However, Figure 1-2 potentially the impression that net decarbonisation is a matter of simply 
increasing energy efficiency and sufficiency, electrifying end-uses as much as possible and 
deploying  renewable  and  low-carbon  fuels  for  the  remaining  applications.  But  while  this  is 
undoubtedly  necessary  (and  most  of  the 
it  already  exist), 
decarbonisation  will  entail  much  more  far-reaching  integration  between  sectors  (i.e.  sector 
coupling), decentralisation of energy assets (upending the traditional linear value chain from 
supply to transmission, storage and finally consumption), greater involvement of consumers, 
higher utilisation of assets for flexibility and adequacy services as well as energy trade across 
all market timeframes, and a more innovative and responsive regulatory framework. All these 
trends are reflected in the six pillars of the EU Energy System Integration Strategy, which thus 
goes beyond the hierarchy for decarbonisation of the energy sector. 

technical  solutions 

for 

Figure 1-4 illustrates the complexity of an integrated energy system and highlights the 
main recommendations for each of the topics analysed in this report. It shows the main 
elements of the supply, energy transport, conversion, storage and consumption value chain 
along with important technologies for specific elements (such as battery and fuel cell electric 
vehicles  for  transport  or  co-located/behind-the-meter  storage  for  renewable  energy  plants, 
industry and the built environment). Selected recommendations are also indicated for each of 
the main chapters of the study. The recommendations are selected based on their relevance 
to  illustrate  the  complexities  of  energy  system  integration  but  are  not  necessarily  the  most 
important of each chapter, as many others are listed, as shown in Figure 1-4.  

Figure 1-4 does not capture all the possible elements of an energy system, nor their 
interlinkages,  as  this would  be  intractable.  For  example,  liquid (fossil) fuels  are  a  major 
energy  carrier  in  our  current  energy  system  but  are  not  included  –  nor  is  coal.  Electricity, 
methane  gases  and  hydrogen  networks  could  also  be  separated  between  transmission 
(including  cross-border  interconnection  points  and  domestic  lines)  and  distribution  levels. 

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Nonetheless, the figure already conveys the complexity of our future energy system, where 
networks,  large-scale  and  decentralised  renewables  and  storage,  conversion  and  other 
technologies interact. 

System integration will require a transformation not only of our energy system, but also 
of the IT, market and governance frameworks. Figure 1-4 only shows the physical layer of 
the energy system. However, any energy system entails also communication and control (also 
named ICT), market (i.e. economic) and governance (i.e. policy) layers. As much as investing 
in  and  operating  efficiently  the  right  assets,  energy  system  integration  will  also  entail  a 
transformation of the ‘higher’ layers. 

Addressing the many barriers identified in this study is to a significant extent a matter 
of implementation, although many others will require additional measures.  As almost 
all actions identified in the EU Energy System Integration Strategy have been completed and 
several  other  initiatives have taken  place  since, regulatory,  market-based and  cooperation-
focused measures have been adopted. However, several still require further implementation 
at the EU and Member State-level, and the impacts on solving the various system integration 
barriers  will  still  be  seen.  For  these  actions,  focus  should  be  on  implementation  and,  once 
impacts can be evaluated, assessment and improvement. 

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Figure 1-4 Overview of the integrated energy system and selected recommendations 

36 

Energy efficiency measuresEnergy governance, financing and skillsSupplyDemandTransport, conversion and storageHydrogenMethaneHeat and coldElectricityOtherTransportBEVsFCEVBuilt environmentSmart metersHPsBtM RESIndustryHigh-temp HPsBtM RES1172Grid connection principles review3High-temperature HP R&DElectrification and decentralised RES7Fossil fuel subsidy phase-out   10Electrolysis revenue and network tariffs11Further H2quotas/targetsHydrogen uptakeElectricity storage (large-scale)Hydrogen storageMethane gases storageThermal storage(large-scale)Heat-to-powerLarge-scale HPsCCCO2CO2storageCCMethanation105Equipment and installation financing6/7Dynamic pricing and ToUtariffs18Expanding on PPAs 19Accelerating permitting3/4Waste heat accounting/modelling8Heat emissions regulation/tax9Waste heat utilisation principlesWaste heat utilisation10Support national/local authorities14Supply mix disclosure obligations1Promoting energy storage2Integrated infrastructure planning3Digitalisation and innovationCross-cutting aspects4Monitoring and reportingSelected RecommendationsLNG importsHydrogen/derivative importsElectrolysersGas/H2-fired power plantsUtility-scale renewablesNuclear power plantsCCRefuelling/recharging stations2532221119193/49888814141011BtM storage12BtM storage134H2/derivative terminalsLNG terminalsSMR/ATRCCCo-located storage6/76/79Strategy on electrification9101918114CHPCHPCHPCHP 
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2.  Electrification of end-uses and decentralised 

renewable energy integration 

2.1.  Introduction 

Direct electrification refers to using electricity as a direct replacement for fossil fuels in end-
use  applications  such  as  electric  cars  and  heating  (notably  using  heat  pumps).  Indirect 
electrification, on the other hand, refers to using electricity as an input in industrial processes 
and converting it to an alternative energy carrier or feedstock, such as converting (renewable) 
electricity into hydrogen (more on this in chapter 3). Direct electrification is considered more 
efficient  than  indirect  electrification  due  to  fewer  energy  conversion  processes,  and  their 
associated  efficiency  losses,  but  it  is  not  applicable to  all  sectors,  at  least  not  with existing 
technologies.  However,  indirect  electrification  is  more  suitable  for  long-term  storage  and 
allows  to  manage  renewable  energy's  intermittency.  For  some  applications,  renewable 
energy-based alternatives other than electrification can be used to substitute fossil fuels, e.g. 
solar  heating.  This  section  focuses  on  direct  electrification,  while  indirect  electrification  is 
covered partially in the chapter on uptake of hydrogen (see chapter 3). 

Transportation  and  industry  are  the  focus  of  this  section,  while  commercial  and 
residential sectors are studied together under the heading of “buildings”. The buildings 
sector  includes  offices,  malls,  stores,  schools,  hospitals,  hotels,  warehouses,  restaurants, 
houses  and  apartments,  as  well  as  industrial  buildings.  Potential  uses  of  electricity  in  the 
transportation sector mainly refer to electric vehicles (EVs), but also rail transport (trains) and 
ships (electric ferries). Electric ships and aircraft may also emerge in the future. The industrial 
sector can electrify use processes that employ fossil fuels today, such as in low- and medium-
temperature heat applications. Here key technologies are heat pumps for low-enthalpy heat, 
micro-waves, plasma technologies and others in direct heat applications, and, in the future, 
high-temperature heat pumps for steam production via mechanical vapor compression. In the 
industrial sector, this report did not look into the role of PPAs, which could have been a useful 
mechanism to overcome identified barriers.  

For  the  buildings  sector,  the  electrification  process  concerns  the  electrification  of  space 
heating and hot water (mainly through heat pumps), local production of RES, local storage, 
recharging of electric vehicles, smart appliances, monitoring and control systems and smart 
metering. The Smart Readiness Indicator is a tool that rates the smart readiness of buildings 
(or building units) in their capability to perform the following three key functionalities: optimise 
energy  efficiency  and  overall  in-use  performance  adapt  their  operation  to  the  needs  of  the 
occupant,  adapt to  signals  from the  grid (for  example energy  flexibility).  Heat  production  in 
district heating systems can also be converted from using fossil-fuels to electricity, through the 
deployment of large-scale heat pumps.  

Decentralised renewable energy is usually referred to as generation on or close to the site 
where energy  is  used  while centralised  generation  is  delivered  through  the transmission  or 
distribution grid to energy users. After self-consumption and eventual local storage, the surplus 
of  decentralised  generation  installations  is  injected  into  the  grid.  The  main  purpose  is 
production for self-use, including storage, by individual consumers or grouped users located 
in the proximity of generation. Often, small-scale smart grids are useful in the case of user 
groups. Decentralised power generation is efficient by reducing grid losses. Furthermore, it 
has the potential to increase the flexibility of grid operation, when combined with storage and 
demand  response  options,  such  as  load  shifting  and  shedding.  The  maximum  volume  of 
renewable power capacity that can be handled by a given grid infrastructure can be increased 
by developing decentralised renewable electricity generation.  

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Active  participation  of  a  prosumer  in  electricity  markets  is  easier  and  more  effective  when 
consumers can purchase from the grid, consume self-production, eventually store electricity 
locally and sell their surplus electricity via the grid. Peak shaving may be possible through time 
shifting  with  charging  and  discharging  batteries.  Such  active  participation  of  a  prosumer  is 
favourable for the electricity grid, as combining load shifting, load shedding and local storage 
can increase flexibility. Besides easier connectivity to the grid, decentralised generation has 
potentially smaller environmental impacts, compared to large-scale RES installations (which 
require  environmental  permits),  and  can  be  licensed  easier  than  centralised  renewables 
generation. Finally, a major advantage of decentralised generation is societal, as the users 
(households and  enterprises)  directly  and  via  aggregators  get the  eventual  net  profits from 
demand response while saving on electricity (and heat) bills. Provided that capital financing is 
available or is supported via state support to reduce loan costs, such an investment by final 
users pays off by improving energy affordability, which is of great importance for society.    

Electrification  combined  with  decentralised  renewable  generation  and  various  local 
storage systems is a system integration approach that can bring higher benefits to the 
users, the grid, and overall decarbonisation efforts. Consumers having to accommodate 
large electricity bills due to high consumption volumes have great incentive to invest and act 
as prosumers seeking net profits from active market participation and electricity cost savings 
due  to  the  lower  cost  of  local  renewable  energy  generation.  Similarly,  by  joined  efforts  in 
energy-sharing or collective self-consumption schemes, it is possible to invest in larger-sized 
decentralised  self-generation  assets  using  renewables,  as  compared  to  investments  by  a 
single  consumer.  At  the  same  time,  the  grid  system  requires  expansion  as  the  grid  has  to 
accommodate larger volumes of electricity. An additional reason is that the increased volume 
of electricity demand features high variability with in particular daily peak and off-peak demand 
cycles for mobility and seasonal patterns due to electricity use for heating.  

Decentralised electricity generation from renewables in combination with storage and demand 
response, decreases the quantities exchanged with the grid, thus partly offsetting the need for 
reserve and balancing services of the grid and increasing the flexibility services that demand 
response and decentralised generation can offer to the grid. In other words, there is a clear 
synergy  between  electrification  and  decentralised  renewables  generation;  when  both 
increases, their synergy can mitigate grid congestion, reduce the need for scarce  -centrally 
procured- power reserves, and increase the efficiency of new investment in the grids, reducing 
eventually  the  per  unit  investment  needs.  Additional  benefits  arise  when  decentralised 
renewable generation combines with electricity storage installed at the prosumer’s premises. 
Moreover, additional benefits can arise by combining decentralised assets with heat storage 
and by applying bi-directional use of EV batteries in the future, or other advanced technologies 
(e.g. grid forming inverters). In such cases, electricity injected into the grid and taken from the 
grid can adjust to specific load profiles as needed by the grid to reduce variability, reserves, 
and costs. In this manner, decentralised renewables with storage and demand response can 
become  a  source  of  high-value  flexibility  services  for  the  grid  and  the  energy  system  in 
general. Markets can be designed that remunerate such high-value services, and in this way 
the infrastructure’s high investment costs for grids with decentralised assets can eventually 
be paid off. 

Electrification and decentralised renewable energy operating as an integrated system 
are  among  the  major  enablers  to  cost-efficiently  decarbonise  the  energy  system. 
However,  considerable  barriers  currently  exist,  impeding  the  rapid  development  of 
decentralised assets together with electrification. This is the subject of the section below. 

The remainder of this chapter is structured as follows: 

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•  Section 2.2 analyses the barriers; 
•  Section 2.3 provides recommendations (focused on the EU-level). 

2.2.  Barriers 

to  electrification  and  decentralised  RES 

integration  

For  the  purpose  of  structuring  this  chapter,  the  barriers  are  grouped  into  four  overarching 
categories, depending on their nature:  

•  Technical barriers; 
•  Economic and financial barriers; 
•  Legislative and regulatory barriers; 
•  Societal barriers. 

The barriers are also categorised with respect to the three sectors:  

•  Buildings; 
• 
Industry; 
•  Transport. 

We also note here that not all barrier categories apply to all of these sectors.  

Although the barriers are grouped for reporting purposes, it is clear that barriers and 
challenges  have  technical,  economic,  and  legal  aspects  that  need  to  be  jointly 
understood and evaluated. For example, network upgrades, from a technical point of view, 
require in general long project lead time periods, and the immediate improvements may be 
limited. Network upgrades also have an economic aspect, as massive grid investments are 
required, increasing network tariffs and affecting the financial capacity of the DSOs. Similarly, 
and regarding the recovery of the investments, there is a need for an assessment and potential 
redesign of the regulatory framework regarding the network tariffs’ structures approved by the 
Regulators and how the Development Plans of the Networks are compiled. This electrification 
process entails higher charges for consumers, on top of their expenditures for new equipment. 
Similarly, in the buildings sector, the upgrade of the electrical installation (panels, wiring) might 
be  technically  challenging  and  quite  expensive.  Therefore,  it  is  the  combination  of  the  two 
barriers, technical complexity and financial burden, which makes building owners reluctant to 
electrify their heating installation.10 

Most key barriers apply to multiple sectors and only few apply to specific sectors and are thus 
reported  separately.  Based  on  stakeholders’  feedback  and the  conducted  literature  review, 
the remaining overarching barriers and their root causes are outlined and briefly described in 
the following subsections: for all sectors (subsection 2.3.1), for the buildings sector (subsection 
2.3.2),  for  the  industrial  sector  (subsection  2.3.3)  and  for  the  transport  sector  (subsection 
2.3.4).  

2.2.1.  All sectors 

The barriers discussed in this section are applicable to all sectors and are summarised in the 
following table. The survey confirmed that most of the suggested barriers are either important 
or fundamental. Across the three sectors the economic and financial barriers were considered 
the most important. 

10 https://www.enelgreenpower.com/learning-hub/energy-transition/renewables-electrification/electrified-end-use-consumption 

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Table 2-1 Summary of barriers in all sectors 

Barrier type 

Barrier 

Technical 

Economic and financial 

Legislative and regulatory 

Societal 

Insufficient distribution network expansion and reinforcement 

1. 
2.  Delays in the rollout of smart metering equipment 
3. 
Insufficient digitalisation at distribution level 
4.  Delays in grid connection and permitting 
5.  Upfront costs for equipment and installation 
6.  Operational costs for equipment 
7.  Adjusting regulation at national level 
8.  Lack of professional experience and skills 
9.  Lack of consumer awareness and/or knowledge 

2.2.1.1.  Technical barriers 

Insufficient electricity network expansion and reinforcement 
Issues related to network development and delayed investments are among the most 
cited and important challenges with respect to the integration of decentralised RES and 
the  electrification  of  end  uses  in  all  three  sectors.11,12  Depending  on  the  speed  of 
electrification and decentralised RES integration, the power grid infrastructure should be ready 
to accommodate a significant increase in peak demand and supply.13  

In many Member States, distribution systems, and often transmission systems, are not able 
to: 14,15  

a.  Accommodate  increased  energy  flows,  in  multiple  directions,  and  balance  effectively 
supply  and  demand  which  is  becoming  an  increasingly  complex  task.  It  seems  that 
existing modes  of  operation for  the  networks (especially  the distribution systems)  are 
still functional but not adequate to efficiently cope with the new challenges.  

b.  Serve the increasing number of requests for new connections, either of RES production, 
storage facilities  and  recharging  points,  or  for  the  upgrade  of  existing  connections  to 
accommodate increased electricity consumption (e.g., electrifying heating).  

The root causes for delays in increasing the capacity of the networks are: 16,17 

•  The pace of implementation of investment projects and the rate of uptake of new 
technologies, including smart equipment and digitalised control centres, is much 
lower than the rate of growth in electrification. From a technical perspective, projects 
network upgrades, which include reinforcements and extensions, are relatively complex 
projects requiring both significant lead time for permitting, and design, as they should be 
combined with new technologies, as well as time for construction.  

11 IEA (2021) Distributed energy resources for net zero: An asset or a hassle to the electricity grid?  
12 IRENA (2023) Innovation Landscape for Smart Electrification 
13 Eurelectric (2021) Connecting the dots: Distribution grid investment to power the energy transition 
14 https://auroraer.com/media/grid-management-challenges-costing-spanish-energy-consumers/ 
15 https://www.bmwk.de/Redaktion/EN/Dossier/grids-grid-expansion.html 
16 IEA (2023) Electricity Grids and Secure Energy Transitions 
17 Eurelectric (2023) Power System of the Future: Keys to delivering capacity on the distribution grid 

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•  The cost of new projects leads to increased network charges paid by consumers, 
putting  political  pressure  on  regulators,  as  people  expect  these  projects  to 
decrease  prices.  In  some  cases,  securing  the  financing  may  delay  the  projects,  as 
DSOs  face  increasing  financial  challenges  to  fund  investment  projects  in  equipment 
(cables,  transformers),  digitalisation  projects  and  smart  equipment,  IT  projects  and 
structural maintenance. 

Delays in the rollout of smart electricity metering equipment 
A  more  specific  issue  related  to  the  system  development  and  modernisation  is  the 
rollout  of  smart  meters.18  More  than  50%  of respondents to the  survey  consider that 
accelerating and completing the roll out of smart meters across Europe is an important 
or  fundamental  issue  regarding  the  integration  of  decentralised  RES  and  the 
electrification of end uses. Some Member States have already reached high penetration 
rates exceeding 80% for electricity19 (Denmark, Estonia, Finland, France, Italy, Latvia, 
Luxembourg, Malta, the Netherlands, Slovenia, Spain, Sweden) or are in the range of 
70% like Austria and Portugal (as shown in Figure 2-1); however, stakeholders cite that 
progress for several of the remaining Member States remains slow.20  

Figure 2-1 Smart meters roll-out - 2022 

Source: ACER 2023 Market Monitoring Report 
Demand response and other distributed energy resources 

Scaling up the deployment of smart meters and smart control equipment, which enable the 
real-time  transmission  of  information  and  the  monitoring/  control  of  energy  flows,  is  a  key 
prerequisite for active market participation by consumers and the development of demand-

18 Vitiello et al. (2022) Smart Metering Roll-Out in Europe: Where Do We Stand? Cost Benefit Analyses in the Clean Energy 
Package and Research Trends in the Green Deal. https://doi.org/10.3390/en15072340 
19 ACER/CEER (2023) Energy Retail and Consumer Protection - 2023 Market Monitoring Report 
20 EU (2019) Benchmarking smart metering deployment in the EU-28 

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side  flexibility.21  It  is  also  crucial  for  the  efficient  integration  of  DER,  as  it  will  significantly 
enhance the grid management and network development planning capabilities of operators.22 

Stakeholders  also  cite  that  all  functionalities  and  use  cases  for  smart  meters  should  be 
enabled across the EU by harmonising minimum/ default requirements imposed by Member 
States  (e.g.  provision  of  readings  directly  to  consumer  and/or  any  3rd  party,  upgrading  of 
readings at sufficient frequency to use energy saving schemes). It is noted that the European 
legislation already includes provisions to this respect applicable to new rollouts.23 

Key issues related to the further rollout of smart meters include; the required high volume of 
work for the concerned DSOs, that need to ensure efficiency in such large-scale deployment 
projects,  the  need  to  develop  adequate  tools,  mechanisms  and  platforms,  to  facilitate  the 
optimal  use  of  the  data  to  be  provided  by  the  meters  and  to  facilitate  product  exchanges, 
including energy, storage, flexibility etc., and transactions.  

Insufficient digitalisation at distribution level 
A key challenge to the electrification of end uses in all three sectors and the integration 
of  DER  is  the  digitalisation  of  the  distribution  grid.24  This  is  a  key  prerequisite  to 
interoperability and (near) real-time access of all concerned market parties to energy-related 
data  in  a  non-discriminatory  manner,  including  metering  and  consumption  data,  as  well  as 
data  required  for  demand  response  and  supplier  switching.25  This  in  turn  is  of  critical 
importance in order to ensure a level playing field between market operators competing for 
the provision of various services to end-users or prosumers (e.g. suppliers, aggregators) in 
the context  of the  energy transition, that  will  enable consumers/prosumers to play  a  bigger 
and more active role in the electricity market (including by reducing peak time demand), benefit 
from variable or dynamic electricity market prices and flexible network tariffs, and reduce their 
bills.26 
Delays in grid connection and permitting  
Network  connection  and  permitting  delays  pose  another  important  challenge, 
especially with regard to the integration of renewable energy units and storage facilities 
both at the demand and the supply sides. According to stakeholders, it should be ensured 
that grid connection procedures, are transparent, and streamlined.27 

2.2.1.2. Economic and financial barriers 

Upfront costs for equipment and installation 
The  high  upfront  cost for  purchasing  and installing  equipment  for  electrical  heating/ 
cooling as well as renewable energy generation units and storage facilities is cited as 
one  of  the  most  significant  barriers  to  electrification  and  the  integration  of 
decentralised RES.28,29  

21 https://www.enlit.world/digitalisation/think-smart-act-smart-win-smart/ 
22 EC (2023) Smart grids and meters 
23 See Article 20 of Electricity Directive (EU) 2019/944 on the functionalities for smart metering systems and relevant 
implementing Regulation (EU) 2023/1162 on access to metering and consumption data that also accounts for smart metering 
data 
24 Eurelectric (2023) Action Plan on Grids  
25 COM(2022) 552 Final. Digitalising the energy system - EU action plan 
26 Digital Europe (2023) Roadmap for Europe's energy ecosystem digital transformation 
27 SolarPower Europe (2023) Grid planning and grid connection: recommendations for a future-proof implementation of the 
Clean Energy Package 
28 JRC (2021) EU challenges of reducing fossil fuel use in buildings 
29 IEA (2022) The Future of Heat Pumps 

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Stakeholders  consider  that  the  upfront  cost  of  purchasing  and  installing  heat  pumps  and 
decentralised RES systems is still generally perceived as high, mainly because of high initial 
capital investment costs and long payback period.  

Similar considerations are mentioned regarding the higher price of electric vehicles, compared 
to  conventional  cars,  reflecting  the  high  cost  of  batteries  and  the  fact  that  the  electric  car 
industry competes with well-established and mature conventional technologies.   

The potential stranding of fossil-fuel-related assets and especially regulated assets such as 
natural  gas  transport  and  distribution  networks  that  have  not  yet  been  fully  depreciated 
presents  an  additional  issue  as  the  residual  cost  of  existing  infrastructure  which  will  be 
scrapped and not reused or repurposed, is from a societal perspective increasing the cost of 
electrification.30      

Operational cost of electrical equipment 
Another important challenge is the operational cost of electrical equipment, especially 
the price ratio between electricity and fossil fuels.31 Stakeholders point out that despite 
the high energy efficiency of electrical equipment, legacy charging structures for energy and 
non-energy costs, as additional costs, as levies, surcharges and taxes, added to the unit cost 
of electricity, act as a barrier to electrification.    

Specifically, electricity tariffs in several Member States tend to include various charges (taxes, 
levies,  etc.)  which  are  not  related  to  the  cost  of  energy  supply.32  Thus,  price  signals  are 
distorted, and consumers are burdened with overhead costs which limit the competitiveness 
of heat pumps and other electrical equipment, hindering their uptake. Stakeholders report that 
overall  energy  taxation  currently  favours  gas  and  oil  heating  due  to  high  taxes/  levies  on 
electricity  and  the  low  taxation  of  fossil  fuels  and  especially  of  natural  gas  used  for  small 
installations which are not included in the ETS. 

Regarding DER, additional transactional and/ or operational costs may arise due to the need 
for  prosumers  to  rely  on  professional  support  such  as  legal  or  consulting  services  for 
contracting with aggregators and other parties.  

2.2.1.3. Legislative and regulatory barriers 

Adjusting and implementing regulation at national level 
Delays in the transposition of the EU’s electricity market design and the implementation 
of  appropriate  secondary  legislation  in  Member  States  poses  a  challenge  to  the 
electrification of end-uses in all three sectors and to the integration of DER.33,34 Although 
a range of implementation options are available, these have not yet been thoroughly evaluated 
at the national level in some Member States, while in others, different approaches have been 

30 FSR (2021) Stranded gas assets: the dilemma of the energy transition costs 
31 IRENA (2023) Renewable solutions in end-uses: Heat pump costs and markets 
32 EHPA (2023) EU Heat Pump Accelerator: A joint plan for boosting heat pump deployment and meeting the REPowerEU 
targets 
33 A joint report by ENTSO-E and the European Associations representing DSOs (CEDEC,E.DSO, Eurelectric, GEODE), June 
2021, Roadmap on the Evolution of the Regulatory Framework for Distributed Flexibility 
34 SmartEn (2022) The implementation of the Electricity Market Design to drive demand-side flexibility 

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applied. This is an important aspect discussed extensively in the literature and highlighted by 
stakeholders. Key elements are outlined below.  

•  Design of electricity supply pricing and network tariffs in MS is not yet adequately 
aligned  with  the  energy  system  integration  objectives.35,36  Respondents  to  the 
survey  consider  that  the  development  of  dynamic  electricity  price  signals  in the  retail 
segment  will  be  instrumental  in  mobilising  the  significant  potential  of  demand-side 
flexibility.  Large-scale  electrification  of  various  sectors  and  applications,  including 
heating/ cooling and EVs, entails significant investments in equipment and installations 
by the end user. At the same time, investments for network expansion and reinforcement 
as  well  as  in  generation  capacity  are  required  to  accommodate  the  increasing  load, 
particularly at peaks. A key challenge is to optimise the network and system usage level. 
This is done by providing adequate electricity pricing signals, which should be achieved 
through  well-functioning  markets,  through  market-based  variables,  or  even  dynamic 
supply prices. These provide incentives to consumers/prosumers to adjust their use of 
heating and cooling appliances, thus adding flexibility to the system and reducing the 
overall  energy  system costs.37  The  design  and  structure  of  distribution  network tariffs 
poses  a  challenge  for  the  economic  feasibility  of  electrification  applications,  the 
integration  of  DER,  and  other  equipment  including  storage  and  other  equipment 
to  be  struck  between  grid 
increasing  consumption.  A  balance  needs 
reinforcement/expansion and the associated increase in network charges that may pose 
a disincentive to the uptake of end-use electrification. Consumers may hesitate to accept 
higher network charges if those charges are based on their supply capacity, as it would 
require  them  to  increase  their  capacity  to  accommodate  higher  energy  flows.  This 
reluctance  stems  from  the  fact  that  consumers  have  already  made  significant 
investments in electrification applications and equipment, and they certainly do not want 
to be charged twice for actively participating in the operation of the network, e.g. charges 
for inflows and outflows. Stakeholders point out that distribution network tariffs should 
take into account the benefits provided by DER, storage and EVs, to the network through 
decreasing  the  local  (peak)  load  and  providing  various  balancing  services  (see 
“congestion management” below). 

•  Stakeholders consider that there is a need for a clear definition and an estimation 
of  the  different  types  of  flexibility  products  and  services  (frequency,  volume, 
duration) required at each level (local, national and regional).38 At a more advanced 
(i.e. mature) stage, which will be associated with a significant increase in the number of 
grid  connected  electricity  installations  (DER,  storage,  charging  stations)  and  market 
players as well as enhanced market-oriented conditions and dynamics, it is expected 
that an even more pressing need will arise to streamline and harmonise/ standardise 
different products (e.g. energy, capacity, ancillary services) and procedures through a 
combination  of  appropriate  regulatory  designs  and  possible  state  interventions/ 
schemes39, e.g. minimum guaranteed offtake, prioritisation etc.  

35 Eurelectric (2021), Powering the Energy Transition Through Efficient Network Tariffs 
36 smartEn (2019) The smartEn Map: Network Tariffs and Taxes 
37 CEER (2020) Recommendations on Dynamic Price Implementation 
38 RAP (2022) The joy of flex: Embracing household demand-side flexibility as a power system resource for Europe 
39 Eurelectric, Power System of the Future, Keys to delivering capacity on the distribution grid, 2023 

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•  The transposition of EU legislation concerning Energy Communities is yet to be 
fully  implemented  in  several  Members  States.40  Energy  Communities  are  a  key 
element  of  the  clean  energy  transition,  supporting  private  investments  in  renewable 
energy and storage facilities as well as ensuring citizen participation in suitable energy 
markets, on a level-playing field with the other market actors. Energy Communities can 
thus  provide  direct  benefits  to  citizens  through  lower  electricity  bills  and  local  job 
opportunities, also contributing to the public acceptance of energy transition projects and 
to increased consumer awareness.41 

2.2.1.4. Societal barriers 

Professional expertise and skills 
A key element highlighted in the literature and by stakeholders is the scarcity of skilled 
professionals with appropriate expertise in the fields of heating electrification, DER and 
storage installation. Regarding heat pumps in particular, respondents to the survey consider 
that, to meet REPowerEU’s roll-out targets, sufficient numbers of skilled workers are needed 
for  every  part  of  the  heat  pump  value  chain,  from  manufacturing  to  installation  and 
maintenance. EU’s Joint Research Centre (JRC) reports that the heat pumps industry in the 
EU today employs nearly 320,000 people,42 while at least 500,000 skilled workers are needed 
to  meet  REPowerEU’s heat  pump  roll-out  targets  by  2030  according  to  estimates  by  the 
European Heat Pump Association (EHPA).43 

Electrification  brings  major  value  creation  opportunities  for  industrial  companies 
across the value chain but also requires timely actions and investments.44   

Finally, the transition to electrified industrial processes may be challenging due to the 
need to adjust company organisation and roles. Stakeholders report that converting fuel-
based to electrical equipment can trigger a variety of other changes in integrated industrial 
processes. This would entail the need for employees to acquire new skills and adapt to new 
processes and conditions.  

Consumer awareness and/or knowledge 

Many  consumers  may  lack  awareness  and  appropriate  information  both  about  the 
technologies and the associated benefits of electrification, as well as the efficient use 
of energy resources, and the decentralised renewable energy options. 

Specifically: 

•  The  technical  complexity  of  installing  and  operating  DER  systems,  within  an 
active  market  access  approach,  presents  a  behavioural  barrier  to  their  uptake. 
Despite the wide deployment of residential PVs, storage and participation of households 
in energy communities in several Member States, sometimes under support schemes, 
like  net  metering,  which  do  not  reflect  accurately  the  value  for  DERs,  customer 
engagement can be further improved by enhancing consumers’ awareness and skills.45 
Respondents to the  survey  cite that  it  is  complex  for residential  end-users  to interact 

40 smartEn (2022) Energy communities to increase local system efficiency 
41 EC (2023) Energy communities 
42 JRC (2023) The Heat Pump Wave: Opportunities and Challenges 
43 EHPA (2023) Wanted: half a million heat pump workers 
44 ETC (2021) Making Clean Electrification Possible 
45 https://onenet-project.eu/wp-content/uploads/2023/07/OneNet-Deliverable-D11.5_v1.0.pdf 

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with the electricity system. Active participation of household consumers in the energy 
market requires both informed consumers willing to invest in equipment (i.e. renewable 
energy units and storage facilities), as well as the development of associated technical 
skills and capabilities for their efficient utilisation and operation, either independently or 
through  market  parties  (e.g.  aggregators).  Lack  of  awareness  and  insufficient 
information  can  also  pose  barriers  with  respect  to  consumers’  participation  in 
collaborative schemes which comprise the exchange/ pooling of products, capacity and 
data.   

•  Residential and tertiary sector consumers can benefit from improved access to 
appropriate  guidance and advice  on  the  installation  of relevant  equipment  (e.g. 
specification of heat pump type and size, technical feasibility of retrofits, potential 
need  for  energy  efficiency  upgrades).  Stakeholders  cite  that  access  to  information 
and/or guidance is a real issue when it comes to mainstreaming these technologies in 
buildings and represents a major cause for the delay in their installation. In their view, 
consumers need to be able to make an informed choice and easily acquire information 
about whether their building is ready for a heat pump, up-front and operational costs, 
financing and installation options, and have access to users’ experiences.46 

•  Lack  of  sufficient  information  by  consumers’  may  entail  concerns  about  the 
impact of electrification on their overall energy bill, or misconceptions about the 
technical performance of equipment such as heat pumps. In cases where existing 
heating  equipment  has  not  yet  reached  the  end  of  its  useful  life,  consumers  may 
consider  that  the  replacement  of  existing  heating  systems  is  not  yet  warranted, 
downplaying the positive effect of energy savings. Respondents to the survey cite risk 
aversion  as  a  key  reason  for  the  low  acceptance  of  electrification  by  consumers. 
Consumers  may  also  be  subject  to  a  “not  in  my  backyard”  syndrome  from  their 
neighbours. Some respondents to the survey cite noise pollution concerns with respect 
to  heat  pumps.47  Additionally,  consumers  may  hold  a  false  perception  that  electrical 
heating and electrical equipment (notably heat pumps) are more “challenging” and less 
effective in terms of usage, primarily due to a bias stemming from lack of appropriate 
information  and  their  familiarity  with  the  existing  equipment  that  can  be  difficult  to 
overcome.48 

2.2.2.  Buildings Sector 

The barriers discussed in this section concern the electrification of end-uses in buildings and 
the integration of decentralised renewable energy. Electrification of end-uses is examined with 
respect to heating/ cooling.  

Almost all respondents to the survey underlined that reducing fossil fuel use in buildings is the 
clear priority target for the buildings sector, through the combination of two approaches.  

46 BEUC (2023) From Boilers to Heat Pumps: What consumers need in the switch to renewable heating 
47 EHPA (2020) Heat Pumps & Sound 
48 ACEEE (2022) Ready to Upgrade: Barriers and Strategies for Residential Electrification 

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•  Firstly,  by  improving  the  energy  performance  of  buildings,  which  is  achieved 
through (a) energy efficiency measures to improve insulation and (b) increased use of 
high-efficiency household appliances and heating equipment.  

•  Secondly,  by  replacing  fossil-fuel  heating  systems  with  low-carbon  energy 

sources.  

A  potential  option  to  further  increase  the  efficient  use  of  electricity  is  by  using  DC 
electricity  in  buildings  and  microgrids.  The  expansion  of  digital  technology  allows  DC 
electricity to match perfectly with embedded generation and storage equipment, EV charging 
and  numerous  other  applications.  The  energy  savings  that  are  possible  by  eliminating  the 
need of power converters is significant, but probably not enough to provide clear economic 
signals and trigger replacement. In the existing stock  of buildings, which are not yet renovated 
and digitalised, and DER and storage equipment is not yet widely installed, the benefits from 
installing  only  DC  networks  probably  are  not  enough  to  outweigh  technical  and  cost 
challenges.  

The  challenges  to  deploying  DC  systems  in  buildings  are  consumers  and  industry 
professionals’ unfamiliarity with the DC technologies and small markets for DC devices and 
components.  On  the  other  hand,  the  switch  from  AC  to  DC,  is  the  way  forward  for  smart 
buildings and DER systems to function efficiently. A major challenge would be to efficiently 
coordinate the introduction of all new equipment (embedded energy generation, storage and 
charging), with the renovation works in the building (panels, wiring, etc.).   

Table 2-2 Summary of barriers in buildings 

Barrier type 
Technical 
Economic and financial 
Legislative and 
regulatory 

Barrier 

1.  Specific building stock constraints 
2.  Split incentives between owners and tenants of buildings 

3.  Planning and permitting framework 

2.2.2.1. Technical barriers 

Building stock constraints 
Specific  building  stock  characteristics  may  hinder  the  retrofitting  of  heating 
electrification and decentralised RES equipment and/or increase installation costs.49,50 
For example, in multi-apartment and high-rise buildings, it may not be possible to ensure the 
availability of appropriate space for installing equipment such as storage facilities or outdoor 
units of heat pumps. Older buildings may also require the upgrade of electrical panels and 
internal  wiring  to  support  new  equipment  such  as  heat  pumps,  solar  panels  or  storage 
facilities.51 

Additionally, in buildings with existing oil or gas boilers, the flow temperature of the hydronic 
distribution  systems  is  relatively  high,  often  exceeding  the  flow  temperature  at  which  heat 
pumps  operate  efficiently.  In  order  to  attain  optimally  efficient  operation  of  heat  pumps, 
improvements are thus required in the thermal envelope of buildings and/ or in the surface 
area  of  the  heat  distribution  system  (e.g.  underfloor  heating  or  larger  radiators)  and/  or 

49 EC (2023) Integrating Heat Pumps in Existing Residential Buildings 
50 EHI (2021) Rolling out heat pumps: Barriers and how to overcome them 
51 ACEEE (2022) Ready to Upgrade: Barriers and Strategies for Residential Electrification 

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hydronic balancing of the heating system.52 JRC estimates that some kind of energy efficiency 
improvement  or  adjustment  to  the  heating  distribution  system  are  required  for  60%  of  EU 
dwellings, to ensure high-efficiency operation of the heat pumps.53  

On  the  other  hand,  the  JRC  notes  that  deep  renovations  may  not  be  necessary;  a  partial 
renovation and/or adjustments to the distributional heating system of these buildings will also 
enhance their efficiency.54 Additionally, some studies estimate that because heating systems 
in  existing  buildings  are  oversized,  the  share  and  depth  of  the  required  retrofits  could  be 
limited.55,56 For example, a study on Danish houses estimates that approximately 80% of the 
heating systems are over-dimensioned relative to their current heat load and concludes that 
houses  with  currently  over-dimensioned  heating  systems  can  be  heated  with  supply 
temperatures below 60 °C for most of the year.57 In this regard, the evidence regarding the 
distribution and depth of the changes required to existing buildings is not conclusive. 

2.2.2.2. Economic and financial barriers 

Split incentives between owners and tenants of buildings 
Split incentives between the owners and the tenants of a building, referring to the fact 
that the electrification investment is borne by the owner but the benefits accrue to the 
tenant  in  the  form  of  reduced  utility  costs,  poses  an  important  challenge.58  The 
electrification investment can be recouped by the building owner through an increase in rent 
costs, however, it may be challenging for the owner and the tenant to reach an agreement 
regarding  the  “fair”  increase  in  rent.  Additionally,  higher  rent  costs  due  to  investments 
undertaken for  electrification  can  put  off  potential  tenants that  may  fail  to  acknowledge  the 
associated energy cost savings, thus preferring less energy efficient buildings. As mentioned 
in  Section  2.4.1,  the  revised  EED  requires  Member  States  to  remove  regulatory  and  non-
regulatory barriers in order to improve split incentives between owners and tenants. 

2.2.2.3. Legislative and regulatory barriers 

Planning and permitting framework 
The planning and permitting framework for buildings in several Member States poses 
a challenge to the installation of heat pumps and the integration of DER by adding a 
layer  of  unnecessary  complexity.  However,  the  revised  REDII  now  provides  specific 
measures to accelerate permit granting process of renewables projects, including heat pumps, 
under specific conditions (see hereafter). This directive will have to be transposed by Member 
States by 21 May 2025. Respondents to the survey highlight that building regulations need to 
recognise the value of flexibility that storage can provide. 

2.2.3.  Industry 

The barriers examined in this section concern specifically the electrification of industrial sector 
processes and are summarised in the following table.  

Table 2-3 Summary of barriers in the industrial sector 

52 IRENA (2023) Renewable solutions in end-uses: Heat pump costs and markets  
53 JRC (2023) The Heat Pump Wave: Opportunities and Challenges 
54 Ibid. 
55 https://www.lsta.lt/files/events/ljunggren.pdf 
56 https://publications.deltares.nl/11205149a.pdf 
57 https://www.sciencedirect.com/science/article/pii/S037877881831702X 
58 JRC (2023) The Heat Pump Wave: Opportunities and Challenges 

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Barrier type 

Barrier 
1.  Unavailable suitable electricity-based technologies for high-temperature heat 

Technical 

Economic 
and financial 

processes  

2.  Requirement for significant re-design of processes posing disincentive for 

investors 

3.  Competitiveness and reliability of electricity against other resources (natural 

gas, oil)  

2.2.3.1. Technical barriers 

Unavailable suitable electricity-based technologies for high-temperature heat processes  
A  significant  part  of  industrial  activities  (e.g.  steel,  cement,  glass)  require  high-
temperature  heat  processes  reaching  temperatures  above  1000°C  that  cannot  be 
served  through  electrical  heat  pumps  which  can  currently  operate  efficiently  at 
temperatures up to 150°C.59 Other industrial activities (e.g. food, chemicals) require high-
temperature  heat  pump  technology  that  can  deliver  heat  above  150°C  which  is  not  yet 
considered mature and has not been adequately commercialised to date.60 The International 
Renewable  Energy  Agency  (IRENA)  reports  that  as  of  2020,  89%  of  industrial  heating 
processes still relied on fossil fuels.  

Requirement for significant re-design of processes posing disincentive for investors 
The  electrification  of  industrial  activities  will  be  implemented  mostly  through 
customised  solutions,  posing  a  challenge  to  the  development  of  standardised 
methods/  approaches,  and  thus  to  the  attainment  of  potential  economic/  financial 
efficiencies. Requirements to develop and design in some cases industry-specific systems 
and  manufacturing  lines  would  be  a  challenge  especially  for  medium  and  smaller  sized 
companies.61  

Stakeholders  report that many  industrial  processes,  are  not  designed  to use  electricity  and 
that  suitable  electrified  alternatives  would  need  significant  redesign  that  will  change 
significantly the way that energy intensive industry currently operates.  

2.2.3.2. Economic and financial barriers 

Competitiveness and reliability of energy sourcing   
An  important  economic/  financial  barrier  arises  from  the  strong  competitiveness  of 
conventional  fuels  (e.g.  natural  gas)  both  in  terms  of  the  respective  price  ratio  (e.g. 
electricity/  gas  ratio)  as  well  as  in  terms  of  their  (usually)  optimal,  mature  and  long-
serving sourcing and reliable delivery. Industrial processes require that energy sourcing 
has very specific characteristics (e.g. price predictability, specific diurnal profile), which 
may be particularly challenging to meet through decentralised renewable energy generation 
solutions, as resource variability can limit their reliability, mainly from an economic perspective. 

59 IRENA (2023) Innovation Landscape for Smart Electrification 
60 Such higher temperatures can be reached by renewable sources of heating (geothermal, biomass and solar thermal) as well 
as district heating. 
61 Lawrence Berkeley National Laboratory (2018) Electrification of buildings and industry in the United States 

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Energy purchases from the grid, including the relevant shaping, profiling and balancing costs, 
increase uncertainty, affecting negatively the price predictability required. 

Furthermore,  industries  rely  on  supply  chain  robustness  to  avoid  production  disruptions  or 
failures.  According  to  stakeholders,  even  a momentary  interruption  in electricity  supply  can 
result in costly production losses or even destruction of production assets, such as for  float 
glass production. Until now, on-site fossil fuel storage has ensured operational availability and 
reliability, and operators are seeking guarantees for the same level of service from electricity.62  

Stakeholders also cite that until 2021 (before the energy supply crisis), relatively cheap natural 
gas  presented  tough  competition  for  industrial  electrification.  Additionally,  it  may  be 
challenging  to  convert  industrial  equipment  powered  by  direct  fuel  combustion  (e.g.  CHP 
systems) to electricity, since fuel combustion generates significant amounts of heat as a by-
product, which is used to power various other processes without substantial additional cost.63 

2.2.4.  Transport 

The electrification of road transport, powered by renewable and low-carbon electricity, 
is  a cost-efficient  approach  for  meeting  the EU  goals  of  decarbonisation  and energy 
security in this sector. Electric vehicles can also provide storage and flexibility services to 
the  grid,  facilitating  the  further  integration  of  renewable  sources.64  The  uptake  of  electric 
vehicles (EVs) has a two-fold impact on the power sector.  

Electrification of road transport increases total electricity demand and is likely to also 
increase peak demand, which require grid reinforcements. Firstly, the increase in local 
(peak) demand, both in dense residential areas with high EV use as well as in areas with fast 
charging stations, stresses the local distribution grid. Secondly, the increase in system (peak) 
demand and residential load centres puts pressure on the transmission grid. Overall, however, 
an efficient operation of (existing and future) generation, transmission and distribution assets 
is crucial for consumers to benefit from the cost savings of using renewable sources. Matching 
electricity production profiles to consumption remains however as a key challenge.  

The  advanced  use  of  smart  charging,  namely  optimising  charging  schedules  of  EVs 
when costs for the user are lowest and supply is not scarce and further promoting bi-
directional  technologies  which  use  the  EV  batteries  as  a  local  flexibility  source,  can 
reduce  potential  grid  constraints  and  make  more  efficient  the  investments  into  grid 
capacity. Simulations of the power system show that smart charging systems can offset the 
adverse effects on peak load and are thus increasingly considered an enabler to the mass 
uptake  of  EVs,  contributing  to  decarbonisation  and  to  a  more  efficient  use  of  resources 
including power generation assets and grid infrastructure.65  

However, both the uptake of EVs and the implementation of smart charging systems at a 
large-scale are subject to some barriers that are discussed in this section and are 
summarised in the following table. 

Table 2-4 Summary of barriers in the transport sector 

62 IISD (2022) Industrial Electrification 
63 Lawrence Berkeley National Laboratory (2018) Electrification of buildings and industry in the United States 
64 EEA (2022) Decarbonising road transport — the role of vehicles, fuels and transport demand 
65 https://doi.org/10.1016/j.enpol.2021.112751 

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Barrier type 
Technical 
Economic and 
Financial 
Legislative and 
regulatory 
Societal 

1.  Delays in the development of charging infrastructure network 

Barrier 

2.  Cost of EV vehicles 

3. 

Incomplete framework for communication protocols and interoperability 
standards 

4.  Range & charger-availability anxiety 

2.2.4.1. Technical barriers 

Delays in the development of electric charging infrastructure network 
One of the most important technical challenges regarding the uptake of EVs relates to 
the  timely  and  efficient  development  of  a  network  of  public  and  private  recharging 
stations,  including  bi-directional  charging  capabilities.66,67  Respondents  to  the  survey 
point out that the availability and accessibility of charging stations is currently limited, posing 
a significant barrier to the uptake of EVs.  

According  to  the  OECD’s  2022  Environmental  Policies  and  Individual  Behaviour 
Change Survey, insufficient charging infrastructure is a barrier to greater electric car 
uptake.  Overall,  33%  of  respondents  report  that  there  are  no  charging  stations  for  electric 
cars  within three kilometres of  their  home, ranging  from  22%  in the  Netherlands to  43%  in 
France.68 Moreover, the growing number of electric vehicles already today poses a challenge 
for  DSOs  to  connect  the  necessary  recharging  infrastructure.  On  the  other  hand,  certain 
stakeholders  such  BDWE,  an  association  of  utility  companies  in  Germany,  point  to  an 
oversupply  of  charging  options,  reporting  an  average  occupancy  of  11.6%  at  the  country’s 
public  recharging  points  in  2023.69  At  the  same  time,  Europe’s  recharging  infrastructure  is 
growing at a fast pace while the public Alternative Fuels Infrastructure Regulation (AFIR) that 
came  into  force  in  October  2023  set  mandatory  targets  for  public  recharging  points  on  the 
main roads (see section 2.3.1 below). Specifically, in 2022, slow recharging points in Europe 
amounted to 460,000, a 50% increase from the previous year, while the overall stock of fast 
recharging  points  numbered over  70,000,  an  increase of  around  55% compared  to  2021.70 
However, other stakeholders such as VDA, Germany’s car industry association, assert that a 
lack of adequate charging infrastructure remains one of the biggest hurdles for the rollout of 
EVs in the country.71 

The literature points to the fact that EV recharging infrastructure shows certain public good 
characteristics common to public infrastructure, that merit the full attention of policy makers.72  

However, the development of recharging infrastructure, like other decentralised infrastructure 
(small  scale  generation,  storage)  depends  critically  on  grid  connection  capabilities  and  the 
relevant network reinforcement, which should be synchronised with the increase in EV stock. 
This requires appropriate planning-based or demand-driven roll-out programmes to support 
the  implementation  of  anticipatory  yet  economically  efficient  investments,  especially  in 
recharging infrastructure with bi-directional capabilities, in order to facilitate the accelerated 

66 EC (2021) Sustainable & Smart Mobility Strategy 
67 IEA (2022) Policy brief on public charging infrastructure 
68 https://www.oecd.org/env/how-green-is-household-behaviour-2bbbb663-en.htm 
69 https://www.cleanenergywire.org/news/germany-passes-100000-public-electric-car-charging-points-eve-industry-show-iaa 
70 https://www.iea.org/reports/global-ev-outlook-2023/trends-in-charging-infrastructure 
71 https://www.boersen-zeitung.de/english/challenges-persist-in-the-charging-infrastructure-for-electric-cars 
72 https://doi.org/10.1016/j.rser.2021.111733 

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uptake of EVs and unlock their potential benefits.73,74 Indicatively, the share of electric cars in 
total fleet sales in Europe reached 21% in 2022, up from 18% in 2021, 10% in 2020 and under 
3% prior to 2019.75 

2.2.4.2. Legislative and regulatory barriers 

Inadequate framework for standardisation and market access 
The  development  of  a  clear  enabling  regulatory  framework  for  inter-operability 
standards  and  market  access  through  bidirectional  capabilities  presents  a  critical 
challenge to the efficient development of charging infrastructure and the timely uptake 
of EVs.76  

The  development  and  enforcement  of  the  communication    standard,  EN  ISO  15118-20 
standard  in  convergence  with  ongoing  industry  practice  such  as  the  Open  Charge  Point 
Protocol,  is  a  critical  aspect  in  order  to  ensure  interoperability/  compatibility  of  software 
platforms and hardware devices as well as bidirectional communication between equipment 
and  actors  at  multiple  levels  (e.g.  grid  operator,  charger,  vehicle,  charging  point  operator, 
energy  supplier,  aggregator).77   Manifold  protocols  developed  by  industry  operators  should 
converge and become international standards by standardisation development organisations 
(SDOs)  in  order  to  simplify  the  landscape  and  provide  a  more  certain,  stable  and  robust 
development where views by all relevant stakeholders are duly discussed.  

Regarding  bidirectional  recharging  capabilities  in  particular,  stakeholders  point  to  the 
differences  in  regulatory  treatment  across  technologies,  segments,  markets  and  Member 
States.78 Due to the early stage of standards and market access, the number of vehicles and 
chargers supporting this functionality remains limited.  

Additionally, rapid European electricity legislation implementation at national level is needed 
to  allow  demand-side  flexibility  access  to  the  electricity  markets.79  In  this  direction,  the 
preparation of a new network code on demand response, in line with the existing Electricity 
Market Design and expected to be submitted end of 2024, is an important step to unlock the 
potential of electric vehicles. 

2.2.4.3. Societal Barriers 

Range  &  charger-availability  anxiety  is  an  important  barrier  to  the  uptake  of  EVs. 
Stakeholders report that potential users may still be put off by the perception that an EV is 
likely to run out of battery power before the intended destination is reached, thus leaving EV 
users  stranded.  Specifically,  respondents  to  the  survey  consider  that  the  range  of  electric 
vehicles,  in  terms  of  the  distance  they  can  cover  on  a  single  charge,  remains  a  challenge 
compared to conventional fuel-powered vehicles. A similar perception, concerning uncertainty 
about the availability of recharging points, also poses an important barrier to the uptake of EVs 
by potential users.80 

73 ETC (2021) Making Clean Electrification Possible 
74 IEA (2022) Policy brief on public charging infrastructure 
75 IEA (2023) Global EV Outlook 
76 DG Energy (2021) Best practices and assessment of regulatory measures for cost-efficient integration of EVs into the 
electricity grid  
77 IEA (2022) Policy Brief on Public Charging Infrastructure 
7878 RAP (2023) Enabling two-way communication: Principles for bidirectional charging of electric vehicles 
79 Ibid. 
80 IRENA (2023) Innovation Landscape for Smart Electrification 

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2.3.  Recommendations  on  electrification  and  decentralised 

RES integration 

Addressing the barriers as reported on in section 2.3. requires a combination of technological 
innovation,  policy  support,  and  public  engagement.  A  key  factor  is  to  ensure  efficient 
coordination  and  synchronisation  of  the  different  agents’  effort  and  plans  towards 
electrification,  avoiding  conflicts  between  their  goals  and  delays  in  the  deployment  and 
integration  of  the  required  equipment  and  tools  for  electrification.  This  section  provides  an 
overview  of  recent  or  planned  policies  and  measures  as  well  as  recommendations  to 
accelerate electrification and decentralised RES integration. Recommendations are generally 
addressed  towards  the  European  Commission,  if  other  stakeholders  are  needed  or 
addressed, they are explicitly mentioned. 

Several new provisions to advance electrification and decentralised renewable energy 
integration in the EU have been introduced in revised REDII, EPBD, ETD, EED and AFIR. 

These new provisions already address some of the recommendations from stakeholders put 
forward  in  the  survey  as  well  as  in  various  studies  and  policy  papers  and  are  expected  to 
partially or fully address some of the barriers identified. 

2.3.1.  Recent or planned policies and measures  

This section provides an overview of the recent or planned policies and measures at 
the EU level addressing the topic of electrification and decentralised RES integration. 

This allows to identify which barriers will in principle be addressed by these existing or planned 
policies and measures, and thus which barriers would remain. The main relevant EU policies 
and measures for electrification and decentralised RES integration: 

✓  The 2021 proposal for a recast of the Energy Performance of Buildings Directive 
to  electrification  and 

includes  provisions  aimed  at  addressing  barriers 
decentralised RES integration: 

o  Member States are required to take measures (technical assistance, one-
stop-shops,  financing  schemes,  removing  unanimity  requirements  in  co-
ownership  structures)  to  overcome  barriers  regarding  renovation  and 
attain minimum energy performance standards (MEPS) in all buildings (art. 
9). New buildings must be ‘zero-emission buildings’ as of 2030 and new 
public buildings must be zero-emission as of 2027. 

o  Member States are required (art. 12) to: (a) equip buildings with minimum 
numbers  of  private  recharging  points  and  ducting  infrastructure  (new 
provisions  and  lower  applicability  thresholds  compared  to  EPBD  in  its 
current form) and (b) take measures to overcome barriers to the installation 
of recharging points in residential buildings, in particular the need to obtain 
consent from the landlord or co-owners for a private recharging point for 
own  use  (c)  ensure  that  the  recharging  points  are  capable  of  smart 
charging and, where appropriate, bidirectional charging, and that they are 
operated based on non-proprietary and non-discriminatory communication 
protocols and standards, in an interoperable manner. 

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✓  The 2023 proposal for a Regulation to reform the Union’s Electricity Market Design 
(EMD)  on  which  the  Council  and  the  Parliament  have  reached  a  provisional 
agreement: 

o  Amending Regulation (EU) 2019/943: 

▪  Requires that every two years, the regulatory authority, or another 
authority  or  entity  designated  by  a  Member  State,  shall  adopt  a 
report on the estimated needs for flexibility for a period of at least 
the next 5 to 10 years at national level, in view of the need to cost 
reliability  of  supply  and 
effectively  achieve  security  and 
decarbonise  the  electricity  system,  taking  into  account  the 
integration  of  variable  renewable  electricity  sources  and  the 
different sectors (art. 19c). 

▪  Requires Member States to define an indicative national objective 
for  non-fossil 
respective  specific 
including 
contributions of both demand response and energy storage to that 
objective. (art. 19d). 

flexibility, 

the 

▪  Member  States  may  apply  non-fossil  flexibility  support  schemes 
consisting  of  payments  for  the  available  capacity  of  non-fossil 
flexibility (art. 19e). 

▪  Specifies design principles for non-fossil flexibility support schemes 

such as demand response and storage (art. 19f). 

information  on 

▪  Requires  DSOs  and  TSOs  to  cooperate  with  each  other  in 
for  new 
publishing 
connections in their respective areas of operation in a consistent 
manner and giving sufficient granular visibility to developers of new 
energy projects and other potential network users (art. 57). 

the  capacity  available 

o  Amending Directive (EU) 2019/944: 

▪  Specifies that all households, small and medium sized enterprises 
and  public  bodies  and,  where  Member  States  have  decided  so, 
other  categories  of  final  customers,  shall  have  the  right  to 
participate in energy sharing as active customers (art. 15a). 

▪  Requires DSOs to provide system users with the information they 
need  for  efficient  access  to,  including  use  of,  the  system.  In 
particular, the DSO shall publish in a clear and transparent manner 
information on the capacity available for new connections in its area 
of operation, including in congested areas if flexible energy storage 
connections  can  be  accommodated,  and  update  that  information 
regularly, at least quarterly (art. 31, par. 3). 

✓  The 2023 revision of the Energy Efficiency Directive 2023/1791 requires Member 
States to take the necessary measures to remove regulatory and non-regulatory 
barriers  to  energy  efficiency  as  regards  split  incentives  between  owners  and 
tenants, or among owners of a building or building unit (art. 22). 

✓  The  Council  Regulation  2022/2577  (Emergency  Regulation)  laying  down  a 
framework  to  accelerate  the  deployment  of  renewable  energy,  sets  temporary 

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requirements for a period of 18 months, regarding the permitting process for solar 
energy and storage equipment as well as heat pumps: 

o  The maximum deadline for the permit-granting process for the installation 
of  solar  energy  equipment  and  its  related  co-located  storage  and  grid 
connections is set at 3 months (provided that the installations’ primary aim 
is not energy production). 

o  Regarding the installation of heat pumps below 50 MW, the permit-granting 
process shall not exceed 1 month, while in the case of ground source heat 
pumps it shall not exceed 3 months.  

✓  The Directive (EU) 2023/2413 that entered into force on 20 November 2023 (to be 

transposed by Member States by 21 May 2025), amending the REDII: 

o  Sets  requirements,  similar  to  those  of  Council  Regulation  2022/2577 
(Emergency Regulation), regarding the permitting process for solar energy 
and storage equipment as well as heat pumps: 

▪  The  maximum  deadline  for  the  permit-granting  process  for  the 
installation of solar energy equipment and co-located storage is set 
at  3  months  (provided  that  the  installations’  primary  aim  is  not 
energy production). 

▪  The  maximum  deadline  for  the  permit-granting  process  for  the 
installation of solar energy equipment with a capacity of 100 kW or 
less, and co-located storage is set at 1 month. 

▪ 

▪  Regarding the installation of heat pumps below 50 MW, the permit-
granting  process  shall  not  exceed  1  month,  while  in  the  case  of 
ground source heat pumps it shall not exceed 3 months. 
In general, Member States shall ensure that connections to the grid 
shall  be  permitted  within  two  weeks  of  the  notification  to  the 
relevant  entity:  (a)  for  heat  pumps  of  up  to  12  kW  electrical 
capacity; and (b) for heat pumps of up to 50 kW electrical capacity 
installed by renewables self-consumers, provided that the electrical 
capacity  of  a  renewables  self-consumer’s  renewable  electricity 
generation  installation  amounts  to  at  least  60  %  of  the  electrical 
capacity of the heat pump. 

o  Requires Member States (art. 18, par. 3) to: (a) ensure the sufficiency of 
trained and qualified installers of renewable heating and cooling systems 
through  appropriate 
to  qualification/ 
certification and (b) put in place measures to promote participation in such 
programmes, in particular by small and medium-sized enterprises and the 
self-employed. 

training  programmes 

leading 

✓  The  Alternative  Fuels  Infrastructure  Regulation  (AFIR)  that  came  into  force  in 

October 2023: 

o  Sets  mandatory  deployment 

targets 

for  public  electric  recharging 

infrastructure: 

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-  For  each  light-duty  battery-electric  car  in  a  Member  State,  a  power 
output  of  1.3  kW  must  be  provided  by  publicly  accessible  recharging 
infrastructure (art. 3, par. 1).  

-  Every 60 km along the trans-European transport (TEN-T) network, fast 
recharging  points  of  at  least  150  kW  need  to  be  installed  from  2025 
onwards (art. 3, par. 4). 

-  Regarding  heavy-duty  vehicles,  by  2030  dedicated  recharging  points 
with  a  minimum  output  of  350  kW  need  to  be  deployed  every  60  km 
along the TEN-T core network, and every 100 km on the larger TEN-T 
comprehensive network (art. 4, par. 1.) 

o  Mandates  the  installation  of  publicly  accessible:  (a)  fast  recharging 
infrastructure  in  urban  nodes  and  (b)  overnight  recharging  infrastructure 
along the main transport network. 

o  Specifies  that  operators  of  publicly  accessible  recharging  points  shall 
provide end users with the possibility to recharge their electric vehicle on 
an ad hoc basis (art. 5). 

o  Sets requirements regarding  the technical  specifications of  public  power 
recharging  points  and  specifies  a  clear  legislative  process  to  adopt 
standards in relation to e-mobility, including relevant aspects of interaction 
with the grid (art. 24 and Annex II). 

✓  The proposed revision of the Energy Taxation Directive aims to introduce a new 
structure  for  minimum  tax  rates  based  on  the  real  energy  content  and 
environmental performance of fuels and electricity, which will ensure that the most 
polluting fuels are taxed the highest. 

✓  The  2023  Commission 

(EU)  2023/1162  on 
interoperability requirements and non-discriminatory and transparent procedures 
for access to metering and consumption data (as provided for by the Electricity 
Directive, art. 24).   

Implementing  Regulation 

✓  Preparation  of  Commission  Implementing  Acts  on  interoperability  requirements 
and non-discriminatory and transparent procedures for access to data required for 
demand  response  and  customer  switching  (as  provided  for  by  the  Electricity 
Directive, art. 24). 

✓  Preparation  of  a  new  network  code  on  demand  response,  expected  to  be 
submitted end of 2024, to unlock the potential of electric vehicles, heat pumps and 
other electricity consumption to contribute to the flexibility of the energy system in 
line  with  the  existing  Electricity  Market  Design  (both  Electricity  directive  and 
Regulation and the revised EMD).  

✓  The Code of conduct for energy-smart appliances under preparation by DG ENER 
and  JRC  to  enable  interoperability  and  boost  the  participation  of  energy-smart 
appliances in demand response schemes. 

✓  The 2020 Renovation Wave Strategy presents a strategy to trigger renovation, in 
line with the Energy Efficiency First principle outlined in the EU strategy on Energy 
System Integration, which aims to address long-standing barriers which are still 
relevant  today  (insufficient  understanding  of  energy  use  and  savings,  split 

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incentives  between owners and tenants,  disagreements  between owners  of the 
same building, lack of or limited financing). 

✓  The  EU  Heat  Pump  Action  Plan  under  preparation  which  seeks  to  set  out 
measures aimed to address the main barriers for a faster rollout of heat pumps 
(high  upfront  costs  of  heat  pumps,  technical  (un)preparedness  of  buildings  for 
installer 
information  gaps, 
lower-temperature  heating, 
awareness  and  acceptance,  split  incentives,  financing  constraints,  permitting 
procedures, national building regulations, skills gaps). 

low  customer  and 

✓  The  EU  Action  Plan  for  Grids  outlines  specific  actions  at  EU  level,  aimed  at 
alleviating  barriers  for  network  expansion  and  reinforcement,  by  improving 
implementation of the agreed legal framework. Key actions include: 

o  Supporting  DSO  grid  planning  and  identifying  conditions  under  which 
anticipatory investments in grid projects should be granted (actions 3 & 4). 
o  Promoting  uptake  of  smart  grid,  network  efficiency  and  innovative 

o 

technologies inter alia through tariff design (actions 7 & 8). 
Increasing  visibility  on  opportunities  from  EU  funding  programmes  for 
smart grids and modernisation of distribution grids (action 10). 

o  Providing  guidance  and  technical  support  on  how  to  implement  existing 
legislative tools to implement permit acceleration measures (action 11). 

✓  European Commission initiatives on standardisation of recharging infrastructure 

specifications: 

o  European  Standardisation  Organisations  are  currently  in  the  process  of 

adopting key smart charging standards at European level.81  

2.3.2.  Recommendations to address the technical barriers 

Recommendation 1: Provide guidelines to maximise benefits of smart meter networks  
Addressee: European Commission 
Related  policies  &  measures:  JRC  Guidelines  for  cost-benefit  analysis  of  smart  metering 
deployment,  Commission  Recommendation  for  the  roll-out  of  smart  metering  systems, 
Electricity Directive, Regulation (EU) 2023/1162 
Expected impacts: 2030 
Relevant sectors: Building and transport sectors 

Provide guidelines on how to enable different value propositions for the utilisation of 
smart  meter  networks  and  maximise  benefits  for  consumers  and  energy  systems, 
making  more  efficient  use  of  lessons  learned  from  the  implementation  of  rollout 
programmes to date.  

The  progress  of  rolling  out  smart  meters  varies  between  the  Member  States,  as  many 
countries  have  already  progressed  significantly  while  others  are  delayed,  especially  with 
regard to tendering for equipment and effective installation plans. However, further reflection 
on  how  to  maximise  the  benefits  of  the  smart  meter  network  for  grid  users  is  necessary, 
from  countries  with  mature  rollout  projects  and 
particularly  analysing 

information 

81 https://ecostandard.org/wp-content/uploads/2022/12/ECOS-RAP-Standards-for-EV-smart-charging.pdf 

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implementation  experience.  Member  States  should  be  able  to  utilise  such  information/ 
guidelines in order to ensure that their smart meter networks will truly enable active market 
participation, as envisaged. 

ACER  reports  that  based  on  NRAs  estimates,  the  smart  metering  devices  installed  across 
Member  States  enable  mostly  standard  value  propositions,  allowing  consumers  to  better 
understand  and  control  their  energy  consumption  (e.g.  energy  consumption  in  real-time, 
overview  of  historical  consumption).82  However,  to  maximise  the  direct  benefits  of  smart 
meters  for  final  customers,  more  advanced  value  propositions  are  required,  based  on 
advanced  data  analytics  and full  access to flexibility  markets,  allowing  consumers to  better 
manage and reduce their electricity bill (e.g. ability to valorise the provision of explicit demand 
response to the power markets, functionalities facilitating smart charging of EVs at home). 

The topics on which best relevant practices can be collected and promoted may include the 
following: 

•  How  has  the  smart metering  equipment  (including  distributed measurement  and sub-
metering devices) and data facilitated the DSOs’ network operation and maintenance?  
•  How has the smart metering equipment and data facilitated participation of end-users in 

short-term wholesale and ancillary services markets? 

•  How  has  the  smart  metering  equipment  and  data  facilitated  retail  market  functioning, 

improved billing and facilitated supplier switching? 

•  How has the smart metering equipment and data facilitated the development of flexibility 

services, demand response, decentralised renewable generation and storage?  

•  How has the data gathered from smart meters been used for estimating and analysing 
the  energy  patterns  and  savings  of  consumers,  to  develop  targeted  efficiency 
programmes? 

Recommendation 2: Review electricity grid connection principles 
Addressee: European Commission 
Related  policies  &  measures:  JRC  Guidelines  for  cost-benefit  analysis  of  smart  metering 
deployment,  Commission  Recommendation  for  the  roll-out  of  smart  metering  systems, 
Electricity Directive, Regulation (EU) 2023/1162 
Expected impacts: 2030 
Relevant sectors: Building, industry and transport sectors 

a.  Review  current  principles  of  the  process  for  handling  connection  requests, 

referring to: 

•  The ‘first come first serve’ principle, especially in areas where connection capacity 

is scarce. 

•  The legal obligation for TSOs and DSOs to connect new network users in all cases 
with limited options to refuse, no matter the cost or the impact specific connections 
may bring to the system.  

b.  Review  firmness  on  connection  terms  and  further  develop  structured  regulatory 
schemes  and  incentives  promoting  flexible  connections,  both  for  RES  generators 

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(injections)  and  end-users (off-take)  without  however  undermining  investment  in  RES 
generation and storage.83  

Indicatively, different forms of alternative connection agreements, some of which are already 
implemented in Member States such as France, Netherlands and Belgium, include: temporary 
firm connection agreements, fully flexible connection agreements, time-limited firm connection 
agreements, combination of fully flexible and time-limited firm connection agreements, shared 
connection agreements, ‘dynamic operating envelopes’, and Use-it-or-lose-it (UIOLI) or use-
it-or-sell-it (UIOSI) connection agreements.84 

To  address  the  evolving  trends  in  Europe's  energy  and  transport  sectors,  particularly  the 
growing  presence  of  decentralised  electricity  generation,  storage  facilities,  electric  heat 
pumps,  and  EV  charging  points,  the  Commission  is  actively  working  to  adapt  the 
interconnected  power  system.  This  involves  preparing  amendments  to  two  delegated  acts, 
namely  the  Network  Code  on  Requirements  for  Generators  (2016/631)  and  Demand 
Connection (2016/1388). These policy developments are crucial in the decarbonisation efforts 
of  Europe  and  ensuring  the  smooth  integration  of  emerging  technologies.  Additionally,  the 
draft  Network  Code  on  demand  response  that  is  currently  under  development,  includes 
provisions on non-firm connection agreements. The aim is to specify the process for national 
terms and conditions to align (at least nationally) the use of such agreements. 

Recommendation 3: Further promote R&D to improve efficiency of heat pumps at (very) 
high temperatures for electrification of industrial processes  
Addressee: European Commission 
Related policies & measures: Energy Efficiency Directive, Renewable Energy Directive 
Expected impacts: 2030 
Relevant sectors: Building and industry sectors 

Promote Research & Development (R&D) with the aim to improve the efficiency of heat 
pump systems at high (i.e. above 160°C) temperatures in order to accelerate the technical 
development and commercialisation of heat pumps in the industrial sector and increase their 
competitiveness compared to conventional fuels-based technologies (e.g. natural gas).85 

Additionally,  early  deployment  of  electrified  industrial  processes,  including  heat  pumps and 
other  electro-heating 
infrared, electric-arc, 
radiofrequency, microwave) and translating policy targets into electrification plans and pilots 
can prove out technologies and support scaled-up investment.86 

(e.g. induction, 

technologies 

resistance, 

83 CEER (2023) CEER Paper on Alternative Connection Agreements 
84 Ibid. 
85 Lawrence Berkeley National Laboratory (2018) Electrification of buildings and industry in the United States 
86 IISD (2022) Industrial Electrification 

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Recommendation  4:  Promote  pilot  projects  and  develop  works  protocol/  manual  for 
replacing AC to DC 
Addressee: European Commission 
Related policies & measures: Energy Efficiency Directive, Electricity Directive 
Expected impacts: 2040 
Relevant sectors: Building sectors  

Promoting further pilot projects as well as developing work protocols and manuals is 
necessary for training purposes and for preparing the workforce to be in place at a later 
stage, when further efficiency gains using DC current will gain momentum along with 
increasing  embedded  electricity  generation  and  storage  projects,  to  maximise 
efficiency gains. 

The  efficient  coordination  between  the  digitalisation  process,  the  employment  of  smart 
technologies and further actions, like shifting from AC to DC in buildings, with an objective to 
maximise efficiency gains, requires a prioritisation of actions. Promoting the replacement of 
AC  with  DC  electricity,  without  having  in  place  applications  like  embedded  generation  and 
storage, and other digital equipment, reduces the potential to maximise the benefits of such 
measures.  

2.3.3.  Recommendations  to  address  the  economic  and  financial 

barriers 

The economic and financial barriers to further electrification mainly relate to: 

•  High upfront costs of purchasing equipment and installation, to which the residual 

value of the undepreciated equipment being replaced is added. 

•  No clear energy price signals, including tariff structures and difficulties to maximise 

benefits from further electrification.  

•  Strong  competition 

for  electrification 

investment  and  deployment 

from 

conventional fossil fuel-based technologies and established processes.  

Funding levels and the way these funds are allocated to the different steps in the electrification 
process  is  a  key  factor  to  overcome  financial  barriers.  As  an  example  of  asymmetries  in 
funding  allocation,  the  tremendous  expansion  of  RES  generation,  backed  by  subsidy 
schemes,  tax  credits,  and  a falling  levelised  cost  of  energy  (LCOE)  due  to  scaling–up  and 
competition,  should  be  contrasted  to  the  development  of  the  transmission  and  distribution 
network capacity as well their modernisation pace that are falling behind.  

Recommendation  5:  Support  emerging  business  models  for  financing  of  upfront 
equipment and installation costs 
Addressee: European Commission, Member States 
Related policies & measures: Renewable Energy Directive, Energy Efficiency Directive 
Expected impacts: 2030/2040 
Relevant sectors: Building and transport sectors 

Regarding heating/ cooling electrification, emerging business models such as “heat as 
a  service”  and  “pay-as-you-save  schemes”  can  help  alleviate  the  burden  of  high 
upfront costs. In the “heat as a service” model, the investment, its maintenance and output 
(heat/cool) are provided by specialised energy service companies (ESCOs) on a long‐term 

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basis as a bundled service, while in “pay-as-you-save schemes”, the customer pays a fixed 
rental fee for the heating/cooling equipment based on energy savings. These business models 
may  be  facilitated  through  appropriate  definitions  of  concepts,  as  well  as  regulations  and 
guidance regarding pre-contractual transparency as well as contractual terms and conditions. 
Such solutions could be particularly suitable for consumers that do not have easy access to 
capital and could hance to some extent also address energy poverty issues.    

Recommendation  6:  Implement  dynamic  electricity  commodity  pricing  to  enhance 
competition at the supply side  
Addressee: European Commission, Member States 
Related policies & measures: Electricity Regulation and Directive 
Expected impacts: 2030/2040 
Relevant sectors: Building and transport sectors 

One option for promoting the efficient use of distributed energy resources, including 
storage, EVs and bidirectional charging, smart meters, and demand response, would 
be to improve price signals by applying variable or dynamic supply tariffs which can 
allow end users and prosumers to take benefit of the market dynamics. Dynamic price 
formulas are specially designed for supply contracts, using smart meters or timers to allow 
end-users or prosumers to adjust their injection or offtake based on price signals and/or time 
zones. 87 

A prerequisite for advancing organised electricity and ancillary services’ markets (including for 
grid  congestion  management),  based  on  automated  structures  and  exchanges,  is  smart 
equipment  and  an  adequate  level  of  digitalisation  of  the  system  operators  for  procuring  all 
these  market-type  services.  However,  a  well-functioning  flexibility  and  ancillary  services 
market may take a long time to mature, and easy-to-apply solutions such as dynamic electricity 
commodity pricing may apply, without however contradicting the right consumers to fixed-price 
electricity contracts.  

Recommendation 7: Implement cost-reflective Time of Use (ToU) grid tariffs to provide 
adequate price signals for demand response 
Addressee: European Commission, Member States 
Related policies & measures: Electricity Regulation and Directive 
Expected impacts: 2030/2040 
Relevant sectors: Building and transport sectors 

To facilitate the effective integration of distributed energy resources, including storage, 
electric  vehicles  (EVs),  bidirectional  charging,  smart  meters,  and  demand  response, 
there  is  a  need  to  develop  a  robust  flexibility  and  ancillary  services  market.  In  the 
absence of such a market, promoting the efficient utilisation of these resources can be 
achieved  through  user-friendly  solutions  like  Time  of  Use  (ToU)  grid  tariffs.  These 
tariffs  would  reflect  the  costs  associated  with  services  provided  by  the  distribution 
system operator (DSO) or transmission system operator (TSO) and enable end users 
and prosumers to take advantage of market dynamics while maximising their benefits.88  

In parallel, the procurement of ancillary services at the local level (DSO’s level) also needs to 
be developed. Integration of DER into the network and electrification of end uses requires the 

87 ACER (2023) Demand response and other distributed energy resources: what barriers are holding them back? 
88 Ibid. 

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establishment  of  detailed  and 
frameworks  regarding  DSO  congestion 
management and access to flexibility services through a combination of regulation, connection 
agreements, network tariffs and procurement of services through tenders.89 

transparent 

Harmonisation of actions for managing flexibility and congestion at the system and local levels 
provides  better  possibilities  for  end-users  and  prosumers  to  optimally  use  their  equipment, 
with a clear view of the options and opportunities. These designs and approaches should not 
be competitive but complementary, ensuring exchanges of products and services between the 
local and system levels optimising the use of resources. This will be facilitated by unifying the 
marketplaces  and  platforms  to  exchange  products  and  services,  ensuring  equal  and  open 
access to participants, either directly or through specialised entities, like aggregators, energy 
community operators, etc. 

In this regard, a Network Code on demand response is under development, to be published 
before mid-2024, which aims to unlock the potential of EVs, heat pumps and other electricity 
consumption  to  contribute  to  the  flexibility  of  the  energy  system,  addressing  remaining 
regulatory  barriers  for  the  development  of  demand  side  and  other  flexibility  sources  in  the 
electricity market. It includes in particular rules on aggregation, energy storage and demand 
curtailment. 

Recommendation 8: Promote flexible and partial industrial electrification  
Addressee: European Commission, Member States 
Related policies & measures: Electricity Regulation and Directive 
Expected impacts: 2030/2040 
Relevant sectors: Industry sectors 

For  many  industrial  activities  currently  using  fossil  fuels,  gradual  approaches  to 
electrification should be examined, whereby energy needs will be partially covered with 
electricity,  allowing  at  the  same  time  the  possibility  to  switch  in  a  flexible  manner 
between  electricity  and  fossil  fuels.  Industries  facing  international  competition  must 
safeguard  their  competitiveness  while  transitioning  to  electrification,  to  avoid  any  negative 
impact. This hybrid approach may provide more time for technology improvements towards 
full electrification and may also relax the concerns of industrial users regarding a rapid and 
complete switch from existing and mature fossil-fuel uses to electrified alternatives. 

Through this hybrid setup, industry users have the option to mitigate the volatility in energy 
prices arising from the intermittency of renewable resources. Utilising both existing fossil fuel 
equipment and new investments towards a moderately paced electrification path, can protect 
industrial  customers  from  undesirable  price  volatility  and  mitigate  concerns  regarding  their 
competitiveness. 

Current technologies already allow industrial consumers to replace a significant share of their 
fossil-fuel intake with electricity, and electricity prices are low enough in certain regions that 
companies  could  lower  their  energy  costs  by  switching  from  fossil  fuels  to  electric  power. 
Opportunities to adopt electric technology should only continue to expand as electricity prices 
fall and electric technologies improve.  

89 CEER (2020) CEER Paper on DSO Procedures of Procurement of Flexibility 

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2.3.4.  Recommendations  to  address  legislative  and  regulatory 

barriers 

Recommendation 9: Formulate an actionable strategy for Electrification 
Addressee: European Commission 
Related policies & measures: Electricity Directive 
Expected impacts: 2030 
Relevant sectors: Building, Industry and transport sectors 

Stakeholders highlight the need for a dedicated electrification action plan to accelerate 
the  uptake  of  direct,  smart  electrification  in  Europe.  Indicatively,  the  Electrification 
Alliance90  advocates  that  the  Electrification  action  plan  should  set  a  target  of  35% 
electrification of final energy use across the EU by 2030 and should ensure that electrification 
becomes an integral element of Member States’ National Energy and Climate Plans (NECPs). 
Concrete actions according to stakeholders, would include a reform of grid planning both for 
transmission  and  distribution  networks  to  improve  coordination  and  political  oversight, 
programmes to attract skilled workers, the prioritisation of direct and smart electrification in 
the EU’s funding and financing programmes and the empowerment of end-users to utilise the 
full potential of demand side management.91 The strategy can also propose specific regulatory 
and price-based incentives and mechanisms to further increase the rate of electrification.  

Recommendation 10: Monitoring report concerning the access of DERs in markets, and 
progress on business models (ESCOs, Aggregators) 
Addressee: European Commission/ ACER 
Related policies & measures: Electricity Directive 
Expected impacts: 2030 
Relevant sectors: Building, Industry and transport sectors 

A regular monitoring report by a competent EU authority such as ACER, concerning 
the  market  access  of  DERs  in  markets,  and  progress  on  business  models  (ESCOs, 
Aggregators)  would  enhance  transparency  and  provide  important  information  to 
policy-makers  and  stakeholders  alike  on  barriers  and  latest  developments.  The 
monitoring report could indicatively include a review of roles and responsibilities of new actors, 
eligibility provisions (e.g. to participate in day-ahead and intraday markets, provide balancing 
and congestion management services), legal frameworks on aggregation models, availability 
of incentives and price signals, latest updates on business models, key national measures, 
barriers,  and  recommendations.  Member  States  would  be  required  to  regularly  collect  and 
provide relevant information and data to the competent authority in a structured manner. 

90 Electrification Alliance is an alliance of associations including Avere (electro-mobility), Eurelectric, the European Climate 
Foundation, the European Copper Institute, the European Heat Pump Association, EuropeOn (electrical contractors), smartEn, 
SolarPower Europe and WindEurope. 
91 Electrification Alliance (2023) Electrification Manifesto 

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Recommendation  11:  Support  national  and 
assessment and planning efforts 
Addressee: European Commission, Member States 
Related policies & measures: Renewable Energy Directive, Energy Efficiency Directive 
Expected impacts: 2030/2040 
Relevant sectors: Building, Industry and transport sectors 

local  authorities 

in  coordinating 

EU authorities can support national and local authorities in the planning process for 
national  network  development  plans,  both  at  transmission  and  distribution  levels, 
through  appropriate  guidelines  and  supervision.  As  noted  in  EU’s  Energy  System 
Integration Strategy, future network planning will require a more integrated and cross-sectoral 
approach, notably of the electricity and gas sectors. It will also require full consistency with 
climate and energy targets, including alignment with National Energy and Climate Plans, an 
adequate consideration of all relevant actors, and should be informed by local conditions. 

Recommendation  12:  Adopt  and  implement  common  European  standards  to  ensure 
interoperability, including for smart and bidirectional charging 
Addressee: European Commission, Member States and manufacturers 
Related policies & measures: AFIR Regulation  
Expected impacts: 2030 
Relevant sectors: Transport sector 

The development and enforcement of the communication standard, EN ISO 15118-20 in 
convergence with ongoing industry practice such as the Open Charge Point Protocol, 
is  a  critical  aspect  in  order  to  ensure  interoperability/  compatibility  of  software 
platforms and hardware devices. This includes bidirectional communication between 
equipment and actors at multiple levels (e.g. grid operator, charger, vehicle, charging 
point operator, energy supplier, aggregator).92 

Manifold protocols developed by industry operator should converge and become international 
standards  by  standardisation  development  organisations  (SDOs)  in  order  to  simplify  the 
landscape  and  provide  a  more  certain,  stable  and  robust  development  where  views  by  all 
relevant stakeholders are duly discussed.  

2.3.5.  Recommendations to address societal barriers 

Addressing  the  skills  and  knowledge  gaps  for  further  electrification  and  DER  as  well  as 
increasing awareness of consumers is critical for achieving the energy and climate objectives. 
Re-skilling and training is necessary to prepare the workforce for the massive effort into the 
development and deployment of low-carbon technologies.  

92 IEA (2022) Policy Brief on Public Charging Infrastructure 

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Recommendation  13:  Develop  training  programmes  for  sector  professionals  on 
electrical equipment and EVs 
Addressee: European Commission 
Related  policies  &  measures:  Net-Zero  Industry  Act,  Heat  Pump  Action  Plan,  funding 
opportunities addressing skills such as LIFE calls 
Expected impacts: 2030 
Relevant sectors: Building, Industry and transport sectors 

The development of training programmes for the certification of sector professionals 
by  Member  States  and  the  development  of  systematic  processes  for  the installation/ 
retrofitting of electrical equipment would streamline the quality and cost efficiency of 
associated works. These measures should include the provision of coordinated social and 
professional  reskilling/  upskilling  assistance in  declining  sectors  and regions.93  Additionally, 
regarding  industrial  electrification  and the  increasing  uptake  of  EVs,  training  and  reskilling/ 
upskilling of personnel will be required to support the introduction of new roles. 

93 JRC (2020) Employment in the Energy Sector 

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3.  Uptake of renewable and low-carbon hydrogen (and 

other low-carbon gases) 

3.1.  Introduction 

It is generally agreed that hydrogen plays an important role in integrating the energy system. 
Findings of a recent study94 indicate that a fully decarbonised Europe can only be reached (at 
reasonable  cost)  through  sufficient  uptake  of  hydrogen.  The  uptake  of  renewable  and  low-
carbon hydrogen is, however, still in its early stages. The flexibility services of hydrogen-based 
generation to balance an increasingly intermittent renewable energy supply may be especially 
valuable but is dependent on a supportive regulatory framework at national and local levels 
and  certainly  the  so-called  “hard-to-abate”  sectors  will  rely  on  hydrogen  to  reach 
decarbonisation goals.  

Despite active development by the European Commission through various policy measures 
(e.g. the REDII or the FuelEU Maritime/Aviation) the sector still faces various barriers. 

This chapter provides an overview of barriers based on literature and stakeholders input and 
provides recommendations on how the European Commission can help to overcome them. 
Additionally, the report specifically addresses in two separate chapters the issues of feasibility 
and costs of meeting the EU ambition to produce 10 million tonnes of renewable hydrogen in 
2030  and the  climate  and environmental  impacts  of  (long-distance)  hydrogen  imports.  Two 
detailed paragraphs on the feasibility and costs for reaching the targets in the short term by 
2030  and  on  the  GHG  footprint  of  hydrogen  imports,95  conclude  that  the  above-mentioned 
barriers need to be addressed to reach the ambitious national targets by 2030, and that the 
imports should focus on renewable hydrogen or low-carbon hydrogen with certified lifecycle 
analysis.  The  cross-border  adjustment  mechanism  (CBAM)96  will  to  some  extent  also 
prevent/avoid  unfair  competition  from  fossil  energy-based  hydrogen  (or  hydrogen  based) 
imports. 

3.2.  Barriers to the uptake of hydrogen  

This section gives an overview of barriers to the uptake of hydrogen in the EU on the basis of 
literature  review  and  stakeholder  consultation  -  survey,  interviews  and  workshops.  The 
barriers mentioned in this chapter generally concern the uptake of all of the following types of 
hydrogen:  renewable  hydrogen  from  renewable  energy  sources  and  low-carbon  hydrogen 
which is defined as hydrogen with at least 70% less CO2 emissions than fossil fuels (hydrogen 
made using nuclear power or hydrogen made using fossil fuels in combination with carbon 
capture  and  storage  (CCS)).  Those  barriers  that  effect  only  certain  types  of  hydrogen  are 
indicated  accordingly  in  the  sub-sections.  Due  to  the  growing  availability  of  renewable 
energies  across  the  EU,  renewable  hydrogen  will  be  the  most  prominent  hydrogen  type 
contributing to decarbonisation of end-uses and system integration. Therefore, the focus of 
the barrier analysis lies on renewable hydrogen. Still, barriers particularly relevant for other 
types of hydrogen are also addressed and highlighted. The barriers are further grouped into 
the overarching categories “economic and financial barriers”, “technical barriers”, “legislative 
and  regulatory  barriers”  and  “societal  barriers”.  Each  barrier  and  its  effects  are  briefly 
described. 

94 Fraunhofer ISI (2023) The impact of industry transition on a CO2-neutral European energy system  
95  https://www.transportenvironment.org/discover/hydrogen-hype-why-the-eu-should-be-cautious-about-uncertain-imports-from-
far-flung-places/  
96 Carbon Border Adjustment Mechanism - European Commission (europa.eu) 

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Table 3-1 Summary of main barriers for the uptake of hydrogen 

Barrier type 

Barrier 

Technical 

1.  Insufficient manufacturing capacities for electrolysers97 

2.  Cost gap of renewable and low-carbon H2 towards costs of fossil-based 

hydrogen 

Economic and 
financial barriers 

3.  Complex use of additional revenue streams, such as balancing market 

services 

4.  Reaching bankability for hydrogen related projects 

5.  Competition from non-EU sources of hydrogen 

6.  Lack of H2 transportation and storage infrastructure  

7.  Missing international regulation and import policy 

8.  Long, complex, unstandardised permitting processes for RES and H2 projects 

9.  Lack of a skilled workforce e.g. for H2 project management and H2 project 

permitting 

Legislative and 
regulatory 
barriers 

Societal 

10. Lack of acceptance and concerns of about derivatives of hydrogen such as 

ammonia (high toxicity) or methanol and safety issues 

3.2.1.  Technical barriers 

3.2.1.1. Technological development (of hydrogen production) 

Achieving  sufficient  reliability  and  safety  is  of  high  importance,  although  further 
technology improvement is also needed. 

Both hydrogen via electrolysis (from renewables or nuclear) and hydrogen via natural gas and 
CCS  are  technically  proven  technologies.  Therefore,  while  there  are  still  technical 
improvements to be made in hydrogen production, especially the limitations concerning the 
deployment  of  functioning  hydrogen  infrastructure  remain  open.  This  includes  lack  of 
standards  on  leakage  testing.  In  terms  of  hydrogen  production  from  electrolysis,  alkaline 
electrolysers  are  currently  the  most  mature  and  market-ready  technology.  However,  other 
electrolysis  technologies  like  PEM  (Proton  exchange  membrane  -  more  compact  design, 
higher flexibility), SOEC (Solid Oxide Electrolyser Cell - integration of industrial waste heat, 
improved electrical efficiency, reversible operation), and AEM (Anion Exchange Membrane - 
higher  flexibility,  no  use  of  noble  materials)  exist  and  would  have  strong  benefits  for  the 
integration  of  hydrogen,  but  have  not  yet  been  brought  to  an  equal  technology  readiness 
level.98 

Electrolysis in larger scale may face water scarcity in some arid regions. 

With  electrolysis  projects  continuing  to  significantly  increase  in  size,  the  desalinated  water 
to  hydrogen  project 
scarcity  becomes  an 

technical  barrier 

increasingly 

important 

97 Nameplate manufacturing capacities have in the meantime surpassed the demand from project developers (e.g. recent report 
by  BNEF  (https://www.hydrogeninsight.com/electrolysers/severe-overcapacity-the-global-supply-of-electrolysers-far-outstrips-
demand-from-green-hydrogen-projects-bnef/2-1-1618327), thus making it unlikely to face insufficiencies in the medium term. 
98 IRENA (2023) Innovation Landscape for Smart Electrification 

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implementation. Especially in areas with large amounts of solar energy, like southern Europe, 
local availability of water will be a growing issue.99 

Carbon capture and storage technology lacks experience in Europe. 

For fossil-based low-carbon hydrogen production, the SMR components are widely available 
and commercialised, however, applications of CCS are still expensive due to Europe’s lack of 
experience and scale.  

The use of waste heat from electrolysers requires technical adaptations downstream 
(see also chapter 4 on waste heat utilisation). 

With  regard  to  the  use  of  waste  heat  from  electrolysers,  e.g.  in  district  heating,  some 
stakeholders  mention  that  while  technical  feasibility  seems  realistic,  still  more  research  is 
needed  on  understanding  “manageable  configurations”.  Especially  with  regards  to  the 
operational  profile  of  electrolysers  and  thus  availability  of  waste  heat,  which  means  all 
downstream systems “need to be capable to cope with these fluctuations” through for example 
the use of thermal energy storages. 

3.2.1.2. Hydrogen infrastructure & storage 

Infrastructure  build-out  is  planned  but  needs  accelerated  implementation  and 
comprehensive integrated planning. 

The integration of hydrogen will need a transportation network to carry hydrogen across the 
EU  to  the  demand  locations.  While  this  in  principle  may  also  be  possible  through  strong 
expansion  of  the  electricity  grid,  the  amounts  that  can  be  transported  via  pipeline  usually 
exceed those of high voltage lines leading to many cases where transport via pipeline is more 
economical  (e.g.  Aquaventus  project  in  the  German  North  Sea100).  Furthermore,  the 
development of electricity transmission has a long lead time leading to risks for decarbonising 
sectors requiring hydrogen supply already towards 2030 and even 2035. 

It is essential to plan the infrastructure in an integrated manner, which has also been pointed 
out  by  several  stakeholders.  For  example,  TEN-E  only  obliged  ENTSO-E  to  develop  the 
offshore electricity network development plans but should – with the next revision or ideally 
beforehand – also include gas stakeholders. Three stakeholders in the survey pointed out that 
the  top-down  planning  approach  of  the  EU  is  problematic.  They  believe  that  instead  of 
assessing the potential supply and demand and optimal energy carriers across the different 
sectors via high-level modelling, a bottom-up approach should be considered that is able to 
incorporate local specificities. 

Pipeline infrastructure for hydrogen is currently insufficient 

However, literature review and survey results shows that the current transport capacities of a 
total of 2,000 km101 of dedicated hydrogen pipelines across Europe are not sufficient in both 
length and transport capacities. Retrofitting existing pipelines is suggested to be the least 
expensive option but will take time and experience and needs to be closely coordinated with 
a slow phase-out of natural gas over the next decades. Moreover, recently the European 
Clean Hydrogen Alliance highlighted that even if all hydrogen pipelines are retrofitted or built 

99 Hu et al. (2020) A Review of Technical Advances, Barriers, and Solutions in the Power to Hydrogen Roadmap 
100 https://aquaventus.org/wp-content/uploads/2022/05/AquaDuctusShortStudy_OffshoreHydrogenProduction_v120_EN.pdf 
101 BCG (2021) The Green Tech Opportunity in Hydrogen 

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as currently envisioned in the European Hydrogen Backbone by 2030, several large 
European regions would still remain without pipeline access.102 

Hydrogen storage infrastructure needs targets and accelerated build-out. 

Hydrogen storage infrastructure would bring flexibility and resilience to the European energy 
system by allowing large-scale and long-term storage of renewable and low-carbon energy. 
However, (long-term) hydrogen storage systems have not yet been rolled out. Among the first 
projects is Green Octopus Mitteldeutschland project103 that will involve hydrogen storage in 
salt  caverns  and  is  scheduled  for  completion  in  2026.  This  has  been  in  part  because  the 
technical  differences  between  natural  gas  and  hydrogen  storage  have  not  been  fully 
overcome. Stakeholders suggest implementing hydrogen storage capacity targets, combined 
with increasing demand targets for hydrogen. 

3.2.1.3. Hydrogen imports infrastructure 

Technical challenges remain for all maritime import routes. 

Hydrogen  transport  via  sea  is  still  physically  non-existent  with  worldwide  only  one  single 
hydrogen tanker demonstration vessel being in test operation, between Australia and Japan. 
Currently, all different routes for shipping hydrogen or its derivatives still have process steps 
that are not yet at a commercial level104: 

•  Liquid Hydrogen (LH2): maritime transport, scale-up of liquification; 
•  Synthetic LNG: CO2 transportation, CO2 sourcing; 
•  Ammonia (NH3): NH3 cracking; safety issues; 
•  Liquid Organic Hydrogen Carriers (LOHC): hydration and dehydration steps.  

All  of  the  derivatives  lead  to  large  energy  efficiency  losses,  especially  in  combination  with 
further re-conversion to hydrogen. For some derivatives, additional safety aspects need to be 
studied and standardised, due to issues of very high toxicity (ammonia). 

European  governments  (including  Germany,  intending  to  import  renewable  hydrogen  from 
Canada; and the UK, already funding pilot plants for ammonia cracking)105 have announced 
support  for  repurposing  existing  LNG  terminals  for  LH2  or  ammonia  but  have  not  yet 
communicated a clear preference for either of the technologies. So far, no terminal has been 
converted, making cost estimates uncertain. However, a switch of an existing LNG terminal to 
LH2 is expected by initial studies to be more expensive than a switch to an ammonia terminal, 
due to the significantly lower temperatures required. Furthermore, the uptake of new terminals 
is  limited  by  the  uncertainty  regarding  the  scale  of  future  imports  of  hydrogen  and  its 
derivatives.106  All  in  all,  the  EU  should  considerer  carefully  which  countries  to  target  for 
importing renewable H2.107  

102 Hydrogen Europe (2023) Jorgo Chatzimarkakis at EUSEW2023. Bringing hydrogen to industry: the right infrastructure to 
unlock decarbonisation 
103 https://www.ontras.com/de/go 
104 DVGW (2023) Kurzstudie zu Transportoptionen von Wasserstoff 
105 Energy Monitor (2023) LNG terminals 
106 IEA (2022) Global Hydrogen Review 
107 https://www.transportenvironment.org/wp-content/uploads/2024/02/202402_H2_imports_TE_briefing.pdf  

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3.2.2.  Economic and financial barriers 

3.2.2.1. Cost gap 

The cost gap between unabated fossil-based hydrogen and renewable as well as low-
carbon hydrogen remains significant and is considered a fundamental barrier by a large 
majority of stakeholders. 

One of the most cited and important barriers to a rapid uptake of hydrogen is the current cost 
premium  for  renewable  and  low-carbon  hydrogen  technologies  compared  to  conventional 
fossil-fuel based hydrogen.108 Price of electricity (energy) to power renewable hydrogen is one 
of the key determining factors to produce cost competitive renewable hydrogen, along with 
improvements  of  economies  of  scale  in  the  manufacturing  of  electrolysers.  The  US  Clean 
Hydrogen  Strategy  and  Roadmap  (June  2023109)  estimates  that  electricity  prices  of  USD 
30/MWH are necessary for H2 to be priced at about 2 USD / H2 kg and about USD 20 MWh 
for 1 USD/H2 kg. As already analysed above in the survey responses (see also annex 6.1), 
especially  renewable  hydrogen  faces  high  costs  due  to  the  need  for  expanded  renewable 
energy production, as well as high investment costs for the electrolysers. One reason for the 
high investment costs for electrolysers is that these have not yet reached the economies of 
scale.  

Yet, also low-carbon hydrogen that needs CCS technology faces higher production costs. A 
reduction in production costs and an improved price competitiveness will be a key factor for 
large-scale  deployment  of  clean  hydrogen.110  Competing  products,  such  as  fossil-based 
hydrogen produced via SMR in northwest Europe had a levelised cost of hydrogen production 
(LCOH) in 2021 of EUR 1.4–2.0/kgH2, while the LCOH of solar PV-powered electrolysis was 
around  EUR  6.8-9.4/kgH2  according  to  the  IEA.111  IRENA  estimates  a  lower  LCOH  for 
Europe’s renewable hydrogen production at EUR 3.8-5.1/kgH2, which is still higher than the 
conventional alternative.112  

Subsidies remain focused on CAPEX. 

Not much emphasis has been put on OPEX subsidies in the EU (compared to the U.S. with 
its Inflation Reduction Act providing tax reductions of up to USD 3/kgH2, or EUR 2.6 /kgH2). 
EU  focus  so  far  has  been  on  CAPEX  subsidies  and  obligations,  even  though  many 
stakeholders argue OPEX subsidies would facilitate a faster transition to renewable fuels.113 
The European Hydrogen Bank is an important tool to address the above mentioned barriers. 
The  first  EU-wide  auction was launched  in  November  2023  with Germany  contributing  350 
Mio  €  in  addition  to  the  800  Mio  € foreseen  for  European  projects  from  the  EU  Innovation 
Fund114. Applicants are informed on their application for the first pilot round as early as April 
2024  and  the  Commission  intends  to  launch  a  second  round  of  auctions  in  2024115.  The 
Commission will use the results from the pilot scheme to inform future auctions.  

Another challenge is the potential volatility of hydrogen production costs for projects without 
‘fixed  price’  PPAs,  due  to  its  higher  dependency  on  the  costs  of  electricity  to  power  the 

108 Agora (2020) Making renewable hydrogen cost-competitive 
109 U.S. National Clean Hydrogen Strategy and Roadmap (energy.gov)  
110 Renewable or low-carbon hydrogen encompassing all production technologies and sources such as nuclear, or fossil fuels 
combined with CCU/S 
111 IEA (2022) Northwest European Hydrogen Monitor 
112 IRENA (2023) Innovation Landscape for Smart Electrification 
113 According to an interview with Richard Yu, held on June 30, 2023 
114 European Commission (2023) Commission launches first European Hydrogen Bank auction with €800 million of subsidies 
for renewable hydrogen production 
115 European Commission (2023) Commission launches first European Hydrogen Bank auction with €800 million of subsidies 
for renewable hydrogen production 

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electrolysers.  The  production  costs  of  renewable  hydrogen  depend  to  a  large  extent  on 
renewable energy prices, whereas the cost of low-carbon hydrogen depends on e.g. natural 
gas  prices  (plus  the  non-volatile  cost  of  CCS),  or  nuclear  electricity  prices.116  Currently, 
premiums  are  being  paid  due  to  scarcity  of  renewable  hydrogen.  Renewable  hydrogen 
production  may  mitigate  the  exposure  towards  renewable  energy  price  volatility  via  both, 
physical  measures  such  as  dedicated  renewable  power  plants  connected  via  direct  line,  or 
through participation on long-term energy markets, such as (preferably ‘fixed price’) PPAs.  

Literature117 has put forward the issue that PPAs, as considered under the REDII and DAs, 
may not be possible through intermediate contracts with electricity traders, as a direct contract 
between the electricity producer and hydrogen producer is needed according to the current 
Commission guidance on implementation of the hydrogen delegated acts.118 This limits the 
possibilities to optimise the debt-to-equity ratios for smaller project developers not being able 
to  use  a  more  credit-worthy  intermediary  and  in  countries  (incl.  e.g.  Canada)  with  state-
mandated power purchasers, it may not be possible for hydrogen projects to directly contract 
with power generators.  

Uneven  taxation/levies/carbon  pricing  among  energy  sectors  is  referred  to  by  many 
stakeholders in the survey as critical in order to reach a level-playing field among all 
energy sectors. 

This is relevant for all types of hydrogen. Germany, for example, proposed an electricity price 
cap  of  0.06  €/kWh  for  its  energy-intensive  industries  (such  as  chemicals,  steel,  and  glass 
manufacturing),  which  will  likely  be  implemented  through  tax  reductions  on  the  energy 
purchases for all industrial off-takers. The impacts of a subsidisation of electricity for industry 
on the competitiveness of renewable and low-carbon hydrogen have not been studied in the 
literature in sufficient detail, yet arguments put forward include the dilemma of on the one hand 
keeping  electricity-intensive  production  in  Europe  and  preventing  a  shift  of  CO2  emissions 
abroad, and on the other hand the problems of an uneven playing field and of a lack of long-
term investment incentives to transform the energy supply to industry, thus leading to lock-in 
into currently used technologies. 

A further detailed discussion of hydrogen costs and their impact on reaching the EU ambition 
of 10 million tonnes for domestic renewable hydrogen production is provided in section 3.5.1. 

3.2.2.2. Revenue streams from flexibility services 

The  electricity  balancing  market  remains  highly  complex,  while  revenue  streams 
remain volatile and therefore insufficient to build business cases on. 

The balancing market as currently designed includes products electrolysers can technically 
deliver119 (FCR, aFRR and mFRR). Additionally, the introduction of a peak shaving product is 
under discussion120 (not as a pan-European product, but in MSs respectively), which could 
also  provide  additional  revenue  streams.  Many  stakeholders,  however,  consider  flexibility 

116 Gordon et al. (2023) Socio-technical barriers to domestic hydrogen futures  
117 https://www.kslaw.com/news-and-insights/eu-regulatory-challenges-complicating-the-development-of-international-green-
hydrogen-projects 
118 FAQ on implementation of Delegated Acts July 2023 
119 https://itm-power.com/markets/grid-balancing 
120 European Commission (2023) Commission welcomes deal on electricity market reform  

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markets to be very complex with highly volatile revenue streams121, which makes it especially 
difficult for small scale electrolyser projects to participate and build a business case on.  

Electrolyser manufacturers do not provide long-term warranties for electrolysers being 
operated under fluctuating load. 

Different  technologies  are  available  on  the  market,  including  Alkaline,  Proton  Exchange 
Membrane electrolysers (PEM), Anion exchange Membrane (AEM) electrolysers, and Solid 
Oxide (SOEC) electrolysers. Despite some electrolyser projects (especially for AEL and PEM 
technologies) having reached prequalification for the balancing market122, and thus technical 
maturity  in  principle,  manufacturers  are  hesitant  to  provide  long-term  warranties  on  stack 
reliability  and  require  impractical  process  steps  such  as  nitrogen  flushing,  hindering  short 
response times. However, the servicing of the membranes in case of the PEM technology is 
a  normal  commercial  process,  and  they  need  to  be  replaced  when  reaching  their  normal 
lifetime even without fluctuating loads. 

3.2.2.3. Financing and funding 

Reaching  bankable  projects  remains  a  major  challenge,  especially  due  to  lack  of 
guaranteed offtake and predictability of demand. 

As explained above, clean (renewable and low-carbon) hydrogen production from all sources 
is currently not yet at the financial breakeven point, and therefore continues to have the two 
problems: Firstly, it is still difficult to prove the bankability of all projects for all hydrogen types 
to investors (several stakeholders in the survey emphasise that bankability is closely tied to 
guaranteed  offtake  and  thus  long-term  perspectives  to  business  cases).  Secondly, 
governmental support is needed to bridge the gap between the high production costs and the 
lower  prices  that  off-takers  are  willing  to  pay,  which  again  negatively  affects  renewable 
hydrogen, but also affects low-carbon hydrogen. 

In addition,  components  of  the  hydrogen  supply  chain are  improving  in maturity  and in the 
ramp-up of commercial implementation. In the future technical advances and efficiency gains 
bear  the  risk  for  investors123  to  lose  competitiveness  over  time  (‘First-Mover  penalty’).  For 
example, electrolyser efficiency may improve significantly with next generation products, thus 
enabling hydrogen production at lower levelised costs compared to projects using the “older 
equipment”. 

Finally,  there  is  a  lack  of  scalability  and  standardisation  of  the  technology  beyond  current 
project  sizes  and  towards  future  projects  that  are  significantly  larger,  which  reduce  the 
profitability and bankability. 

Projects are still facing regulatory uncertainty (acknowledging that much of the uncertainty will 
be lifted, when the European regulatory framework is completed in 2024), this however also 
includes a lack of harmonisation in terms of regulation, due to competition between different 
national  jurisdictions,  such  as  on  preferred  specifications  of  produced  and  transported 
hydrogen.  

121 
https://www.regelleistung.net/Portals/1/downloads/modalit%C3%A4ten_rahmenvertraege/marktbeschreibung/Description%20of
%20the%20balancing%20process%20and%20the%20balancing%20markets.pdf?ver=jxP7kkJgWsQjOyQ98AwSsA%3D%3D; 
122 https://h2me.eu/wp-content/uploads/2021/10/H2ME2-D4.11-Public-FV-Report-assessing-the-current-%E2%80%A6.pdf  
123 Renewable and Low-Carbon Fuels Value Chain Industrial (RCLF) alliance at EUSEW2023. Gearing up for the rollout of 
renewable and low-carbon fuels! 

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Off-takers  remain  cautious  to  adopt  renewable  or  low-carbon  alternatives  making  it 
difficult to sign contracts to prove bankability. 

Although many hydrogen production facilities are planned (within the EU and projects located 
outside the EU, looking to export to the EU), many producers have not yet been able to find 
off-takers, due to the high cost of renewable and low-carbon hydrogen “scaring off” off-takers 
from switching to hydrogen.  

3.2.2.4. Availability of hydrogen 

Availability is perceived by some stakeholders as challenging, others see increasing 
momentum. 

A  further  barrier  to  the  uptake  of  hydrogen  frequently  put  forward  is  the  lack  of  available 
renewable and low-carbon hydrogen. This is supported by studies and organisations such as 
the European Clean Hydrogen Alliance which have come to the conclusion that an exponential 
supply increase is needed and that this will be a daunting task.124,125 However, some studies 
do  not  see  that  the  quantity  of  available  renewable  and  low-carbon  hydrogen  is  the  most 
pressing issue, as potential imports and production capacities in Europe are sufficient.126,127 
Please note our detailed discussion of this issue in section 3.5.1. 

3.2.3.  Legislative and regulatory barriers 

3.2.3.1. Regulation 

Despite a very well-advanced regulatory environment, the remaining incompleteness 
still creates insecurities.  

Many stakeholders are fairly positive that with the Hydrogen and Decarbonised Gas Market 
package  put  in  place  and  the  pending  rules  for  a  low-carbon  hydrogen  GHG  methodology 
spelled  out,  the  overall  regulatory framework  is  satisfyingly  complete.  However,  as long as 
there  are  remaining  discussions  and  no  final  decisions  on  the  GHG  methodology  DAs, 
insecurities remain on details. 

Harmonisation among Members States is lacking on both speed and ambition. 

Some stakeholders stated that harmonisation among Members States is lacking due to the 
different  legislative  velocities  and  ambition.  Also,  the  complexity  of  the  various  legislative 
measures  addressing  the  uptake  of  hydrogen  is  mentioned  and  the  rules  defined  in  the 
Delegated Acts are mentioned by about a fifth of the respondents to be “too restrictive”.  

While  local  specificities  need  to  be  taken  into  account,  national  regulations  should  be 
harmonised to enable the development of effective clean hydrogen trade in Europe.128 Within 
the EU this is soon implemented by the Hydrogen and Decarbonised Gas Market Package.  

Additionally,  an  official,  clear,  and  coherent  payment  framework  for  hydrogen  transmission 
between regions is missing, which would need to cover entry and exit fees and charges, or 
payments for supplied/ injected hydrogen. This limits business cases and delays projects from 
passing beyond the demonstration phase.129 Stakeholders, such as gas traders, emphasise 

124 IEA (2022) Northwest European Hydrogen Monitor 
125 European Clean Hydrogen Alliance (2021) Alliance Roundtables on Barriers and Mitigation Measures 
126 Renewable and Low-Carbon Fuels Value Chain Industrial (RCLF) alliance at EUSEW2023. Gearing up for the rollout of 
renewable and low carbon fuels! 
127 IEA (2022) Global Hydrogen Review 
128 IEA (2022) Global Hydrogen Review 
129 Gordon et al. (2023) Socio-technical barriers to domestic hydrogen futures  

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the  need for  transmission  fees to  be  adapted  such that  projects  can  reach viable business 
cases. 

3.2.3.2. International regulation and imports policy 

The  international  (global)  regulatory  environment  is  not  sufficiently  harmonised 
especially regarding carbon pricing and CCS. 

Furthermore,  the  regulatory  environment  with  the  above-mentioned  principles  needs  to  be 
increasingly  harmonised  globally  and  across  the  EU.  In  literature,  several  areas  are 
specifically mentioned, in which there is a lack of harmonisation: 

•  An internationally (globally) agreed framework for pricing carbon emissions is not yet in 
place. Despite CBAM incentivising third countries to implement pricing schemes. This 
hinders the development of a clean hydrogen market, hinders the international trade of 
hydrogen, and is a reason for hydrogen remaining economically unattractive in several 
use cases.130 

•  There is still no harmonised regulatory framework for international transport of hydrogen 

(via ship or pipelines), which is a barrier to international hydrogen trade.131  

•  For  natural  gas-based  low-carbon  hydrogen  projects  to  reach  the  Final  Investment 
Decision (FID), the creation of a well-defined legal and regulatory regime for CCS is a 
precondition. See also discussion paragraphs on certification. 

The definition of renewable hydrogen in the EU requires significant interpretation to be 
applied in potential exporting countries. 

Hydrogen  Guarantees  of  Origin  (GO)132  are  a  reliable  way  of  ensuring  customers  that  the 
hydrogen they buy is actually produced from renewable energies. Additionally, together with 
the  appropriate  certification  processes  they  can  provide  a  regulatory  base  for  the  trade  of 
clean  hydrogen  between  EU  Member  States  and  third  countries.133  Several  exporter  and 
importer countries such as Germany, France, the Netherlands, the EU as a whole, Australia 
and the UK have included certification schemes in their hydrogen strategies.134 

Some  stakeholders  indicate  there  is  a  lack  of  clarity  for  non-EU  countries  on  the  exact 
application of certification criteria both in and outside the EU, e.g. countries such as Canada, 
Egypt, or the US that are looking to export to the EU, as some of the requirements are closely 
linked  to  the  European  energy  system  and  regulations.135  Especially  the  applicability  of 
requirements such as on bidding zones is not necessarily straight forward on energy markets 
without similar concepts.  

130 Gordon et al. (2023) Socio-technical barriers to domestic hydrogen futures  
131 Gordon et al. (2023) Socio-technical barriers to domestic hydrogen futures  
132 GOs have the purpose of informing final consumers, while certification has the purpose of demonstrating legal compliance 
for target achievement and financial support under with the Renewable Energy Directive recast. 
133 European Clean Hydrogen Alliance (2021) Alliance Roundtables on Barriers and Mitigation Measures 
134 European Commission (2023) Commission sets out rules for renewable hydrogen 
135 King & Spalding (2023) Europe's Definition of Green Hydrogen (RFNBO) Adopted into EU Law 

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3.2.3.3. Definition and certification of renewable and low-carbon hydrogen 

While certification criteria are becoming increasingly well-defined, many stakeholders 
consider  the  requirements  as  complex  and  the  additionality  criterion  in  the  DAs  is 
considered detrimental to fast system integration. 

The  European  Commission  finalised  the  legislative  process  for  two  highly  anticipated 
Delegated  Acts,  which  have  now  become  EU  law,  by  publishing  the  EU's  definition  of 
renewable  hydrogen  on  June  20,  2023.  The  first  act  establishes  the  criteria  under  which 
hydrogen, hydrogen-based fuels, or other energy carriers can be classified as renewable fuels 
of non-biological origin (RFNBOs). The second act outlines a methodology for calculating the 
life-cycle greenhouse gas emissions and reductions associated with RFNBOs.136 In addition, 
guidance137 has been provided to the operators of the recognised voluntary schemes138 that 
can certify the production and consumption of hydrogen from renewable sources. While these 
acts provide clear guidelines for how RFNBOs need to be produced, some stakeholders still 
see  them  as  complex,  impractical  and  with  strict  production  requirements.  Especially  the 
requirements  concerning  additionality  have  been  mentioned  (e.g.  in  Hydrogen  Europe’s 
position  paper139)  as  legislative  barriers  that  will  increase  the  cost  of  hydrogen  in  Europe. 
Further,  some  stakeholders  emphasise  that  additionality  requirements  are  per-se  a 
detrimental requirement to energy system integration (additional renewable energy capacities 
per production unit of hydrogen do not allow the hydrogen production site to interact strongly 
with  the  existing  grid),  preferring  other  criteria,  such  as  “grid-serving”.  However,  all 
stakeholders accept that the DAs are adopted and wish to provide input to be considered in 
future discussions.  

The regulation on low-carbon hydrogen definition is pending. 

Several  stakeholders  emphasise  the  need  for  regulatory  clarity  with  regards  to  low-carbon 
hydrogen from all sources: fossil + CCS, nuclear, RCF. A fast deployment of a uniform GHG 
calculation method that should also apply to non-EU sources is mentioned several times. The 
upcoming methodologies, to be expected in 2024 or early 2025 (latest 12 month after entry 
into  force  of  the  Gas  and  Hydrogen  Package140),  will  apply  the  same  principles  regarding 
imported hydrogen as defined for renewable hydrogen in the RED.  

3.2.3.4. Permitting 

Permitting  remains  complex  and  challenging,  often  due  to  lack  of  digitalisation, 
personnel and technical knowledge. 

For new hydrogen projects of any kind, obtaining permits and other approvals is often a long 
and challenging process, which causes significant delays and cost increases, and discourages 
future projects.141  There  are  several  reasons  for  this.  Parts  of  the regulatory  framework for 
hydrogen have not been developed sufficiently or are outdated, this is particularly true for low-
carbon  hydrogen  using  CCS  technology.  Accordingly,  the  framework  for  authorisation  of 
hydrogen  projects  is  non-existent  or  lacks  clarity  in terms  of  relevant  authorities,  timelines, 
applicable  processes  and  more.142  The  permitting  processes  involve  complex  legal  and 

136 Directorate-General for Energy (2023) Renewable hydrogen production: new rules formally adopted 
137 https://energy.ec.europa.eu/system/files/2023-07/2023_07_26_Document_Certification_questions.pdf 
138 https://energy.ec.europa.eu/topics/renewable-energy/bioenergy/voluntary-schemes_en  
139 Hydrogen Europe (2022)  
https://hydrogeneurope.eu/wp-content/uploads/2022/05/2022.05.16_HE_PositionPaper_REPowerEU.pdf 
140 https://ec.europa.eu/commission/presscorner/detail/en/ip_23_6085 
141 IRENA (2023) Innovation Landscape for Smart Electrification 
142 European Clean Hydrogen Alliance (2021) Alliance Roundtables on Barriers and Mitigation Measures 

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administrative procedures between authorities, and the applicants receive scarce amounts of 
information and assistance.143  

Across the EU, the permitting process has not been harmonised and remains complex and 
unclear. Due to the perceived safety risks, electrolysers or hydrogen infrastructure projects 
typically need safety insurance, which requires additional permitting.144 Finally, the staff at the 
authorities  often  lack  the  technical  knowledge  for  the  authorisation  as  well  as  the  final 
certification,  even  if  they  have  prior  experience  with  renewable  energy  permitting.  These 
departments are also becoming increasingly understaffed as the frequency of applications for 
hydrogen projects increases.145 This latter point is also emphasised by several stakeholders 
from  the  survey  as  the  major  concern  regarding  slow  permitting  processes.  This  is  further 
supported  by  the  fact  that  only  5  Members  States146  reported  to  have  NRAs  (National 
Regulatory  Authorities)  with  competence  for  hydrogen  infrastructure.  Permitting  issues  are 
addressed  in  a  provisional  agreement  on  a  framework  covering  necessary  permitting 
authorisations for hydrogen from all sources in article 7 in the directive for “common rules the 
internal market in renewable and natural gases and in hydrogen” 147148.   

3.2.4.  Societal barriers 

3.2.4.1. Societal acceptance 

Lack  of  public  knowledge  on  hydrogen  and  derivatives  creates  risks  for  hydrogen 
application in larger scale. 

There  is  currently  still  a  lack  of  public  knowledge  surrounding  renewable  hydrogen  and  its 
benefits  for  the  energy  transition.  Furthermore,  the  adoption  of  hydrogen  technologies  – 
despite being currently one of the more widely accepted solutions to decarbonisation – may 
in the future with increasing use and reports of e.g. accidents create fears and insecurities in 
people.  Hydrogen  and  derivatives’  safety  is  another  aspect  that  is  important  for  hydrogen 
acceptance. Safety needs to be proven; however, the required hydrogen leakage detection 
technology is not yet at a sufficient technological reliability level (TRL).149 

Low-carbon hydrogen from fossil + CCS needs safe CCS technologies, but the public 
opinion remains sceptical.  

While there is an increasing alignment that CO2 can be stored safely, public perception of the 
technology  remains  sceptical.  This  hinders  the  implementation  of  projects  in  the  European 
Union.150  

3.2.4.2. Skilled Workforce 

Both authorities and project developers lack qualified specialists. 

Currently, there is a lack of qualified specialists to implement and oversee hydrogen projects. 
This shortage could further grow with a sharp increase in the number of hydrogen projects. As 

143 Gordon et al. (2023) Socio-technical barriers to domestic hydrogen futures  
144 IRENA (2023) Innovation Landscape for Smart Electrification 
145 European Clean Hydrogen Alliance (2021) Alliance Roundtables on Barriers and Mitigation Measures 
146 ACER (2023). Report on Investment Evaluation, Risk Assessment and Regulatory Incentives for Energy Network Projects 
147 https://ec.europa.eu/commission/presscorner/detail/en/ip_23_6085 
148 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52021PC0803 
149 IRENA (2023) Innovation Landscape for Smart Electrification 
150 https://www.mdpi.com/1996-1073/15/15/5716 

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previously stated, the expert shortages apply both to the private and the public side of activities 
related to project development and permitting.151,152 

3.3.   Recommendations on the update of hydrogen 

The  following  section provides  an  overview  of  recent  or  planned policies  and measures as 
well  as  recommendations  to  accelerate  the  uptake  of  hydrogen.  Stakeholder  feedback 
obtained from a survey, interviews and workshops is used to highlight, prioritise, and focus on 
certain  aspects.  The  recommendations  are  structured  along  the  major  barrier  categories 
(economic,  technical,  legislative  and  societal),  in  order  to  differentiate  renewable  or  low-
carbon  related  recommendations,  they  are  highlighted  respectively:  renewable,  low-carbon 
and overarching. Recommendations are generally addressing the European Commission, if 
other stakeholders are needed or addressed, they are explicitly mentioned. 

3.3.1.  Recent or planned policies and measures 

This section provides an overview of the recent or planned policies and measures at EU level 
on the uptake of hydrogen. It becomes clear that the overall EU regulatory framework is almost 
completed.  However,  decisive  packages  are  still  under  discussion  and  their  impact  on  the 
uptake of hydrogen remains to be seen. 

✓  Under  the  Renewable  Energy  Directive  (EU)  2018/2001,  two  delegated  acts 
((EU) 2023/1184 and (EU) 2023/1185) have been adopted on 13 February 2023. 
These  delegated  acts  provide  a  definition  for  renewable  fuels  of  non-biological 
origin  (RFNBOs),  i.e.  hydrogen  produced  from  renewable  electricity  and  the 
methodology on how to calculate the respective GHG emission savings.  

✓  The amended Renewable Energy Directive extends the scope to other industry 
sectors as well as raises the already existing binding targets of the Directive (EU) 
2018/2001. The following targets for the use of hydrogen have been agreed upon: 
Industry:  42%  of  the  hydrogen  should  come  from  RFNBOs  by  2030.  This 
• 
proportion shall be increased to 60% by 2035; 

•  Transport:  The  2030  target  is  more  ambitious  than  before.  It  requires  each 
Member State to mandate fuel suppliers to ensure that  renewable fuels and 
renewable electricity supplied to the transport sector result in either: 

o  A  renewable  energy  share  of  at  least  29%  in  the  final  energy 

consumption, or 

o  A greenhouse gas intensity reduction of at least 14.5%, 
o  This  also  includes  using  RFNBOs  as  intermediate  products  for 

conventional fuel production. 

Additionally,  each  Member  State  must  ensure  that  the  combined  share  of 
advanced biofuels, biogas and RFNBOs in the energy supplied to the transport 
sector is at least 1% by 2025 and 5.5% by 2030, with a minimum share of 1% 
from RFNBO in 2030. 

✓  The  FuelEU  Maritime  Regulation  aims  at  reducing  emissions  from  maritime 
transport  by accelerating  the  uptake  of  sustainable alternative fuels. Mandatory 

151 Gordon et al. (2023) Socio-technical barriers to domestic hydrogen futures  
152 European Clean Hydrogen Alliance (2021) Alliance Roundtables on Barriers and Mitigation Measures 

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GHG  reduction  targets  shall  boost  demand  from  ship  operators  to  uptake 
alternative  fuels.  The  approach  is  technology-neutral,  though  RFNBOs  can  be 
used  to  meet  the  targets.  Where  RFNBO  are  taken  into  account,  the  GHG 
emission  intensity  and  the  sustainability  criteria  of  REDII  have  to  be  met  and 
certified as such. 

✓  The  ReFuelEU  Aviation  regulation  on  ensuring  a  level  playing  field  for 
sustainable  air  transport  introduces  an  obligation  on  fuel  suppliers  to  integrate 
sustainable aviation fuels (SAF) to airlines at all EU airports. Renewable hydrogen 
for aviation and low-carbon aviation fuels as synthetic aviation fuels play a role in 
decarbonising  aviation  and  are  therefore  included  within  the  scope  of  the 
ReFuelEU  Aviation. In fact, the regulation sets out  a mandate  on  the uptake  of 
synthetic aviation fuels: 

minimum 2% SAF from 1 Jan 2025;  
minimum 6% SAF from 1 Jan 2030, of which a minimum of 0.7% of synthetic 

aviation fuels;  

minimum 70% SAF from 1 Jan 2050, of which a minimum of 35% of synthetic 

aviation fuels 

✓  By assigning a cost to carbon emissions, the EU ETS incentivises the uptake of 
low-carbon and renewable hydrogen. The revised EU ETS widens the scope of 
hydrogen  production,  now  including  all  production  methods  as  well  as reducing 
the threshold for production capacity to 5 tonnes per day (which will benefit smaller 
installations).  Further,  investments  in  the  generation  and  use  of  electricity  from 
renewable sources, including renewable hydrogen are being supported through 
the money gained through the emissions trading. 

✓  The Carbon Border Adjustment Mechanisms (CBAM) aims to address the risk 
of carbon leakage. In order to ensure a level-playing field with global production, 
the  CBAM  covers  emission-intensive  industries,  applying  the  scope  also  on 
hydrogen and derivatives such as ammonia imported into the EU. At the moment, 
imports of hydrogen are relatively low. As this situation is expected to change, the 
EU  wants  to  promote  the  uptake  of  renewable  hydrogen.  Through  including 
hydrogen in the CBAM, the EU not only wants to create a level-playing field with 
competition  from  non-EU  countries,  but  also  foster  the  decarbonisation  of 
hydrogen.  

✓  As the EU Taxonomy covers the manufacture of hydrogen and hydrogen-based 
synthetic  fuels,  it  drives  investments  towards  renewable  hydrogen.  To  fulfil  the 
criteria of a green activity and benefit from investments, hydrogen has to fulfil the 
following criteria: 

Lifecycle  GHG  emissions  savings  of  73.4%  for  hydrogen  and  70%  for 
hydrogen-based synthetic fuels relative to a fossil fuel comparator of 94 
gCO2eq/MJ. 

✓  The  Alternative  Fuels  Infrastructure  Regulation  sets  out  a  number  of 
mandatory national targets for the deployment of alternative fuel infrastructure in 
the  EU.  These  targets  also  include  the  establishment  of  a  hydrogen  refuelling 
infrastructure. Member States shall ensure that: 

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A  minimum  number  of  publicly  accessible  hydrogen  refuelling  stations  are 

deployed; 

Publicly  accessible  hydrogen  refuelling  stations  designed  for  a  minimum 
cumulative capacity of 1 tonne per day and equipped with at least a 700-
bar dispenser are deployed with a maximum distance of 200 km between 
them along the TEN-T core network; 

At  least  one  publicly  accessible  hydrogen  refuelling  station  is  deployed  at 

each urban node. 

✓  The purpose of the Gas and Hydrogen market decarbonisation package153 is 
to  design  the  transition  of  the  gas  sector  towards  renewable  and  low-carbon 
gases.  It  consists  of  a  proposal  for  a  regulation  and  for  a  directive,  which  set 
common internal market rules for renewable and natural gases and hydrogen. The 
directive aims at creating a regulatory and certification framework and provides a 
definition  for  low-carbon  hydrogen.  The  regulation  will  define  the  necessary 
framework for the future gas infrastructure to integrate a higher share of hydrogen 
and renewable gases. 

✓  The  Net  Zero  Industry  Act  provides  a  framework  of  measures  to  boost  the 
manufacturing  capacity  of  clean  energy  technologies.  To  scale  up  production, 
technologies  falling  under  the  scope  of  the  regulation  shall  be  subject  to  faster 
permit-granting processes as well as other benefits, such as state aid. Under the 
current proposal electrolysers and fuel cells are included. The Net Zero Industry 
Act  can  thus  lead  to  increased  implementation  in  projects  related  to  renewable 
hydrogen.  

✓  The EU Commission implemented the European Hydrogen Bank (EHB) as an 
instrument  to  foster  and  support  investments  in    hydrogen.  The  purpose  of  the 
EHB  is  to  bridge  the  investment  gap  in  addressing  the  financial  challenges  the 
hydrogen market is currently under. Through financing and funding, this initiative 
shall accelerate investments and production projects. 
In promoting technology development and deployment of a safe and sustainable 
hydrogen value  chain,  the  Clean  Hydrogen  Partnership contributes  to  the  EU 
Green  Deal  and  Hydrogen  Strategy.  The  Partnership  is  a  public-private 
partnership,  which  supports  research  and  innovation  in  the  field  of  hydrogen 
technologies.  The  Undertaking  is  funded  through  the  EU  Horizon  Europe 
programme and private members. 

✓ 

✓  The European Hydrogen Academy contributes to the hydrogen market through 
building  a  skilled  workforce  along  the  hydrogen  value  chain.  It  established  an 
alliance  of  universities  and  institutions,  which  can  help  in  building  a  skilled 
workforce with training and necessary education materials. 

✓  The Council adopted and renewed154 the emergency regulation laying down a 
framework  to  speed  up  the  permit-granting  process  for  renewable  energy 
projects. The regulation shall contribute to a secure and less volatile EU energy 

153 https://ec.europa.eu/commission/presscorner/detail/en/ip_23_6085 
154 https://energy.ec.europa.eu/news/commission-prolongs-energy-emergency-measures-12-months-2023-11-28_en 

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market.  Furthermore,  it  is  a  measure  for  a  rapid  increase  in  renewable  energy 
production. 

✓  There is an EU regulation for the development of the market for CO2 transport and 

storage under discussion155. 

✓  The CCS Directive sets out requirements for the selection of CO2 storage sites 

and requires operators to prove long-term storage.  

✓  Further  Financing  and  Funding  programmes,  including  IPCEI,  Horizon  Europe, 

InvestEU, LIFE programme and European Regional Development Fund. 

3.3.2.  Recommendations to address the technical barriers 

3.3.2.1. Technological development 

Recommendation 1: Further R&D on technical challenges 
Addressee: European Commission and Member States 
Related  policies  &  measures:  Clean  Hydrogen  Partnership,  Horizon  Europe,  other  R&D 
programs 
Expected impacts: 2040 

In order to profit from the respective benefits of the different technologies (SOEC - integrating 
industrial waste heat, improved electrical efficiency, reversable operation; and AEM - higher 
flexibility,  no  use  of  noble  materials),  research  and  development  activities  and  product 
development activities need to be further supported to enable large demonstration projects at 
commercial scale.156 Also the more market ready PEM and alkaline electrolysers can still profit 
from additional research and development to accompany their commercialisation. 

Maritime transportation of hydrogen should be established in parallel with production facilities. 
For the different maritime supply chains for hydrogen or its derivatives, the TRL needs to be 
increased for those process steps that are not yet at a commercial level:157 

•  Liquid Hydrogen (LH2): maritime transport, scale-up of liquification 
•  Synthetic LNG: CO2 transportation, CO2 sourcing 
•  Ammonia (NH3): NH3 cracking; safety issues 
•  Liquid Organic Hydrogen Carriers (LOHC): hydration and dehydration steps.  

Recommendation 2: Consider water scarcity issues 
Addressee: European Commission and Member States 
Related  policies  &  measures:  Industrial  Emissions  Directive,  Clean  Hydrogen  Partnership, 
Horizon Europe 
Expected impacts: 2030 

155 https://op.europa.eu/en/publication-detail/-/publication/bb3264da-f2ce-11ed-a05c-01aa75ed71a1/language-
en?WT_mc_id=Searchresult&WT_ria_c=37085&WT_ria_f=3608&WT_ria_ev=search&WT_URL=https%3A//energy.ec.europa.e
u/ 
156 https://www.clean-hydrogen.europa.eu/system/files/2022-02/Clean%20Hydrogen%20JU%20SRIA%20-
%20approved%20by%20GB%20-%20clean%20for%20publication%20%28ID%2013246486%29.pdf 
157 DVGW (2023) Kurzstudie zu Transportoptionen von Wasserstoff 

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To mitigate increasing water scarcity in hydrogen production areas, it is proposed in literature 
to  pay  more  attention  to  this  issue  in  the  future  by  investigating  the  impacts  of  hydrogen 
production  on  water  use  and  local  availability  of  water.158  Water  scarcity  for  industrial 
applications is to be addressed in the Industrial Emissions Directive (IED),159 this requires a 
differentiate approach in comparison to hydrogen production. 

Recommendation 3: Address upstream methane emissions. 
Addressee: European Commission and Member States 
Related policies & measures: CCS Directive, Methane Emissions regulation, Horizon Europe 
Expected impacts: 2030/2040 

To  reach  a  level-playing  field  between  differently  sourced  CH4  and  to  address  public 
opposition upstream CH4 emissions need to be addressed through strict requirements on life-
cycle  emissions  in  the  GHG  methodology,  for  both  domestically  sourced  methane  and 
especially  for  imported  methane,  if  used  for  hydrogen  production.  See  also  a  detailed 
discussion  in  section  3.5.2  and  Annex  6.5.  In  fact,  the  council  and  parliament  have  very 
recently proposed rules to tackle the issue.160 

On  the  long  run  also  hydrogen  upstream  emissions  could  become  an  issue  and  research 
should be funded to further investigate the issue.161 

3.3.2.2. Hydrogen Infrastructure and storage 

Recommendation 4: Share risks for infrastructure build-out through regulated markets 
and  appropriate  financing  and  funding  schemes  also  considering  energy  system 
integration aspects 
Addressee: European Commission and Member States 
Related policies & measures: Hydrogen and Gas Market Decarbonisation Package, Electricity 
Market Design 
Expected impacts: 2030 

Hydrogen  infrastructure  build-out  has  been  mentioned  as  key  across  all  stakeholder 
consultation.  Hydrogen,  methane  gases  and  electricity  systems  should  be  planned  in  co-
operation of the respective system operators already at an early stage.162 The coordinating 
role is now foreseen for ENNOH in the Gas and Hydrogen Package.163 

Stakeholders  suggest  applying  smaller  bidding  zones  (e.g.  regional  capacity  zones)  and 
locational pricing for renewable hydrogen production, in order to create market incentives for 
correct positioning of the electrolysers and to create the required revenue from the provision 
of flexibility services. At the very least however TSOs should provide transparency on where 
electrolysers could be located ideally to have a maximum grid-serving functionality. 

158 Hu et al. (2020) A Review of Technical Advances, Barriers, and Solutions in the Power to Hydrogen Roadmap 
159 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022PC0156R%2802%29&qid=1651130627889 
160 https://www.consilium.europa.eu/en/press/press-releases/2023/11/15/climate-action-council-and-parliament-reach-deal-on-
new-rules-to-cut-methane-emissions-in-the-energy-sector/ 
161 https://acp.copernicus.org/articles/22/9349/2022/ 
162 IRENA (2023) Innovation Landscape for Smart Electrification 
163 https://observcommon rules the internal market in renewable and natural gases and hydrogentory.clean-
hydrogen.europa.eu/media/news/hydrogen-and-decarbonised-gas-package-agreement-marks-milestone-european-energy-
policy 

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The bigger issue of optimal location of electrolysers remains a topic of high controversy and 
depends on many parameters.164 In the case of energy system integration and the provision 
of flexibility services, electrolysers should be located at nodal points of the energy grid165, also 
directly  affecting  the  ability  to  create  additional  revenue  through  the  balancing  and  other 
flexibility markets (potentially affecting system costs and thus end-consumer prices for both 
electricity  and  hydrogen).  However,  several  stakeholders  also  emphasise  the  need  for  co-
locating electrolysers near the demand centres, to avoid costly transport of hydrogen and e.g. 
enable the use of waste heat from the electrolysers. And in areas with weaker electricity grids 
or very high potentials for renewable energy production in Europe co-locating at the renewable 
energy production site may significantly reduce costs for grid expansion. To find the overall 
optimised location integrated planning is of highest importance and should consider all three 
aspects. 

A  hydrogen  pipeline  system  is  often  mentioned  as  a  solution  to  link  supply  with  demand 
centres. Both new and repurposed hydrogen pipelines will be needed. Repurposing existing 
natural  gas  pipelines  can  cut  investment  costs  by  50-80%  and  result  in  shorter  lead  times 
compared to new pipelines166 and is a solution that is often mentioned in literature. These cost 
savings  could  lead  to  lower  transmission  tariffs  and  improve  the  competitiveness  of  clean 
hydrogen. Based on the ambitious targets set by European countries, the hydrogen network 
development  needs  to  be  accelerated.167  While  some  stakeholders  suggest  requiring 
production  projects  to  be planned  together  with the required  infrastructure this may  lead to 
further  increasing  costs,  thus  risk-sharing  is  best  expanded  to  authorities  via  appropriate 
financing and funding schemes as recently announced for Germany168 and also implemented 
in Belgium or the Netherlands. Only sufficiently backed political will and regulated tariffs allow 
to build-out infrastructure and share the risks adequately across all involved stakeholders.  

Recommendation  5:  Support  Hydrogen  storage  development  through  geological 
surveys,  additional  revenue  streams  and  adjusted  transmission  fees  to  storage 
operators. 
Addressee: European Commission and Member States 
Related  policies  &  measures:  Clean  Hydrogen  Partnership,  Hydrogen  and  Gas  Market 
Decarbonisation Package, Electricity Market Design 
Expected impacts: 2030/2040 

The further development of hydrogen storage in salt caverns depends on additional geological, 
engineering  and  techno-economic  evaluations.169  Some  of  the  needed  research  includes: 
conducting  geological  surveys  while  implementing  cavern  leaching  methods,  conducting 
periodic surveys to monitor changes within the caverns during their operation, and performing 
a comprehensive characterisation of the site storage with the assistance of digital modelling 
development.170 Several hydrogen storage projects are being developed, such as the Delta 
Green project and the HyPSTER project in France, and the Green Hydrogen Hub Project in 
Denmark that expects to have a hydrogen storage capacity of 400 GWh by 2030.171 Further 

164 
https://netztransparenz.tennet.eu/fileadmin/user_upload/The_Electricity_Market/German_Market/Grid_customers/Kundenforum
_2021/2_Kundenforum_30_11_21_Vortrag_Quo-vadis-Elektrolyse.pdf 
165 https://green-planet-energy.de/presse/artikel/neue-studie-zeigt-vorteile-dezentraler-elektrolyseure 
166 IEA (2022) Northwest European Hydrogen Monitor 
167 IEA (2022) Northwest European Hydrogen Monitor 
168 https://www.offshore-energy.biz/germany-aims-to-set-up-hydrogen-core-network-by-2032/ 
169 Williams et al. (2022) Does the United Kingdom have sufficient geological storage capacity to support a hydrogen economy? 
Estimating the salt cavern storage potential of bedded halite formations 
170 Tarkowski (2019) Underground hydrogen storage: Characteristics and prospects 
Author links open overlay panel 
171 Green Hydrogen Hub (2023) Accelerate the integration of renewables 

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large-scale demonstration projects for hydrogen storage need to be supported in order to gain 
further geologic and techno-economic experience with geological hydrogen storage.172 

Additionally, some stakeholders emphasise the need for transmission tariff design considering 
the transmission activity in a future hydrogen grid to make viable business models (e.g. no 
double  charging)  and  to  consider  creating  additional  revenue  streams  on  non-regulated 
markets. 

Recommendation  6:  Better  understand  the  implications  of  CCU/S  through  scientific 
evaluations, and if needed, consider a CO2 infrastructure build-out.  
Addressee: European Commission and Member States 
Related  policies  &  measures:  CCS  Directive,  Methane  Emissions  Directive,  Hydrogen  and 
Gas Market Decarbonisation Package, Net-Zero Industry Act, Clean Hydrogen Partnership 
Expected impacts: 2040 

When asked for recommendations for the uptake of hydrogen, many stakeholders mentioned 
the  co-development  of  a  sufficient  CO2  infrastructure  and  CC(U)S  regulatory  framework. 
Regarding  opportunities  for  CCS  the  NZIA  proposal  includes  CO2  injection  capacities  in 
Chapter III. This is in large parts driven by the understanding that low-carbon hydrogen from 
fossil  fuels  with CCS  should also be  enabled to play  a  role  in  reaching  the  EU  ambition  to 
reach 10 million tonnes domestically produced hydrogen. In face of some sectors relying on 
circularity of carbon (e.g. chemical sector), more use cases of feasible CCU/S applications are 
needed.  It  is  advisable  to  evaluate  the  consequences  of  CCU/S  on  the  basis  of  scientific 
evaluations.  Therefore,  the  European  Commission  should  consider  funding  appropriate 
research  projects,  in  order  to  enable  a  science-based  decision  making  process  in  this 
controversially discussed topic.  

3.3.3.  Recommendations  to  address  the  economic  and  financial 

barriers 

3.3.3.1. Cost gap  

Recommendation 7: Remove fossil fuel subsidies  
Addressee: European Commission and Member States 
Related  policies  &  measures:  European  Trading  System,  Energy  Taxation  Directive, 
Competition Policy 
Expected impacts: 2030 
In  order  to  decrease  and  remove  the  cost  gap,  literature  sources  mention  a  variety  of 
measures and levers. One of these measures is increasing the price of fossil fuel alternatives 
by the  removal  of existing  fossil fuel  subsidies. Beyond  removing  subsidies,  carbon pricing 
can  also  strongly  influence  the  uptake  of  both  renewable  and  low-carbon  hydrogen.  For 
example  the IEA  predicts that  under  the so-called Announced  Pledges  Scenario (APS),  an 
increase of the carbon price to USD 135/tCO2 (not too far from today’s ~80€/tCO2) could lead to 
hydrogen from renewables (USD 2.5-3.5/kgH2) and hydrogen from natural gas with CCS (USD 
2.3-2.7/kgH2)  both  being  cheaper  by  2030  than  hydrogen  from  natural  gas  without  CCS 
(estimated at around USD 3/kgH2).173 It is thus advisable to also include discussions around 

172 IRENA (2023) Innovation Landscape for Smart Electrification 
173 IEA (2022) Northwest European Hydrogen Monitor 

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carbon  pricing,  upon  further  development  of  energy  system  integration  and  specifically  the 
uptake of hydrogen therein.   

Recommendation 8: Further develop existing subsidy concepts and sufficiently fund 
the respective financial pots to achieve the 2030 hydrogen targets 
Addressee: European Commission and Member States 
Related  policies  &  measures:  EU  Taxonomy,  European  Hydrogen  Bank,  Innovation  Fund, 
Connecting Europe Facility, IPCEIs and (other funding schemes) 
Expected impacts: 2030 

Base  assumption  on  subsidy  design  should  be  a  level-playing  field  across  all  actors  from 
renewable energies.174 However, eligibility and numbers are of the highest importance. E.g. 
the USA, through the Inflation Reduction Act of 2022 offers subsidies of up to USD 3/kgH2, 
which could bring the LCOH of renewable hydrogen production below 2 USD/kgH2 and thus 
make  it  competitive.175  In  response,  the  European  Commission  launched  the  European 
Hydrogen  Bank  that  is  designed  to  subsidise  both  EU  production  as well  as  the  imports  of 
renewable hydrogen and in the provisionally agreed electricity market design reform two-way 
contracts for difference are foreseen176. The German government, in turn, has launched the 
H2Global  double-sided  auction  programme  as  a  contracts-for-difference  (CfD)  scheme 
(explained  in  further  detail  in  the  section  entitled  “financing  and  funding”  below).  Further 
hydrogen-focused subsidy programs could further decrease or eliminate the cost gap in the 
EU. 

The EU and Member States could consider improvements to the current/planned support to 
hydrogen production by: 

a)  Use of carbon contracts-for-difference set against a benchmark fuel price per industry: 
Funds  from  the  CCfDs  are  paid  to  RNFBO  producers  and  when  combined  with  the 
electrolyser rebates (next paragraph) the CCfD funds would be sized to correctly fund 
the more expensive hydrogen from renewable sources with prices above those of fossil 
fuel  costs  +  ETS  allowance  price,  as  it  also  would  take  into  account  the  targeted 
electrolyser capex cost (electrolyser cost post-rebate). The total support to the RNFBO 
producer should be capped on a per kg basis to prevent double subsidy. The combined 
effect would achieve a targeted hydrogen cost per kg against a benchmark fossil fuel 
price, simultaneously incentivise electrolyser manufacturing capacity and send a strong 
signal to industries that need to invest in their own infrastructure to be technology ready 
for RFNBO. 

b)  Electrolyser rebates (CAPEX support) could be used to drive down costs and could be 
most effective by directly subsidising project owners in hard-to-abate carbon intensive 
industries. The electrolyser rebates could enable more electrolyser demand and bring 
forward manufacturing capacity. The rebate amount should be sized to reach a target 
electrolyser cost and therefore a targeted levelised cost of hydrogen. The rebates could 

174 BEE (2020) Sector integration statement 
175 IRENA (2023) Innovation Landscape for Smart Electrification 
176 https://www.consilium.europa.eu/en/press/press-releases/2023/12/14/reform-of-electricity-market-design-council-and-
parliament-reach-deal/?utm_source=dsms-
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be reduced each year as the production capacity is scaled and the electrolyser costs 
decrease. 

Stakeholders  further  emphasise  that  currently,  some  major  subsidies  e.g.  EEAG  and 
Innovation  fund  (limited  by  60%  funding  rate  of  IF)  are  not  foreseen  to  be  cumulative.177 
Especially large-scale projects such as IPCEIs should be able to collect further support.  

Recommendation  9:  Consider  expanding  funding opportunities to  low-carbon  H2 and 
provide clarity on conditions.  
Addressee: European Commission  
Related policies & measures: European Hydrogen Bank, EU Taxonomy 
Expected impacts: 2030 

Low-carbon hydrogen is currently excluded from funding opportunities such as the European 
Hydrogen  Bank,  due  to the  EHB’s  intrinsic  requirement to be  REDII-conform  for funding. It 
should be considered whether low-carbon hydrogen should also receive funding, especially 
with regards to carbon negative technologies, which will be needed on the long-term. This is 
a  controversial  topic  in  literature  and  among  stakeholders.  Further  research  and  political 
debate are needed to resolve this controversy.  

Recommendation 10: Enable additional revenue streams for electrolysers and consider 
electricity network tariff exemptions. 
Addressee: European Commission and Member States 
Related policies & measures: Electricity Market Design, Network Codes 
Expected impacts: 2030 

By  implementing  more  demonstration  projects  and  enacting  supportive  regulations, 
electrolysers have the potential to reduce production costs in the future. They can achieve this 
by  leveraging  additional  revenue  streams,  such  as  offering  grid-balancing  services  (e.g., 
restoration reserves or peak shaving) and other flexibility services (e.g., capacity firming or 
mitigating  grid  congestion).  The  ongoing  Demo4Grid  project  in  Austria  is  showcasing  the 
effectiveness of these approaches.178 

In  order  to  provide  flexibility,  new,  simplified  market  designs  might  be  required  that  allow 
electrolysers to participate in the system services market or that allow financial rewards for 
hydrogen  producers  for  providing  grid  balancing  services.179  Market  design  in  general  has 
been addressed in the electricity market reform.180 Further guidance has been prepared on a 
future  Network  Code  on  demand  response,181  defining  flexibility  contributions  and  rules  on 
aggregation, energy storage and demand curtailment and should potentially directly involve 
hydrogen stakeholders (i.e. electrolysis operators). 

Selling both by-product oxygen and low-temperature excess heat for district heating like in the 
HySynergy project182 would provide further revenue streams to close the cost gap. Especially 

177 https://climate.ec.europa.eu/system/files/2020-09/innovation_fund_cumulation_public_en.pdf 
178 Sunfire (2021) Demo4Grid Project Partners Successfully Install a 3.2 MW Pressurized Alkaline Electrolyzer 
179 IRENA (2021) Green Hydrogen Supply: A Guide to Policy Making 
180 https://www.consilium.europa.eu/en/press/press-releases/2023/12/14/reform-of-electricity-market-design-council-and-
parliament-reach-deal/?utm_source=dsms-
auto&amp;utm_medium=email&amp;utm_campaign=Reform+of+electricity+market+design:+Council+and+Parliame 
181 https://consultations.entsoe.eu/markets/public-consultation-networkcode-demand-
response/supporting_documents/Network%20Code%20Demand%20Response%20v1%20draft%20proposal.pdf 
182 FuelCellsWorks (2022) HySynergy announced as Lighthouse Project 

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regarding  excess  heat  the  third-party  access  to  district  heating  is  of  high  importance  (see 
discussions in chapter 4).  

A  large  lever  for  change  would  be  to  reduce  or  eliminate the  tariffs  that  apply  to  electricity 
(largest  contributor  to  OPEX  of  hydrogen  production)  that  is  consumed  for  hydrogen 
production, if the electrolyser is positioned or operated in a way not further congesting the grid. 
This could in principle be implemented through e.g. nodal pricing.183 

Further  levers  that  also  affect  the  cost  gap  are  mentioned  in  literature,  such  as  R&D  into 
electrolyser  technology,184  an  increased  electrolyser  production  capacity185  or  further 
governmental subsidy programmes will be discussed in the sections below related to other 
categories of barriers.  

3.3.3.2. Financing and funding 

Several  key  mitigants  are  discussed  in  literature  to  overcome  current  bankability  issues. 
Grants and loans can be given out to level the playing field with fossil alternatives. Many of 
these subsidy types were mentioned in the previous recommendation section on closing the 
cost gap. 

Recommendation 11: Consider defining binding targets for low-carbon hydrogen and 
specific to industry sectors. 
Addressee: European Commission  
Related  policies  &  measures:  EU  Taxonomy,  Amended  Renewable  Energy  Directive, 
ReFuelEU Aviation, FuelEU Maritime  
Expected impacts: 2030 

Besides subsidies, mandatory stipulations such as quotas (e.g. ReFuelEU Aviation, FuelEU 
Maritime, REDII amendments quotas for hydrogen use in e.g. industry and transport) are also 
effective  at  integrating  low-carbon  and  renewable  hydrogen  or  exclusively  renewable 
hydrogen and guaranteeing a sufficient market size. In order to scale-up the production and 
integration  of  renewable  and  low-carbon  hydrogen,  an  effective  framework  of  support 
mechanisms, including subsidy schemes and quotas, is needed.186  

Despite  the  wish  for  differentiation  and  specific  targets  where  possible,  for  the  long-term 
perspective  also  high-level  targets  are  considered  helpful.  Similar  to  the  2030  targets,  it  is 
suggested  to  set  the  target  for  2040  ambitious  enough.  With  publication  of  this  report  the 
Commission  has  recommended  to  achieve  90%  greenhouse  gas  emissions  reduction  by 
2040,  and  in  the  corresponding  impact  assessment  hydrogen’s  role  as  key  technology  is 
emphasised187.  

While RFNBOs have set quotas, in e.g. the maritime, road transport or air transport sector, 
low-carbon  hydrogen  (fossil+  CCS  and  nuclear-based)  remains  unmentioned.  The 
Commission could also consider setting demand targets for low-carbon hydrogen, which could 
help  to  develop  these  types  of  projects  and  reach  bankability  but  would  need  evaluation 
against the overall strategy of the EU Commission to prioritise renewable H2. Hence further 
detailed analyses will be needed here. 

183 Vp, Scjeodt et al (2022) Electricity Tariff Engineering for Integrated Energy Systems 
184 CMS (2021) Hydrogen law, regulations & strategy 
185 IRENA (2023) Innovation Landscape for Smart Electrification 
186 IEA (2022) Northwest European Hydrogen Monitor 
187 https://climate.ec.europa.eu/document/download/768bc81f-5f48-48e3-b4d4-e02ba09faca1_en 

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This  would  also  echo  action  20  of  the  ESI  Strategy  that  sets  out  to  “consider  additional 
measures to support renewable and low-carbon fuels, possibly through minimum shares or 
quotas  in specific  end-use sectors through the  revision  of  the  Renewable Energy Directive 
and building on its sectoral targets […]".  

3.3.3.3. Availability of hydrogen towards 2030 

To  address  the  potential  shortage  of  hydrogen,  several  recommendations  have  been  put 
forward,  including  the  expansion  of  infrastructure  (detailed  description  provided  below), 
enhancing  hydrogen  trade  policies  (as  outlined  in  the  regulatory  recommendations)  and 
implementing  additional  measures  such  as  scaling  up  electrolyser  manufacturing. 
Furthermore,  there  is  a  need  to  accelerate  the  ambitious  development  of  wind  and  solar 
capacity  to  significantly  increase  the  European  supply  of  hydrogen.  These  actions  will 
contribute to mitigating the potential hydrogen scarcity and ensuring a robust and sustainable 
hydrogen ecosystem.188 Which is also addressed by the Electrolyser Partnership (goal of 25 
GW per year in 2025) and in the Net-Zero Industry Act, which defines that electrolysers and 
fuel  cells  are  strategic  technologies  for  Europe’s  technological  sovereignty  and  for  these 
technologies, a benchmark of 40% of European manufacturing (for the deployment needs in 
2030) is set. See also detailed discussion in chapter 3.4.1. 

3.3.4.  Recommendations to address the legislative and regulatory 

barriers 

3.3.4.1. Regulatory 

Recommendation 12: Further improve gas market through transparency and protection 
of consumer interests. 
Addressee: European Commission and Member States 
Related policies & measures: Hydrogen and Gas Market Decarbonisation Package 
Expected impacts: 2040 

A well-defined organisational framework for a regulatory body to oversee market operations 
is to be maintained. Increased transparency should be provided to enhance the efficiency of 
network  investments  (some  survey  stakeholders  suggest  providing  transparency  through 
reporting requirements for “integration levels [of hydrogen] in fuels at members state level”). 
Finally,  unbundling  measures  could  be  implemented  within  the  hydrogen  value  chain  (as 
market players grow) to prevent a single market participant from exerting excessive control 
over  significant  segments  of  the  supply  chain  and  attaining  a  dominant  position.189  (as  for 
example in the district heating market). Major steps towards these goals are indeed foreseen 
in the Gas and Hydrogen package190. Transparency and consumer protection should however 
also remain the guiding principles of any further policies impacting the uptake of hydrogen, 
e.g. CO2 related markets. 

188 European Clean Hydrogen Alliance (2021) Alliance Roundtables on Barriers and Mitigation Measures 
189 ACER (2021) When and How to Regulate Hydrogen Networks 
190 https://observcommon rules the internal market in renewable and natural gases and hydrogentory.clean-
hydrogen.europa.eu/media/news/hydrogen-and-decarbonised-gas-package-agreement-marks-milestone-european-energy-
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Recommendation  13:  Adopt  rapidly  DAs  on  GHG  methodology  for  low-carbon 
hydrogen. 
Addressee: European Commission  
Related policies & measures: Hydrogen and Gas Market Decarbonisation Package 
Expected impacts: 2030 

To attain the Final Investment Decision (FID) for low-carbon hydrogen projects, a well-defined 
legal and regulatory framework for Carbon Capture and geological Storage (CCS) needs to 
be developed quickly.  

Since  low-carbon  hydrogen  is  especially  discussed  to  be  of  higher  relevance  towards  the 
2030s targets, it is of highest importance to reach fast clarity on the GHG  methodology for 
low-carbon hydrogen. This will help fostering domestic low-carbon hydrogen production.  

Recommendation 14: Strive for harmonisation where possible 
Addressee: European Commission and Member States 
Related policies & measures: n.a. 
Expected impacts: 2040 

Moreover,  the  global  and  EU  regulatory  landscape  needs  to  be  further  harmonised,  while 
acknowledging the need for accounting for local specificities, it is crucial to harmonise national 
regulations  to  facilitate  the  development  of  clean  hydrogen  trade  in  Europe.191  Also,  to 
enhance  harmonisation,  many  stakeholders  suggest  prioritising  the  fast  and  consistent 
implementation of the EU regulatory framework (instead of focusing on additional policies). 

A unified regulatory framework governing the international transmission of hydrogen through 
maritime  routes  and  pipelines  should  be  developed.  This  harmonisation  would  increase 
international hydrogen trade.192 It can be expected that issues around intra-EU coordination 
on  cross-border  trading  will  be  addressed  by  the  newly  created  ENNOH  as  defined  in  the 
provisionally agreed Hydrogen and Decarbonised Gas Market package. 

Efforts  should be  made toward  a  globally  accepted  framework for  carbon  emission  pricing, 
which  has  yet  to  be  established.  This  framework  would  facilitate  the  development  of  a 
hydrogen  market,  improve  international  hydrogen  trade,  and  contribute  to  the  economic 
viability of hydrogen in several applications.193 

Recommendation 15: Develop EU-level regulatory sandboxes for hydrogen. 
Addressee: European Commission and Member States 
Related  policies  &  measures:  Net-Zero 
Decarbonisation Package, Amended Renewable Energy Directive 
Expected impacts: 2030 

Industry  Act,  Hydrogen  and  Gas  Market 

Regulatory  sandboxes,  as  also  foreseen  in  the  NZIA,194  are  critical  for  a  new  sector  like 
renewable hydrogen. They allow innovation to be tested in real projects and under regulatory 
oversight, allowing assessments of potential regulatory frameworks and the resulting effects 
on  business  models  and  operations.  Some  stakeholders  emphasise  the  need  for  these 
sandboxes  in  the  context  of  infrastructure  build-out;  they  should  cover  technical  and 

191 IEA (2022) Global Hydrogen Review 
192 Gordon et al. (2023) Socio-technical barriers to domestic hydrogen futures  
193 Gordon et al. (2023) Socio-technical barriers to domestic hydrogen futures  
194 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52023PC0161 

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coordination aspects to enable “learning by doing”. Member States have so far mainly focused 
on  regulatory sandboxes  on  electricity,195  and legislation  and guidance  at  the EU  level  can 
help  address  this  issue.  Some  concrete  hydrogen  related  examples  are  mentioned  in  the 
SWD(2023) 277/2 of 29 August 2023.196 

3.3.4.2. Definition and Certification of Hydrogen 

Recommendation 16: Consider (further) differentiation of low-carbon hydrogen into at 
least fossil + CCS and electrolytic low-carbon hydrogen. 
Addressee: European Commission  
Related  policies  &  measures:  Hydrogen  and  Gas  Market  Decarbonisation  Package,  EU 
Taxonomy 
Expected impacts: 2040 

The  current  and  forthcoming  regulatory  framework  primarily  defines  low-carbon  hydrogen 
based on the CO2 reduction threshold and the energy content derived from non-renewable 
sources.  However,  when  considering  energy  system  integration,  it  is  important  to 
acknowledge  that  the  impact  on  the  electricity  grid  can  vary  between the two types  of  low-
carbon hydrogen: electrolytic low-carbon hydrogen and fossil fuel-derived hydrogen coupled 
with carbon capture and storage (CCS). Further understanding the different implications on 
system integration could therefore help to better define the strategic targets in an advancing 
energy system integration strategy. 

Recommendation  17: Address  global  competition  and  hold  further Q&A  sessions on 
applicability of EU requirements in non-EU countries. 
Addressee: European Commission  
Related  policies  &  measures:  Amended  Renewable  Energy  Directive,  Carbon  Border 
Adjustment Mechanism 
Expected impacts: 2030 

There  is  an  increasing  global  demand  and  resulting  competition  for  renewable  hydrogen 
imports,  particularly  with  Asian  countries,  where  different  regulatory  standards  apply,  and 
substantial  subsidies  are  offered.  Stakeholders,  from  diverse  backgrounds  (especially 
hydrogen  producers  and  distributors),  emphasise  the  need  for  a  level-playing  field  for 
hydrogen sourced from domestic producers and imported hydrogen, for example requiring the 
consideration of transportation emissions in life-cycle assessments. In the case of renewable 
hydrogen,  for  example,  application  of  some  of  the  DA’s  requirements  require  a  level  of 
interpretation that may still lead to unbalance between EU and non-EU hydrogen producers. 
Further,  CBAM  and  RED  apply  different  methodologies  for  determination  of  the  respective 
GHG emissions.  

Remaining  unclarities  should  best  be  addressed  through  further  Q&A  sessions  as  recently 
conducted.197  

Recommendation 18: Expand on the concept of PPAs (long-term) to enable long-term 
procurement of electricity and reduce associated planning risks of hydrogen projects. 
Addressee: European Commission  

195 Trinomics and Fraunhofer ISI (2023) Study on Regulatory Sandboxes in the Energy Sector   
196 swd_2023_277_f1.pdf (europa.eu) 
197 https://energy.ec.europa.eu/system/files/2023-07/2023_07_26_Document_Certification_questions.pdf 

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Related  policies  &  measures:  Electricity  Market  Design,  Hydrogen  and  Gas  Market 
Decarbonisation Package  
Expected impacts: 2030 

To  ensure  that  electrolysers  produce  hydrogen  in  a  sustainable  manner,  renewable  power 
purchase  agreements  (PPAs)  can  be  used.  The  utilisation  of  renewable  PPAs  with  close 
temporal matching presents a motivation to increase renewable power supply and produce 
hydrogen  exclusively  during  periods  of  high  renewable  generation.  This  approach  reduces 
emissions  without  influencing  electricity  prices.198  This  means on  a more general  level  that 
hydrogen  production  needs  to  reflect  the  availability  of  renewable  electricity.  Due  to  the 
complex  interactions  of  PPAs  also  with  competition  law  the  Commission  should  support 
research to explore legal barriers further and lead the market towards reliable PPAs.199  How 
to  handle  PPAs  is  streamlined  in  the  recent  Parliament  and  Council  agreement200  on  the 
Electricity Market Reform, leaving large freedom with the MSs. 

3.3.4.3. Permitting 

Recommendation  19:  Further  accelerate  permitting  processes  especially  through 
increasing hydrogen competence in NRAs and digitalisation. 
Addressee: European Commission and Member States 
Related policies & measures: Emergency Regulation on Permit-Granting, European Hydrogen 
Academy, Net Zero Industry Act 
Expected impacts: 2030 

The  objective  put  forward  by  the  stakeholders  is  to  keep  simplifying  the  permitting 
processes, allowing stakeholders to construct electrolysers (being already addressed 
in  the  upcoming  NZIA)  and  hydrogen  infrastructure  more  efficiently  and  cost-
effectively.  Simultaneously,  these  measures  will  minimise  project  uncertainties  and 
facilitate  project  management.  Specific  regulatory  hydrogen  frameworks  should  be 
implemented into national law across all Member States in order to provide the basis 
for  an  appropriate,  standardised  permitting  framework.  To  clarify  the  appropriate 
permitting processes, national hydrogen permitting manuals could be adopted as for 
example the case for Portugal201. Furthermore, Member States should ensure that the 
right kinds of skills and resources are provided to the permitting authorities to deal with 
all  requests.202  This  could  for  example  be  supported  at  EU  level  by  the  European 
Hydrogen  Academy  suggested  below,  this  should  be  further  backed  by  IT 
tools/digitalisation. 

Additionally,  fast-track  permitting  procedures203  and  “one-stop  permitting  shops”  are 
strongly recommended.204 These one-stop shops have already been implemented in 
Portugal (and e.g. South Korea), where they are used for offshore wind parks, and by 

198 Parkes (2022) Hourly electricity matching is the only reliable way to reduce emissions from green hydrogen: study 
199 IRENA (2023) Innovation Landscape for Smart Electrification 
200 https://www.consilium.europa.eu/en/press/press-releases/2023/12/14/reform-of-electricity-market-design-council-and-
parliament-reach-deal/ 
201 IAPMEI (2021). Guia do Promotor "Legislação e Regulação para a Economia do Hidrogénio 
202 European Clean Hydrogen Alliance (2021) Alliance Roundtables on Barriers and Mitigation Measures 
203 European Clean Hydrogen Alliance (2021) Alliance Roundtables on Barriers and Mitigation Measures 
204 IRENA (2023) Innovation Landscape for Smart Electrification 

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the regional Chinese authorities in Shanghai, Shanxi and Inner Mongolia in order to 
open a “green channel” for the approval of hydrogen energy projects.205,206  

3.3.5.  Recommendations to address the societal barriers 

3.3.5.1. Skilled workforce 

Recommendation 20: Expand on concepts such as the European Hydrogen Academy. 
Addressee: European Commission  
Related policies & measures: European Hydrogen Academy 
Expected impacts: 2030 

Skilled  workforce  is  given  more  emphasis  (by  at  least  six  of  the  stakeholders)  over  the 
acceptance  issue  (mentioned  by  only  two  stakeholders).  Several  roundtables  have  put 
emphasis  on  tackling  the  challenge  of  upskilling  and  reskilling  the  workforce  in  line  with 
hydrogen  developments  to  avoid  shortages  of  occupational  profiles,  which  could  quickly 
become a bottleneck. Member states are therefore encouraged to provide the right kinds of 
trainings. This could be supported via different national or EU support schemes, such as the 
upcoming  EU  hydrogen  Academy207,  in  order  to  avoid  the  lack  of  availability  of  a  skilled 
workforce  being  a  barrier  to  the  adoption  and  integration  of  hydrogen.208  Also  the  NZIA 
explicitly addresses the issue of capacity building in Chapter V209. 

3.3.5.2. Societal acceptance 

Recommendation  21:  Transparent  testing  of  safety  of  hydrogen  and  derivatives  and 
CO2-related infrastructure. 
Addressee: European Commission and Member States 
Related  policies  &  measures:  Horizon  Europe,  Union  certification  framework  for  carbon 
removals 
Expected impacts: 2030/2040 

For  low-carbon  hydrogen  (from  CCS),  the  safe  capture  and  geological  storage  of  carbon 
dioxide should be demonstrated to reduce public opposition and project delays.210 Important 
steps towards reaching a publicly acceptable level of confidence have been proposed as part 
of the Regulation of the European Parliament and the Council establishing a Union certification 
framework  for  carbon  removals211.  This  proposal  aims  at  establishing  an  independent 
certification for carbon removals.  

In  order  to  raise  user  confidence  in  the  safety  of  hydrogen,  new  generations  of  hydrogen 
leakage detectors should be developed. Possible solutions would be to base the technologies 
on  acoustic,  laser  scanning,  optical  fibre  sensors,  infrared,  odorised  molecules  or  strain 
gauge-based  technologies.  Also,  existing  detection  technologies  should  be  improved 

205 IRENA (2023) Innovation Landscape for Smart Electrification 
206 Shanghai Municipal Development & Reform Commission (2022) Notice on Printing and 
Distributing the Medium and Long-Term Plan for the Development of Hydrogen Energy Industry 
in Shanghai (2022-2035) 
207 European Commission (2023) European Hydrogen Academy 
208 European Clean Hydrogen Alliance (2021) Alliance Roundtables on Barriers and Mitigation Measures 
209 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52023PC0161 
210 Petrounias et al. (2022) Current CO2 Capture and Storage Trends in Europe in a View of Social Knowledge and 
Acceptance. A short review  
211 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022PC0672 

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regarding  measuring  range,  tolerance,  temperature  and  pressure  ranges  and  response 
times.212 Further, derivatives need to be carefully assessed with regards to their toxic nature. 

Recommendation  22:  Keep  emphasising  the  opportunities  for  a  just  transition  by 
hydrogen technologies. 
Addressee: European Commission and Member States 
Related  policies  &  measures:  Just  Transition  Fund,  Recovery  and  resilience  Facility, 
European Regional Development fund 
Expected impacts: 2030 

To counter people’s fear of not benefiting from a switch to hydrogen, there needs to be an 
ongoing discussion about what a “just transition” could look like. This transition would involve 
an  analysis  of  the  societal  implications  of  the  energy  transition  with  a  focus  on  the 
competitiveness  of  the  economy,  geographies,  and  jobs.213  Here  the  impacts  of  energy 
imports  to,  for  example,  further  fund  existing  industries,  and  possibly  new  opportunities  in 
locations of “old” industries, need to be better understood. On any real wealth risks already 
identified, the EU offers several opportunities to connect hydrogen-related projects with e.g. 
the Just Transition fund, Recovery and resilience facility and generally the European Regional 
Development fund. So, hydrogen in general is particularly well suited in its potential to keep 
value creation in Europe.  

3.4.  Additional  aspects  analysed  concerning  the  uptake  of 

hydrogen and other low-carbon gases 

3.4.1.  Feasibility  and  costs  of  meeting  EU  ambition  in  hydrogen 
production capacity exclusively based on renewable sources 

The REPowerEU plan targets production of 10 million tonnes of renewable hydrogen 
per year. 

Issued in 2022, the REPowerEU plan targets an acceleration of the clean energy transition 
and a more resilient energy system in the EU.214 It builds on the previously issued Fit for 55 
package of proposals and addresses the four areas of saving energy, rapidly substituting fossil 
fuels, diversifying energy sources, and smartly combining investments and reforms. One key 
aspect  is  the  shift  away  from  (Russian)  natural  gas,  coal,  and  oil,  towards  fossil-free 
hydrogen.215 

The  REPowerEU  plan  clearly  focuses  on  “renewable  hydrogen”,  with  the  explicit  goal  to 
achieve  10 million  tonnes  (Mtons)  of  annual  domestic  renewable  hydrogen  production  by 
2030, accompanied by another 10 million tonnes annually of renewable hydrogen imports into 
the EU. 

Reaching the REPowerEU goal with renewable hydrogen faces multiple challenges. 

212 IRENA (2023) Innovation Landscape for Smart Electrification 
213 Renewable and Low-Carbon Fuels Value Chain Industrial (RCLF) alliance at EUSEW2023. Gearing up for the rollout of 
renewable and low carbon fuels! 
214 European Commission (2022) COM/2022/230 final 
215 European Commission (2022) Commission staff working document. Implementing the Repower EU action plan: Investment 
needs, hydrogen accelerator and achieving the bio-methane targets 

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This section aims at investigating the feasibility and costs of achieving a domestic production 
of 10 Mtons of hydrogen purely from renewable electricity. The section provides information 
on the required renewable electricity, electrolysis project development, electrolyser capacity, 
and  systems  integration  aspects.  Besides,  it  sheds  light  on  the  expected  costs.  Finally,  it 
discusses the potential advantages and disadvantages of tapping into “low-carbon hydrogen”, 
such as electrolytic hydrogen from nuclear power, hydrogen from fossil sources with carbon 
capture and storage, and recycled carbon fuel hydrogen, in order to reach the goal. 

The main challenge is the scale up of renewable electricity generation. 

Firstly, scaling up the domestic production of hydrogen to 10 Mtons annually requires further 
additional  renewable  electricity  production  of  approximately  500-600  TWh  per  year.216  The 
total investment costs are estimated to be 335-471 billion Euros, with 200-300 billion Euros 
required for additional renewable electricity generation.217 Assuming that a large share of this 
electricity will be traded in the form of PPAs, the recent Reform of the Electricity Market Design 
foresees that an additional 220 TWh – 500 TWh per year of renewable PPAs are needed by 
2030.218  

In  the  course  of  the  REPowerEU  planning,  additional  demand  was  modelled  to  see  how 
demand  will  play  into  the  overall  net  installed  power  capacity  in  2030.  The  resulting  total 
installed capacity is 592 GW for solar and 510 GW for wind.219 In this scenario, hydrogen will 
make up a considerable share of total renewable electricity demand in the EU. The technical 
potential in the EU for renewable electricity, at over 10,000 TWh/year, exceeds the sum of 
future demand from other sectors and this additional demand for renewable hydrogen.220 This 
holds true not only on EU level, but also at a regional level.  

The vast majority of regions in the EU and UK (81%) exhibit more than enough renewable 
electricity  generation  potential  to  cover  the  total  future  local  electricity  demand  plus  the 
electricity  demand  for  producing  hydrogen  to  substitute  all  currently  used grey  hydrogen  in 
that  location.221  All  remaining  regions  could  achieve  this  with  some  renewable  electricity 
imports from neighbouring regions.222 However, political action, including action at EU level, 
is needed to turn this potential into reality, as multiple stakeholders note in the survey. Nine 
out  of  37  stakeholders  explicitly  refer  to  the  issue  of  availability  of  sufficient  renewable 
electricity. For example, one survey participant noted the feasibility of the REPowerEU goal: 
“This target will be very difficult to achieve due to the need to increase massively the renewable 
power production in Europe [...]”. Consequently, stakeholders have called for an increase in 
the  renewable  electricity  target  to  45%  or  more  by  2030.223  Furthermore,  streamlining  the 
permitting  process  of  renewable energy  projects,  as requested  by multiple stakeholders,  is 
already  planned  by  the  European  Commission.224  The  need  for  new  installations  could  be 
somewhat reduced by considering existing renewable electricity plants outside of any support 
schemes (such as fixed feed-in tariffs) as additional.225 Moreover, the Delegated Acts under 

216 Compare e.g. A. Battaglini and A. Ceglarz (2023) The role of hydrogen in a future, lowcarbon, and secure European energy 
system - Discussion Paper 
217 European Commission (2022) Commission staff working document. Implementing the Repower EU action plan: Investment 
needs, hydrogen accelerator and achieving the bio-methane targets 
218 European Commission (2023) Reform of Electricity Market Design (Commission staff working document) 
219 International Energy Agency (2022) Is the European Union on track to meet its REPowerEU goals? 
220 G. Kakoulaki, et al. (2021) Green hydrogen in Europe – A regional assessment: Substituting existing production with 
electrolysis powered by renewables 
221  G. Kakoulaki, et al. (2021) Green hydrogen in Europe – A regional assessment: Substituting existing production with 
electrolysis powered by renewables 
222  G. Kakoulaki, et al. (2021) Green hydrogen in Europe – A regional assessment: Substituting existing production with 
electrolysis powered by renewables 
223 See also Hydrogen Europe (2022) Delivering REPowerEU through a strong European hydrogen industry. 
224 European Commission (2022) Commission staff working document. Implementing the Repower EU action plan: Investment 
needs, hydrogen accelerator and achieving the bio-methane targets 
225 Hydrogen Europe (2022) Delivering REPowerEU through a strong European hydrogen industry 

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the  Renewable  Energy  Directive  provide  for  a  ”grandfathering  clause”  on  additionality  for 
projects commissioned before 2028 in order to avoid that early movers need to consider two 
very different periods of PPA contracts in their projects. 

The second challenge is the scale up of renewable hydrogen project development. 

Secondly,  for  the  goal  of  10  Mt  of  annual  H2  production,  approximately  90-100 GW  of 
electrolyser capacity are required in the EU. For comparison, at the end of 2022 there were 
close to 700 MW of electrolyser capacity installed globally.226 Looking at official electrolysis 
project announcements in the European Union, made by project developers, over 4 GW are 
announced for 2024 already. Globally, for 2030, a total of almost 420 GW in projects had been 
announced  already  at  the  end  of  2023.  However,  it  must  be  noted  that  46%  of  those 
announced projects are in an early stage and 48% are in the stage of feasibility study. Only 
6%  of  announced  projects  are  operating  or  have  taken  final  investment  decision.227￼ 
Developers in the EU have announced projects with about 125 GW of capacity for 2030. Most 
of these projects are in an early stage or feasibility stage.  

As  publications  and  survey  responses  show,  a  crucial  lever  for  the  achievement  will  be 
improved project permitting. As one respondent notes: “Securing rapid development […] and 
permitting is essential […]”. Currently, obtaining permits for new hydrogen projects is complex 
and  lengthy.  The  complexity  is  further  increased  for  projects  that  include  co-location  of 
renewable  energy  plants.  For  example,  one  survey  respondent  states:  “Such  a  huge 
development of renewables in Europe must be accompanied by the relevant administrative 
workforce to guarantee an efficient permitting process.” In total, when asked "What needs to 
be done to ensure it [i.e. the 2030 goal] can be achieved?”, six respondents out of 29 refer to 
permitting issues. This is mirrored by literature which implies that lengthy permitting processes 
can lead to higher costs and hamper investments in hydrogen projects.228 229 First countries 
are planning to improve the permitting process. For example, the German federal government 
has announced to introduce a “Hydrogen Acceleration Law” to adequately adjust and simplify 
the regulatory and legal framework for hydrogen project permitting.230 

Academic research based on probabilistic technology diffusion models has shown that if the 
scaling  up  of  electrolyser  capacity  happens  at  a  similar  speed  as  historical  PV  and  wind 
production upscaling, this will most likely (99.8%) not suffice to reach 100 GW in 2030. Instead, 
with  a  probability  of  over  95%,  the  electrolyser  capacity  will  be  less  than  70  GW  in  2030. 
Furthermore, there is a high probability (over 75%) that less than 1% of final energy in the EU 
is covered by domestically produced renewable hydrogen in 2030. In order to reach a higher 
diffusion speed, emergency-like special political coordination, regulation and financial support 
are  needed,  similar  to  wartime  industry  programs.  Under  the  assumption  of  such 
“unconventional growth”, the probability of reaching the 100 GW goal increases to 49%.231 

The third challenge is the scale up of electrolyser manufacturing capacity. 

Thirdly,  the  market  upscaling  of  electrolyser  manufacturing  capacity  is  one  of  the  critical 
bottlenecks  for  the  mass  production  of  renewable  hydrogen.232  In  March  2022,  the 
Commission  supported  the  industry  commitment  to  a  tenfold  increase  of  its  electrolyser 

226 IEA (2023), Global Hydrogen Review 2023, IEA, Paris https://www.iea.org/reports/global-hydrogen-review-2023, License: 
CC BY 4.0  
227 IEA (2023), Global Hydrogen Review 2023, IEA, Paris https://www.iea.org/reports/global-hydrogen-review-2023, License: 
CC BY 4.0 

228 S. Benz (2023) Genehmigungsrecht für Elektrolyseure – Änderungen der planungsrechtlichen Grundlagen. 
229 IRENA (2023) Innovation landscape for smart electrification 
230 German National Ministry for Economy and Climate Action (2023), Update of the National Hydrogen Strategy (German). 
231 A. Odenweller et al. (2022) Probabilistic feasibility space of scaling up green hydrogen supply 
232 A. Odenweller et al. (2022) Probabilistic feasibility space of scaling up green hydrogen supply. 

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234

manufacturing capacity from 1.5 GW/year at the time233
 to 17.5 GW/year in 2025.235 As of 
May 2023, Europe’s operational electrolyser manufacturing capacity stood at 3.11 GW/year, 
with additional 2.64 GW/year planned by the end of 2023. Looking ahead to 2025, ongoing 
projects  were  expected  to  raise  the  manufacturing  capacity  to  7.65  GW/year.236  Significant 
amounts  of  manufacturing  capacity  will  therefore  be  needed  in  addition  to  these  ongoing 
projects. Very recent reports237 show that globally and in the EU the nameplate manufacturing 
capacities now seem to exceed the current market demands, indeed sending positive signals 
regarding a potential insufficiency. A sign that the above discussed “unconventional growth” 
might  be  feasible238  with  regard  to  this  industry  goal,  the  European  Commission  has 
announced  to  set  an  “enabling  regulatory  framework”,  create  financing  options.239,240  The 
surveyed  stakeholders  mention  this  aspect  much  less  frequently  than  the  availability  of 
renewable  electricity  and  the  project  development/  permitting  issues.  The  two  respondents 
who mention this aspect, do not seem to regard it as unfeasible (“If scale up of electrolysers 
is possible which should be managed by the manufactures now, it is possible.”; “I think it would 
be  more  dependant  [sic]  on  the  manufacturing  capacity  of  the  equipment  (electrolysis)”. 
Comparing  these  few  replies  to  the  larger  number  of  replies  in  the  survey  about  the 
renewables’  build-out  it  becomes  evident  that  both  survey  and  literature  review  imply  that 
electrolyser manufacturing capacity is a much less critical bottleneck for the 2030 goals than 
the build-out of renewable electricity capacity. This is further supported by the fact that the 
European Commission addresses manufacturing capacities via the NZIA, including e.g. the 
implementation  of  one-stop-shops 
for  net-zero 
technologies including electrolyser manufacturing. 

to  accelerate  permitting  processes 

The  fourth  challenge  is  the  temporal  and  spatial  integration  of  renewable  hydrogen 
plants into the overall energy system. 

Fourthly,  the  targeted  renewable  hydrogen  production  in  the  EU  has  interactions  with  the 
energy system. Here, the rules for renewable hydrogen foster feasibility, especially until Jan. 
1st,  2030,  as  they  rather  promote  a  rapid  uptake  of  renewable  hydrogen  by  relaxing  the 
required temporal correlation to monthly granularity, the spatial correlation to bidding zones, 
and provide some exceptions for the additionality rules.  

Regarding  the  temporal  integration  with  the  energy  system  (often  covered  under  the  term 
“flexibility”) the most important effect is that, if hydrogen must be produced from renewable 
sources, the electrolysers have to adapt to the volatility of the renewable energy source, i.e. 
absorb  this  volatility.  This  decreases  volatility  in  the  overall  energy  system,  can  reduce 
curtailment  in  renewable  generation  (depending  on  the  location  of  the  electrolyser  –  see 
geographic correlation) and increases the value of renewable electricity.241,242,243,244 Moreover, 
this  also  fosters  the  use  of  hydrogen  as  long-term  storage,  because  electrolysers  have  an 
incentive  to  be  operated  in  times  of  availability  of  cheap  renewable  electricity.  This  effect 

233 Measured in terms of hydrogen output; 2.5 GW if measured in terms of electricity input and assuming an  
electrolyser efficiency of 70% 
234 European Clean Hydrogen Alliance (2022) European Electrolyser Summit Brussels, 5 May 2022 Joint Declaration 
235 European Commission (2022) Hydrogen: Commission supports industry commitment to boost by tenfold electrolyser 
manufacturing capacities in the EU 
236 Clean Hydrogen Observatory (2023) The European hydrogen market landscape 
237  https://www.hydrogeninsight.com/electrolysers/severe-overcapacity-the-global-supply-of-electrolysers-far-outstrips-demand-
from-green-hydrogen-projects-bnef/2-1-1618327 
238  Hydrogen Europe (2022) Delivering REPowerEU through a strong European hydrogen industry 
239 European Commission (2022) Commission staff working document. Implementing the Repower EU action plan: Investment 
needs, hydrogen accelerator and achieving the bio-methane targets 
240 Hydrogen Europe (2023) Critical Raw Materials Act – Hydrogen Europe’s views 
241 F. vom Scheidt et al. (2022) Integrating hydrogen in single-price electricity systems: The effects of spatial economic signals 
242  IRENA (2023) Innovation landscape for smart electrification 
243 Oliver Ruhnau (2022) How flexible electricity demand stabilizes wind and solar market values: The case of hydrogen 
electrolyzers  
244 European Commission (2019) COM/2023/148 final 

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becomes larger as the share of fluctuating renewable electricity in the system grows above 
74% of total installed capacity and flexibility needs increase significantly.245  

Regarding the spatial integration with the energy system, the currently coarse requirements 
(i.e. bidding zone level) make it easier to develop hydrogen projects, but also forego efficiency 
gains  from  locating  the  electrolysers  at  nodes  with  low  actual  electricity  costs  which  would 
decrease curtailment of renewable energy and associated curtailment and redispatch costs.246 
Besides, cross-border systems integration has a decisive effect. For instance, a former METIS 
study247 – based on the former goal of 5 Mtons per year of domestic hydrogen production in 
the  EU  –  finds  that  with  optimal  cross-border  hydrogen  pipeline  capacity  the  need  for 
electrolyser capacity decreases to 42 GW, compared to 53 GW under a business-as-usual 
scenario.  

The fifth challenge is financing. 

Finally, the REPowerEU plan predicts investment needs for important hydrogen infrastructure 
of about 50-75 billion Euros for electrolysers, 28-38 billion Euros for EU-internal pipelines and 
6-11 billion Euros for storage, all by 2030. In addition to the Fit-for-55 package, this means an 
additional 27 billion Euros of direct investment in electrolysers and distribution of hydrogen in 
the  EU.  Investments  are  eligible  under  several  EU  financial  programs:  Connecting  Europe 
Facility, InvestEU, Horizon Europe, ETS Funds, Recovery and Resilience Facility, European 
Regional  Development  Fund,  Cohesion  Fund,  and  Just  Transition  Fund.  Regarding  the 
European  Regional  Development  Fund,  Cohesion  Fund,  and  Just  Transition  Fund,  the 
eligibility refers to renewable hydrogen only, in line with Regulation (EU) 2021/1058.248 There 
are  –  to  the  best  of  our  knowledge  –  no  studies  yet  estimating  the  resulting  costs  of 
domestically produced hydrogen under the updated 10 Mton target. A former METIS study, 
based  on  the  5  Mtons/a  target  of  purely  renewable  hydrogen  found  costs  between  3.30 
EUR/kg (optimal) and 4.22 EUR/kg (business-as-usual).249 Many of the surveyed stakeholders 
mention  the  prevailing  cost  gap  between  renewable  hydrogen  (without  funding)  and  fossil-
based high-emission hydrogen as one of the key barriers for reaching the REPowerEU goal 
(For example: “There is still a substantial cost gap between renewable hydrogen production 
cost and off-takers' willingness to pay, which needs to be bridged”). As a consequence, they 
call for a “supportive regulatory framework” and comprehensive public funding. Most of the 
surveyed stakeholders claim subsidies are needed in order to achieve the goal. 

In the survey, 36 stakeholders provided answers to the question regarding the feasibility and 
costs of the REPowerEU goal for 10 Mton renewable hydrogen production per year in 2030. 
As  Figure  3-1  shows,  there  are substantial  shares  of  stakeholders  who  regard  the  goal  as 
feasible or rather feasible, as well as stakeholders who believe the goal to be infeasible or 
rather not feasible. The largest share of stakeholders sees the goal as ambitious. Furthermore, 
a considerable share of respondents provided some information – e.g. on one country-specific 
aspect  related  to  the  goal  –  but  refrained  from  any  judgement.  While  the  survey  is  not 
statistically  representative  for  the  view  of  the  European  hydrogen  stakeholders,  it 
demonstrates  that  diverse  opinions  on  the  topic  exist.  Most  stakeholders  provided  one  or 
multiple reasons for their judgement. 

245 European Commission (2023) Staff working document on the energy storage - underpinning a decarbonised and secure EU 
energy system 
246 F. vom Scheidt et al. (2022) Integrating hydrogen in single-price electricity systems: The effects of spatial economic signals 
247 Artelys (2021) METIS study on costs and benefits of a pan-European hydrogen infrastructure – In assistance to the impact 
assessment for designing a regulatory framework for hydrogen 
248  European Commission (2021) Regulation (EU) 2021/1058 of the European Parliament and of the Council of 24 June 2021 
on the European Regional Development Fund and on the Cohesion Fund 
249 European Commission (2021) METIS study on costs and benefits of a pan-European hydrogen infrastructure – In assistance 
to the impact assessment for designing a regulatory framework for hydrogen 

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Figure 3-1 Answers regarding the feasibility and costs of reaching the REPowerEU 
goal of 10 Mtons renewable hydrogen production until 2030 

3.4.1.1.  Potential effects of non-renewable low-carbon hydrogen 

There are several potential effects – positive and negative – of allowing parts of the 10 Mton/a 
target to be produced from low-carbon sources. In the following, we preliminarily note such 
factors  based  on  literature research  and  the  survey  results.  For  the  final  report,  the  expert 
interviews and workshops will be used to add final details. 

The first potential effect of low-carbon hydrogen is the increased speed of hydrogen 
scale up. 

Firstly,  as  outlined  above,  a  crucial  bottleneck  for  renewable  hydrogen  is  the  speed  of 
renewable  electricity  production  build-out  required  for  the  production  of  that  renewable 
hydrogen. Allowing for any other technology to contribute for the 10 Mton/a goal, will increase 
the likelihood of reaching the target until 2030, as two respondents claim. For example, one 
of them states that: “The supply of sufficient volumes of hydrogen, therefore, should consider 
not  only  renewable  but  also  low-carbon  hydrogen”.  This  presumably  refers  to  fossil-based 
hydrogen  with  CCS.  The  build-out  of  additional  nuclear  electricity  plants  for  hydrogen 
production until 2030 faces challenges in terms of development, construction and permitting 
itself.250 In summary, using fossil-based hydrogen with CCS to achieve the 2030 goals could 
reduce  the  availability  barrier,  assuming  both  availability  of  required  fossil  fuels  and  CCS 
technology.    The role  of  low-carbon  sources  might  be  more  relevant  in  bidding  zones  with 
overall  high  shares  of  renewable  energy  where  EU  regulation  already  allows  using  grid 
electricity.251 In such cases, the advantages outlined above can be used to optimise the load 
factor of electrolysers and reduce hydrogen costs. 

The second potential effect of low-carbon hydrogen is the improved compatibility with 
mature, inflexible electrolysis technology. 

Secondly, nuclear plants can provide a base load that is well suited for a relatively steady 
operation of atmospheric Alkaline electrolysis technology. Atmospheric alkaline electrolysis is 

250 see e.g. World Nuclear Association (2020), Median construction times for reactors since 1981 
251 https://energy.ec.europa.eu/publications/delegated-regulation-union-methodology-rfnbos_en 

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one  type  of  electrolysis  technology.  There  are  other  important  technologies,  in  particular, 
pressurised  alkaline  electrolysis,  proton  exchange  membrane  (PEM)  electrolysis,  anion 
exchange  membrane  (AEM)  electrolysis,  and  solid  oxide  (SOEC)  electrolysis  technology. 
Each  of  the  electrolysis  technologies  has  its  own  advantages  and  disadvantages.252 
Atmospheric  alkaline  electrolysis  is  the  most  mature  electrolysis  technology  and  offers 
relatively low CAPEX but has longer cold-start times than PEM and AEM technology and is 
therefore less suited to be used with fluctuating renewable energy resources. Using nuclear 
plants  to  supply  electricity  for  electrolysis  could  improve  the  attractiveness  of  Alkaline 
technology for project developers and thus could decrease the levelised costs of hydrogen.253 
Since the maturity of the technology is one of the remaining key barriers for hydrogen uptake, 
using more mature electrolysis technology could alleviate an important barrier. 

In addition, a well predicable base load can increase load factors of electrolysers and thus 
bring down levelised costs of hydrogen (LCOH). However, this can also be achieved through 
a smart combination of renewable energy plants of different technologies (e.g. onshore wind 
plus solar) or different geographies. 

The third potential effect of low-carbon hydrogen is decreasing costs. 

Thirdly, assuming that there are ways to produce low-carbon hydrogen at lower total costs 
than renewable hydrogen (e.g. from fossil waste streams or low-cost nuclear plants), this could 
naturally  decrease  overall  costs  of  reaching  the  hydrogen  production  goals.  As  alternative 
production  means  replace  renewable  generation,  those  hydrogen-specific  renewable 
generation capacities decrease, presumably starting with the more expensive projects. This 
makes  the  overall  renewable  production  cheaper  and  thus  decreases  both  hydrogen 
production  cost  and  total  system  costs.254  Lower  hydrogen  costs  in  turn  can  lead  to  larger 
hydrogen  consumption  volumes  in  the  EU,  as  modelling  results  indicate.255  However,  the 
world’s  largest  low-carbon  hydrogen-based  ammonia  project  (using  autothermal  reforming 
with  CCS)  was  just  put  on  hold  due  to  too  high  costs,  indicating that  low-carbon  hydrogen 
does not necessarily reduce the cost gap (sufficiently).256 

3.4.1.2.  Conclusion 

The REPowerEU ambition of 10 Mtons annual domestic renewable hydrogen production is an 
important cornerstone of the current EU hydrogen strategy. The extensive review of academic 
and regulatory literature, and the conducted survey among expert stakeholders indicates that 
the  major  bottlenecks  are  the  scaling  up  of  renewable  electricity  plants,  the  project 
development of hydrogen projects, the cost gap and availability of adequate funding, as well 
as appropriate infrastructure for storage and transportation of the produced hydrogen. Given 
the overall stakeholders responses reaching the REPowerEU goals with renewable hydrogen 
is a challenge but may be feasible. While low-carbon hydrogen production alternatives might 
increase the likelihood of reaching the goal, each of them comes with their own challenges, 
e.g. regarding permitting or costs.  

252 For an overview of the characteristics of each technology, see e.g. The Oxford Institute for Energy Studies (2022), Cost-
competitive green hydrogen: how to lower the cost of electrolysers? 
253 M. Holst et al. (2021). Cost Forecast for Low Temperature Electrolysis-Technology Driven Bottom-up Prognosis for PEM and 
Alkaline Water Electrolysis Systems. 
254 European Commission (2023) Assessing the balance between direct electrification and the use of decarbonised gases in the 
2050 EU energy system  
255 European Commission (2023) 2050 no-regret options and technology lock-ins 
256 See Polly Martin, Hydrogen Insight (2023), 'World's largest' blue hydrogen-based ammonia project shelved due to increased 
costs and lack of market. 

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3.4.2.  Carbon footprints of hydrogen imports 

In the short to medium term, transport mode and country of origin determine the carbon 
footprint of hydrogen. In some cases, this may lead to a lower carbon footprint of low-
carbon hydrogen over renewable hydrogen. Additionally, in some countries of origin 
the  local  impacts  need  to  be  considered  leading  to  uncertainties  for  scale-up  and 
communicated  timelines.  On  the  long  term,  however,  only  renewable  hydrogen  is 
compatible with regards to a minimum of carbon emissions. 

For  the  transition  to  a  carbon-neutral  economy,  the  greenhouse  gas  intensity  of  hydrogen 
production and delivery is important. In addition to implementing the local production scale-
up,257  the  European  Union  plans  on  importing  hydrogen  and  its  derivatives  from  other 
countries to minimise overall costs.258 Recent publications discuss the overall uncertainties for 
scale-up  of  hydrogen  projects  outside  of  Europe  due  to  various  reasons  including  e.g. 
competition with local grid decarbonisation or carbon sourcing for derivatives259. But also, the 
local and global environmental impacts of these imports need to be considered when setting 
the  strategy.  This  chapter  provides  a  short  overview  on  greenhouse  gas  emissions  for  the 
different hydrogen import pathways and more detailed analysis can be found in the annex of 
this report (section 6.5). 

The  different  hydrogen  transport  pathways  considered  are  pipeline  transport  and  marine 
transport in the form of different hydrogen derivatives such as liquid hydrogen (LH2), ammonia 
(NH3) and Liquid Organic Hydrogen Carriers (LOHC). The emissions of these pathways are 
also compared to the alternative of emissions from a fossil fuel-based energy supply. 

For  import  of  renewable  hydrogen,  the  breakdown  of  emissions  differs  slightly  between 
pathways.  Contributions  to  the  carbon  footprint  come  from  the  distribution  via  pipeline 
(compression power), synthesis and conversion emissions for ammonia and also for methanol 
and in that case also sourcing of CO2 (which in the cited source was assumed to come from 
Direct Air Capture from 2041 onwards). 

The  GHG  emissions  for  the  production  of  hydrogen  from  natural  gas  with  CCS  can  vary 
strongly between the producing countries, with the production of low-carbon hydrogen using 
CCS  from  Norway  creating  far  lower  emissions  than  the  same type  of  hydrogen  based  on 
natural gas from Russia, China, and Australia.260 With a high carbon capture rate, hydrogen 
production  using  natural  gas  can  be  among  the  production  methods  with  the  lowest  GHG 
emissions in some cases, but in other cases with lower capture rates and less strict regulations 
of the emissions in the fossil fuel production chain, imports of such hydrogen can be linked to 
high GHG emissions.261,262 

257 European Commission (2020) A hydrogen strategy for a climate-neutral Europe 
258 Nunez-Jimenez, A., & De Blasio, N. (2022) Competitive and secure renewable hydrogen markets: Three strategic scenarios 
for the European Union - ScienceDirect  
259 https://www.transportenvironment.org/wp-content/uploads/2024/02/202402_H2_imports_TE_briefing.pdf 
260 Hydrogen Council (2021), by LBST Hydrogen Council Report Decarbonization Pathways Part-1 Lifecycle-Assessment   
261 Richard Taylor, Ellie Raphael, Chester Lewis, Ross Berridge, Jo Howes (2022). Expansion of hydrogen production pathways 
analysis – import chains (publishing.service.gov.uk)  
262 Hydrogen Council (2021), by LBST Hydrogen Council Report Decarbonization Pathways Part-1 Lifecycle-Assessment  

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The emissions from shipping in the values below are based on the baseline trajectory of the 
average shipping fuel GHG intensities until 2050, given in the IEA Net Zero 2050 report, which 
predicts an 85% drop by 2050 (compared to 2008 levels; resulting from the increased use of 
renewable  H2  and  ammonia).263  The  following  pathways  and  emissions  (in  gCO2eq/MJ  H2) 
were calculated for 2030 and 2050: 

•  Renewable hydrogen, Australia, in the form of ammonia 
•  NG + CCS hydrogen, UAE, in the form of LOHC 
•  NG + CCS hydrogen, USA, in the form of LH2 
•  NG + CCS hydrogen, Norway, compressed H2 via pipeline 
•  Renewable hydrogen, Spain, compressed H2 via pipeline 

(2030: 25g; 2050: 9 g) 
(2030: 70g; 2050: 50 g) 
(2030: 80g; 2050: 40 g) 
(2030: 18g; 2050: 17 g) 
(2030: 3g; 2050: 1 g) 

Not surprisingly, sourcing the energy carriers from e.g. Australia instead of Southern Europe 
adds additional steps to the supply chain (large distance shipping and unloading). However, 
under the applied assumption ships are fuelled by e-diesel in 2050, the GHG impact of the 
change in production location and transport mode is marginal and contributes only a maximum 
of 0.2 gCO2eq/MJ. These emissions may be overcompensated by the lower carbon intensity 
of the renewable electricity used in a country with dedicated or renewable-only electricity grids, 
making  the  electricity  mix  for  the  synthesis  process  the  dominant  factor,  even  when  long 
distance transportation is involved.  

The above listed results of the study by Taylor et al. further show that especially imports of 
low-carbon  hydrogen  from  SMR  using  CCS  from  countries  such  as  the  United  States  of 
America (USA) and United Arab Emirates (UAE) are bearing relatively high GHG emissions.  

Instead  of  the  limited  differences  in  GHG  emissions  between  different  renewable  energy 
carriers and between exporting countries of renewable hydrogen, other factors will play a more 
crucial  role  in  determining  the  future  of  European  energy  imports,  such  as  production  and 
import costs as well as safety considerations related to ammonia.  

Much more important in terms of environmental impacts are therefore the decisions to quickly 
replace current fossil fuels and to do so by preferably importing renewable hydrogen-based 
products rather than those based on natural gas and CCS. Transport distance is a factor in 
the  short-  to  medium-term,  while  in  the  long-term  it  is  anticipated  that  ship  transport  is 
decarbonised, reducing transport emissions to very low levels. All in all, renewable hydrogen 
transported by pipeline has undoubtedly the lowest emissions.  

3.4.3.  Barriers  and  recommendations  to  the uptake  of biogas  and 

biomethane 

In  the  following  paragraphs  barriers  and  recommendations  on  biogas  and  biomethane  are 
given based on stakeholder feedback received (i.e. the survey conducted in the framework of 
this study). However, no detailed analysis was conducted. 

Numerous  stakeholders  highlight  in  the  survey  the  contributions  of  biogas  and 
biomethane to the decarbonisation and integration of the EU energy system, which are 
especially the following: 

263 IEA (2021) Net Zero by 2050. Figure 03.25 

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•  Biogas and biomethane are an enabler of decarbonisation of hard-to-electrify end-uses, 
such as heavy-duty transport, high temperature heat in industry, or buildings where deep 
renovations are challenging such as historic buildings 

•  Biogas  and  biomethane  can  provide  adequacy  and  flexibility  services  to  the  energy 

system, being a controllable renewable energy source; 
•  Biomethane  can  directly  employ  existing  natural  gas 

transport  and  storage 

infrastructure, with no or limited technical modifications required. 

The  Commission  recognises  the  importance  of  biogas  and  biomethane,  and  has 
adopted  a  number  of  measures  recently.  The  REPowerEU  Plan  introduced  the  aim  to 
increase biomethane production in the EU to 35 billion cubic metres annually by 2030, with an 
associated investment requirement estimated at €37 billion up until that year. 

The  Commission  furthermore  launched  together  with  the  REPowerEU  Plan  a  biomethane 
action plan264 with a number of specific measures: 

Promote  the  sustainable  production  and  use  of  biogas  and  biomethane  at  EU  and 
national/ regional level and the injection of biomethane into the gas grid 

•  Create a biogas and biomethane industrial partnership/ forum promoting their sustainable 

production and use; 

•  Develop national strategies on sustainable biogas and biomethane production and use or 
integrate a biogas and biomethane component in the National Energy and Climate Plans 
(NECPs); 

•  Consider  broadening  the  scope  of  the  fuel  supply  obligation  in  the  Renewable  Energy 

Directive; 

•  Promote participatory multi-stakeholder engagement; 
•  Reduce red tape and speeding up permitting; 
•  Promote  sustainable  biogas  and  biomethane  co-operation  with  neighbouring  and 

enlargement countries; 

•  Provide incentives for biogas upgrading into biomethane; 
•  Reduce the costs for economic operators, which currently prevent biogas upgrading into 

biomethane. 

Promote  the  adaptation  and  adjustment  of  existing  and  the  deployment  of  new 
infrastructure for the transport of increased shares of biomethane through the EU gas 
grid 

•  Carry  out  regional  assessment  of  network  development  and  matching  it  with  the 

potential of sustainable biomethane production; 

•  Assess  challenges,  bottlenecks  and  other  possible  measures  from  the  infrastructure 

perspective for cost-efficient deployment of biomethane; 

•  Address gas quality standardisation issues. 

264 European Commission (2023) Implementing the REPowerEU Action Plan: Investment Needs, Hydrogen Accelerator and 
Achieving the Bio-methane Targets 

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Address RDN&I gaps 

•  Provide further support to the development of innovative technologies for the production 

of sustainable biogas and biomethane; 

•  Provide further support to innovative solutions and research on barriers and integration 

of sustainable biomethane to the gas grid; 

•  Further support the expansion of the sustainable biomass potential to ensure availability 

of resources for reaching the biomethane production target. 

Access to finance 

•  Provide access to grants and loans; 
• 
•  Access to other financial instruments. 

Innovation fund; 

Many of the actions proposed in the REPowerEU Plan have already been implemented, 
including the biomethane industrial partnership that has been in place since September 2022, 
the  broadened 
the  Renewable  Energy  Directive,  and 
recommendations  on  permitting  of  renewable  energy  projects.  Moreover,  the  Waste 
Framework  Directive  (2008/98/EC)  requires  that  from  2024  on  Member  States  will  have  to 
separately  collect  organic  waste,  which  could  have  a  positive  impact  on  biogas  and 
biomethane production.  

fuel  supply  obligation  of 

There  is  therefore  a  number  of  already  ongoing  actions  on  biogas  and  biomethane. 
Stakeholders  have  proposed  a  few  additional  recommendations  to  further  advance  the 
sources as well as their integration with the rest of the energy system. These include: 

•  Promote the use of hybrid heating systems such as hybrid boilers, while ensuring 
they are aligned to climate and energy objectives and that there are no risks of lock-in 
in natural gas; 

•  Ensure the right-to-inject from a legal but also practical standpoint at the national level; 
•  Define in legislation the 35 bcm objective in order to set obligations to the Member 

States regarding the topic, similarly to what has been done for hydrogen; 

•  Promote  a  more  integrated  energy  infrastructure  planning  considering  all  energy 

carriers in an integrated manner (see section 5.2 for further details); 

•  Carefully consider the possibility to employ biomethane for the decarbonisation of the 
built  environment  in  certain  regions  when  assessing  the  decommissioning  of 
distribution gas grids; 

•  Further  facilitate  the  collection  and  utilisation  of  sustainable  feedstock  on 
environmental  and  agricultural  legislation  (ESI-related  actions  are  already  ongoing  in 
this regard). 

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4.  Utilisation of waste heat 

Disclaimer:  The  scope  of  waste  heat  sources  and  applications  considered  in  this  study  is 
broader than  that  defined  in  article  2(9)  of the  amended Renewable Energy Directive (EU) 
2018/2001.265  The  focus  remains  on  unavoidable  waste  heat  or  cold  generated  as  a  by-
product of industrial, power generation or tertiary sector activities. But particularly non-district 
heating and cold applications such as heat-to-power are considered. Moreover, heat recovery 
from  sewage  is  considered  in  the  present  analysis,  which  under  the  REDII  is  classified  as 
ambient energy (but wastewater treatment plant heat recovery is considered waste heat under 
the REDII).266 

4.1.  Introduction 

This chapter focuses on advancing the utilisation of unavoidable waste heat and cold 
that would otherwise be dissipated unused in air or water, for direct use of the heat in 
e.g. district heating and cooling or for indirect use in other applications (for example 
waste  heat-to-power),  as  illustrated  in  Figure  4-1.  Hence,  the  analysis  does  not  focus  on 
renewable heat and cold, although synergies or other interactions with waste heat and cold 
are considered. On-site energy efficiency measures within industry or the built environment 
are  also  not  discussed  in  detail  (mirroring  the  waste  heat  definition  of  article  2(9)  of  the 
Renewable  Energy  Directive)  but  constitute  nonetheless  the  first  priority  in  line  with  the 
hierarchy for decarbonisation of the energy system as presented in chapter 1. 

Figure 4-1 Waste heat scope of this study 

Waste heat and cold are also frequently referred to as excess or surplus heat and cold, a term 
that some stakeholders prefer as it emphasises the potential for recovery and utilisation of the 
resource. Nonetheless, the term waste heat and cold is employed in this report. 

This chapter presents the analysis of barriers for advancing the utilisation of waste heat 
and cold in the EU, as well as provides preliminary recommendations to address the 
identified barriers. 

The chapter is structured as follows: 

✓  Section 4.2 analyses the barriers to waste heat utilisation in the EU; 

265 Renewable Energy Directive (EU) 2018/2001 article 2(9) : ‘waste heat and cold’ means unavoidable heat or cold generated 
as by-product in industrial or power generation installations, or in the tertiary sector, which would be dissipated unused in air or 
water without access to a district heating or cooling system, where a cogeneration process has been used or will be used or 
where cogeneration is not feasible; 
266 JRC (2021) Defining and accounting for waste heat and cold 

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✓  Section 4.3 provides recommendations (focused on the EU-level) for advancing waste 

heat utilisation; 

✓  Section 4.4 presents an overview of waste heat utilisation applications in the EU as well 

as details selected case studies. 

4.1.1.  Waste heat potential in the EU 

Estimates of the potential waste heat and cold (in line with the definition of the REDII) 
in  the  EU  vary,  but  stakeholders  acknowledge  it  is  very  significant.  The  EU  Energy 
System Integration Strategy recognised the importance of waste heat and indicates that “29% 
of  industrial  energy  demand  dissipates  as  waste  heat”.267  The  JRC  (2021)268  reviewed 
available studies on the waste heat potential in the EU27, which in aggregate indicate a total 
potential of 3139 TWh/year if the highest potential in the ranges provided are considered. The 
Heat Roadmap Europe 2 project estimated the waste heat potential in the EU27_2007269 at 
2850 TWh/year.  

Figure 4-2 Waste heat potential per year in the EU27 (high estimate)270 

The sectors with the highest waste heat potential are industry and power generation. 
However,  other  sectors still  have a non-negligeable  potential  that  could significantly 
contribute  to  the  decarbonisation  of  the  EU’s  heating  and  cooling  sector.  The  JRC’s 
review puts the waste heat potential from power generation at 1869 TWh/year, while industry’s 
potential ranges between 261 and 7535 TWh/year. The total energy input for thermal power 
plants should significantly decrease towards 2040 - the EU Reference Scenario estimates that 
the energy inputs to thermal power generation and district heating will decrease by around 
42%  from  2020  to  2040.271  Energy  inputs  to  thermal  power  plants  will  thus  decrease  but 
nonetheless remain significant and constitute an important area for energy efficiency efforts.  

Concerning other sources of waste heat, the JRC indicates that waste-to-energy could provide 
131 and other sources 344 TWh/year.272 Other estimates of potentials for certain waste heat 

267 COM(2020) 299 Final. Powering a climate-neutral economy: An EU Strategy for Energy System Integration 
268 JRC (2021) Defining and accounting for waste heat and cold 
269 That is, the EU27 as of 2007, which included the UK but not Croatia, who only joined in 2013 
270 JRC (2021) Defining and accounting for waste heat and cold 
271 E3-Modelling (2021) Reference Scenario 2020 (REF2020) main results 
272 JRC (2021) Defining and accounting for waste heat and cold 

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0100200300400500600700800ATBEBGCYCZDEDKEEELESFIFRHRHUIEITLTLULVMTNLPLPTROSESISKEUTWhPower generationWtEIndustryOther 
 
 
 
 
 
 
 
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sources exist, for example from industry (300 TWh/year),273 data centres (48 TWh/year), or 
from tertiary buildings (10 TWh/year). This compares against a final consumption of heat for 
energy purposes in the EU of 550 TWh in 2021.274 These figures refer to traded heat, hence 
do  not  include  heat  consumption  produced  and  consumed  on-site.  This  indicates  that  the 
available EU waste heat potential would be equivalent to the current district heating demand, 
or  almost  the  entirety  of  total  space  heating  and  hot  water  demand  in  the  EU  built 
environment.275 The recovery and utilisation of waste heat can bring other significant benefits, 
such as reduced air pollution or heat emissions to the environment, as highlighted in the case 
studies overviewed in section 4.5. 

4.2.  Barriers to the utilisation of waste heat 

This section analyses the barriers to advancing the utilisation of waste heat and cold 
in  the  EU,  as  well  as  identifies  which  barriers  are  expected  to  remain  in  place  once 
existing  or  planned  policies  and  measures  are  implemented.  Based  on  the  literature 
review, a list of barriers for the utilisation of waste heat and cold was developed as presented 
in Table 4-1.   

Table 4-1 Summary of barriers for waste heat utilisation 

Barrier 
type 

Barrier 

Technical 

Economic 
and 
financial 

Legislative 
and 
regulatory 

1.  Location/temporal/quality mismatch between heat supply and demand 

2.  Technical performance of waste heat recovery and district heating/cooling systems 

3.  Profitability/long payback period 

4.  Inadequate pricing signals 

5.  Project uncertainty, complexity, and risk aversion of DHC operators/split incentives 

6.  Limited replicability of solutions and lack of standardised contracts/tools 

7.  Lack of governance and planning, including information on potentials and 

integration across carriers and with urban planning 

8.  Accounting of climate and environmental footprint/benefits of waste heat utilisation 

Societal 

9.  Knowledge/capacity of actors 

10. Acceptance and behavioural issues 

Following  further  analysis  and  consultation  with  stakeholders,  almost  all  barriers 
identified in the literature review were identified as significant and selected for analysis 
in this chapter. This highlights how complex the issues affecting waste heat utilisation are. 
Only barrier 2 (technical performance) is not analysed in more detail in this chapter, for the 
following reasons: 

•  The  consultations  indicated  stakeholders  do  not  see  the  barrier  as  fundamental  for 
waste  heat  and  cold  utilisation  and  its  broader  integration  with  the  energy  system 
(although it still ranked as ‘important’ by some stakeholders that replied to the survey); 

273 Heatleap (2023) Waste Heat Recovery - Potentials, applications and recommendations for better policies 
274 Eurostat nrg_bal_c 
275 Heatleap (2023) Waste Heat Recovery - Potentials, applications and recommendations for better policies 

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•  The  barrier  is  less  relevant  from  a  system  integration  perspective,  dealing  with 
challenges that can be addressed more readily within the heating and cooling sector; 

•  There are proposed EU measures that target the barriers. 

4.2.1.  Technical barriers 

4.2.1.1. Location/temporal/quality  mismatch  between  heat  supply  and 

demand 

The  location,  temporal,  and  quality  mismatch  between  heat  supply and  demand  is  a 
fundamental barrier for the utilisation of waste heat, as confirmed by stakeholders and 
the literature. 

The  various  sources  of  WH/C  will  most  commonly  not  match  the  demand  concerning  the 
following aspects:276 

1.  Temporal profile: The WH/C source may vary in the short-term (hours to days) and the 
long-term (seasonally), while demand is typically highly seasonal. Some sources such 
as waste-to-energy facilities, wastewater treatment plants or certain industrial facilities 
may provide reasonable constant WH/C, while other sources such as data centres and 
other industries may be highly variable in the short-term or seasonally. Peak demand in 
winter is often the main design criteria of heating systems.277  

2.  Location: WH/C may be consumed on- or off-site (noting that the definition may vary in 
legislation, for example with only off-site WH/C counting toward the specific targets in 
the  RED  II)278.  For  off-site  consumption,  which  is  the  focus  of  the  analysis,  there  will 
always be by definition some mismatch in location. A number of challenges arise, being 
discussed in a specific section below; 

3.  Quality: This concerns both the temperature level of the WH/C source as well as the 
total heat/cold available in comparison to the total demand. Moreover, the waste heat 
availability will be controllable to a varying extent (i.e. the source may be intermittent), 
depending on the underlying process generating the waste heat and techno-economic 
decisions. 

Temporal, location, and quality mismatches are challenges that will remain in the long 
run for all sources, but solutions generally exist to address these mismatches in order 
to integrate renewable and waste heat/cold distributed sources. 

The  AIT  and  Euroheat  &  Power  indicate  that  while  mismatch  challenges  can  typically  be 
overcome (including temperature level issues through the use of large-scale or individual heat 
pumps), they entail costs that will affect the profitability of the utilisation of WH/C279 (see the 
barriers analysed in section 4.3.2). Lygnerud (2023) confirms that solutions exist to address 
the technical challenges of urban waste heat recovery, with economic and regulatory barriers 
being more important.280 This view was shared by a large majority of participants in the project 

276 Austrian Institute of Technology and Euroheat & Power (2020) Discussion Paper - The barriers to waste heat recovery and 
how to overcome them? 
277 ReUseHeat (2019) Urban excess heat utilization in future energy systems – D1.5 Report on the energy planning analyses 
on future energy system in the demo countries 
278 JRC (2021) Defining and accounting for waste heat and cold 
279 Austrian Institute of Technology and Euroheat & Power (2020) Discussion Paper - The barriers to waste heat recovery and 
how to overcome them? 
280 Lygnerud (2023) Urban waste heat recovery as an enabler of the energy transition policy implications and barriers 

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workshop (see results in annex section 6.4). Survey respondents did note that addressing the 
quality mismatch involves measures to reduce the operating temperature of district heating 
networks, which is only possible in combination with the renovation of the building stock. 

Waste heat potential from all sources is underutilised in the EU, particularly for current 
non-conventional sources. The identification of waste heat utilisation projects presented in 
section 4.5, albeit non-exhaustive, indicates that the industrial waste heat makes up the most 
important  utilisation  case  in  the  EU  today,  which  is  in  line  with  its  significant  potential  (see 
section  4.2).  Conversely,  fewer  examples  exist  of  the  utilisation  of  non-conventional  waste 
heat sources such as from tertiary buildings, wastewater or data centres – which is due to their 
more limited potential compared to industrial waste heat, but also to particular challenges for 
their utilisation that are detailed below. 

New  non-conventional  sources  will  bring  additional  waste  heat  potential  to the  2040 
timeframe, with new challenges. One example highlighted by stakeholders was the case of 
waste heat recovery from operation of electrolysers. A short description of the temperature 
levels and efficiency of such systems, as well as the potential waste heat available in the future 
is described in Textbox 1 below. Waste heat from data centres is already currently exploited 
in  a  few  cases  –  but  further  projects  will  follow  with  the  installation  of  new  data  centres, 
particularly if liquid cooling solutions are deployed (increasing the waste heat temperatures). 
Further waste heat potential could arise in the future from exothermic process in for example 
some  carbon  capture  processes281  and  methanation  for  the  production  of  synthetic  natural 
gas.282 The combination of waste-to-energy with carbon capture and storage and waste heat 
utilisation could lead to negative emissions as well as increased overall efficiency (by using 
the waste heat on-site for the carbon capture process or off-site in other applications). 

281 For example Cui et al. (2023) Waste heat recovery and cascade utilization of CO2 chemical absorption system based on 
organic amine method in heating season 
282 Mezzera et al. (2021) Waste-heat utilization potential in a hydrogen-based energy system - 
An exploratory focus on Italy 

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Textbox 1 Waste heat from future operation of electrolysers 

There  could  be  a  significant  potential  for  the  utilisation  of  waste  heat  from 
electrolysers in the future, with increasing attention on the topic given the ambition of 
the REPowerEU plan for production of renewable hydrogen in the EU as well as the recently 
agreed  hydrogen  consumption  sub-targets  targets  of  the  amended  Renewable  Energy 
Directive.283 

Van der Roest (2023)284 indicates that the recovery of such waste heat for district heating 
purposes can increase the overall system efficiency in around 14-15%, to 90% (high heating 
value) for a proton exchange membrane (PEM) electrolyser. This would also improve the 
economic viability of electrolytic hydrogen production and provide heat at a comparable cost 
to other (low temperature) industrial heat sources.  

Jonsson  et  al. (2022)285 study  waste  heat  utilisation from  a  potential  100 MW  electrolysis 
system,  considering  both  PEM  and  alkaline  electrolysers.  Waste  heat  temperatures  are 
similar in both cases (79-80 ºC), which would be a good heat quality for use in 3rd or higher 
generation  systems.  Efficiencies  of  the  overall  system  are  also  significantly  increased: 
94.7% and 88.4% for the PEM and alkaline electrolyser, with the systems providing 171 770 
MWhth and 310 630 MWhth respectively. 

Considering the Commission target to have 40 GW of electrolyser in 2030 as stated in the 
EU  Hydrogen  Strategy286  and  assuming  the  lower  waste  heat  production  estimate  of 
Jonsson et al. (2022) of 1.717 TWhth/y/GWelectrolysis from PEM electrolysers, this would still 
represent a potential 68.7 TWh of waste heat to be recovered. 

Reuter and Schmidt (2022)287 estimate the waste heat potential from electrolysers at 250 
TWh/y by 2040 in the EU27+UK (for 272 GW installed capacity). This amounts to 64% of 
the current final heat demand supplied by district heating in the region, although the potential 
contributions by country will vary – in countries with more limited heat demand from district 
heating, which could be fully supplied from waste heat from electrolysers, while in others this 
waste heat would cover a significant share but not all demand. The authors further highlight 
the  role  of  4th  and  5th  generation  district  heating  systems  (discussed  below)  given  not  all 
existing district heating networks could accept the waste heat, as its temperature range is 
50 – 80 ºC, thus lower than the operating temperature of older networks. 

It must also be noted that although the waste heat is a direct consequence of the exothermic 
reaction, it does not mean that it could not be (partially) recovered and used on-site, which 
would reduce the unavoidable wate heat potential for off-site use. 

Technical challenges particularly affect the development of unconventional waste heat 
resources,288 that have not been yet deployed at scale. Most unconventional waste heat 
sources  are  characterised  by  comparatively  low  temperatures,  often  requiring  the  upgrade 
through  large-scale or  individual  heat  pumps  for final  use,  leading  to additional  barriers  for 
waste  heat  utilisation.  As  can  be  seen  in  Figure  4-3,  non-conventional  waste  heat 

283 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CONSIL:ST_10794_2023_INIT 
284 Van der Roest (2023) Utilisation of waste heat from PEM electrolysers – Unlocking local optimization. 
https://doi.org/10.1016/j.ijhydene.2023.03.374 
285 Jonsson et al. (2022) Utilization of Waste Heat From Hydrogen Production: a Case Study on the Botnia Link H2 Project in 
Luleå, Sweden 
286 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52020DC0301 
287 Reuter and Schmidt (2022) Assessment of the Future Waste Heat Potential From Electrolysers and Its Utilization in District 
Heating 
288 Unconventional used here to refer to unavoidable waste heat from other sources than industry. 

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temperatures range from 20 to 90 ºC (and lie very often in the lower end of this range). Heat 
pumps will thus play an important role in facilitating the exploitation of such sources, with large-
scale heat pumps for collective heating solutions gaining increasing attention. Individual heat 
pumps  might  also  be  deployed  near  or  at  the  end-user  in  low-temperature  district  heating 
systems (discussed below). Hence, the utilisation of non-conventional waste heat sources will 
require not only the deployment of heat pumps but also sufficient (clean) electricity for their 
operation,  which  has  an  impact  also  on  the  economic  and  financial  barriers  to  waste  heat 
utilisation as discussed in section 4.3.2. 

Figure 4-3 Temperatures for waste heat sources and potential applications289 

Waste heat sources 

Applications 

5th  generation  district  heating  systems  could  in  the  future  strongly  facilitate  the 
integration  of  unconventional  sources  of  waste  heat  and  cold  (see  Textbox  2),  but 
currently 4th generation systems are considered to be economically more attractive.290 
If  5th  generation  district  heating  systems  are  to  be  developed  at  a  larger  scale,  further 
innovation will be required, including technology to maintain the balance between supply and 
demand, and for reducing the total costs. This is supported by the survey response of one 
stakeholder, who argued that while individual technologies for waste heat utilisation are well 
known, this is not the case for system integration technologies. 

Furthermore,  5th  generation  systems  may  complement  (rather  than  substitute)  4th 
generation systems.291 The former may be excellently placed to integrate distributed sources 
of  both heat  and  cold, meeting  heating  and  cooling  needs  locally  in an  integrated manner, 
while the latter may in situations be more suitable to decarbonise district heating systems while 

289 waste-heat.eu based on Deutsche Energie-Agentur 
290 Gudmundsson et al. (2022) Economic comparison of 4GDH and 5GDH systems – Using a case study. 
https://doi.org/10.1016/j.energy.2021.121613 
291 Lund et al. (2021) Perspectives on fourth and fifth generation district heating. https://doi.org/10.1016/j.energy.2021.120520 

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more easily integrating with the broader energy system (for example by providing flexibility to 
the power system through the smart operation of large-scale heat pumps). 

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Textbox 2 4th and 5th generation district heating systems 

Figure  4-4  presents  the  evolution  of  district  heating  systems  from  the  first 
generation in the turn of the 20th century to the 4th generation systems currently 
being  deployed.  This  evolution  is  characterised  by  the  shift  from  fossil-based  to 
renewable  and  waste  heat,  the  decentralisation  of  sources  (including  with  the 
development of prosumers), the reduction of network temperatures and demand, with 
associated efficiency gains, and integration with cooling systems. While 3rd generation 
systems were developed with fossil fuels as the main source, 4th generation systems 
have an explicit decarbonisation objective.292 Currently, most district heating systems 
being  operated  are  3rd  or  4th  generation.293  But  besides  the  need  to  develop  4th 
generations systems, for decarbonising the heating and cooling sector 5th generation 
systems are being proposed as a complementary solution to 4th generation systems. 

is  no  commonly  agreed  definition  of  5th  generation  district 
There 
heating/cooling  systems.  Figure  4-4  below  for  example  does  not  differentiate 
between 4th and 5th generation systems. Nonetheless, 5th generation systems can be 
characterised  by  near-ground  operating  network  temperatures  (30  ºC  or  lower), 
requiring the upgrading of the heat/cold at building level.294 Moreover, such systems 
are often considered to comprise a double loop or two-pipe network (with each loop 
at  a  comparatively  high  and  low  temperature). Moreover,  they  may  have  a  greater 
focus on the integration of heating and cooling sources, due to the existence of the 
two-pipe network. A few systems fitting this definition have been in place since the 
1990s.295  

5th generation systems have a number of advantages, given their lower operating 
temperatures, potential two-pipe network and location of heat pumps at the consumer 
site, according to Lund et al. (2021):296 

•  Take advantage of the synergy of combined heating and cooling in areas of 

mixed purpose buildings, 

•  Minimise the barrier of utilising local waste heat sources and minimise upfront 
investment cost for the utility company, though the required initial investment 
at end-users’ level will be higher, and 

•  Enable  less  restrictive  decentralised  growth  of  the  system,  as  central  heat 
supply is not as critical, since new additional end-users will both add and use 
heat from the network. 

However, the authors argue that integration of the heating/cooling system with 
the  broader  smart  energy  system  might  be  more  challenging  than  with  4th 
generation systems,  given  5th  generation  systems  are designed  mainly  to  integrate 
heating and cooling locally and make the optimisation of investments and operation 
considering interactions with the electricity system and broader regional heating and 
cooling system more complex. 

292 Lund et al. (2021) Perspectives on fourth and fifth generation district heating. https://doi.org/10.1016/j.energy.2021.120520 
293 https://www.danfoss.com/en/about-danfoss/articles/dhs/district-energy-generations-explained/ 
294 Gudmundsson et al. (2022) Economic comparison of 4GDH and 5GDH systems – Using a case study. 
https://doi.org/10.1016/j.energy.2021.121613 
295 Lund et al. (2021) Perspectives on fourth and fifth generation district heating. https://doi.org/10.1016/j.energy.2021.120520 
296 Lund et al. (2021) Perspectives on fourth and fifth generation district heating. https://doi.org/10.1016/j.energy.2021.120520 

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Figure 4-4 Generations of district heating systems297 

There is EU funding dedicated to waste heat utilisation solutions in order to advance 
the  knowledge  and  increase  deployment,  but  it  is  limited  and  could  be  further 
supported by feasibility studies. 

The table below provides an overview of EU-supported projects with a focus on waste heat 
utilisation for district heating and cooling as of 2022, according to Euroheat & Power (2022).298 
Several  other  projects  on  district  heating  and  cooling  also  address  waste  heat  utilisation, 
although it may not be the primary focus of the project. Nonetheless, the data shows that the 
EU contribution to projects with a focus on WHU for district heating and cooling amounted to 
around 19 M€, or 4% of the 493 M€ provided by the EU between 2016 and 2022 to district 
heating  and  cooling  projects  overall.  The  CO2OLHEAT  case  study  (detailed  in  the  annex) 
highlights  that  further  EU  support  for  feasibility  studies  of  waste  heat  projects  could  be 
welcome. The project was put on hold after its start because it was identified that the costs for 
implementing  the  supercritical  CO2  heat-to-power  demonstrator  was  higher  than  originally 
estimated.  A  project  participant  indicates  that  such  problems  could  be  mitigated  through 
increase EU funding for feasibility studies of waste heat projects. 

297 Andol (2018) Generations of district heating systems EN.svg 
298 Euroheat & Power (2022) Advancing District Heating & Cooling Solutions and Uptake in European Cities. Overview of 
Support Activities and Projects of the European Commission on District Heating & Cooling 

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Figure 4-5 EU-supported projects with a focus on waste heat utilisation for district 
heating and cooling between 2016 and 2022 

Programme 

Project 

Total Budget € 

EU contribution € 

Horizon 2020 

ReUseHeat 

Horizon 2020 

Heat4Cool 

Horizon 2020 

Horizon 2020 

EMB3RS 

INCUBIS 

LIFE 

Life4HeatRecovery 

4 894 330 

7 934 578 

4 245 119 

2 049 875 

5 819 377 

3 998 061 

5 703 013 

3 984 671 

1 999 875 

3 360 079 

Total 

24 943 279 

19 045 700 

4.2.1.2. Space-related constraints for waste heat utilisation 

This  section  details  specific  issues  related  to  the  location  mismatch  between  waste  heat 
sources and potential end-users.  

The  distance  between  waste  heat  sources  and  sinks  can  be  an  important  limitation 
factor, especially for industrial waste heat sources. Networks typically range from a few 
hundred meters to tens of kms (see the case studies overview in Table 4-4). The JRC (2021)299 
indicates, based particularly on Kavvadias and Quoilin (2018),300 that “literature sources use 
a common threshold for feasible heat transmission distance in the range of 30–50 km, their 
techno-economic  model  suggests 
for  specific 
technoeconomic parameters and market conditions” with one source identifying a maximum 
delivery  distance  of  60  or  70  km  in  existing  projects.  These  distance  limitations  can  be 
particularly challenging for the utilisation of industrial waste heat, whose sources may be very 
distant from potential demand. In contrast, unconventional waste heat sources are frequently 
located  closer  or  within  urban  environments,  mitigating  the  distance  challenge.  To  one 
stakeholder, the costs associated with increasing distances to connect waste heat and cold 
suppliers  and  consumers  is  the  main  barrier  to  the  utilisation  of  the  potential.  Challenges 
related to distance also impact the interconnection of individual DHC networks, a solution that 
has been applied in some cases, as detailed in Textbox 3. 

longer  distances  are 

feasible 

that 

Member  States  seem  to  adopt  excessively  conservative  assumptions  regarding  the 
maximum feasible distances for transporting waste heat. Kavvadias and Quoilin (2018)301 
review the Member States assumptions regarding maximum economically-feasible distances 
mentioned in Article 14(6) of the original Energy Efficiency Directive, as shown in Table 4-2 – 
now article 26(7) of the recast Directive (EU) 2023/1791. Beyond this distance, Member States 
can exempt operators of electricity generation plants from conducting a cost-benefit analysis 
for  refurbishment  to  high-efficiency  cogeneration  installation,  as  required  by  Article  14(5) 
(article 26(8) of the recast Directive). It can be seen that the maximum distance defined is 20 
km, while Kavvadias and Quoilin calculate that under certain conditions distances above 30-
50 km can be feasible. 

299 JRC (2021) Defining and accounting for waste heat and cold 
300 Kavvadias and Quoilin (2018) Exploiting waste heat potential by long distance heat transmission: Design considerations and 
techno-economic assessment 
301 Kavvadias and Quoilin (2018) Exploiting waste heat potential by long distance heat transmission: Design considerations and 
techno-economic assessment 

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Table 4-2  Maximum economically feasible distances for heat transport defined by 
Member States following Article 14(6) of the first Energy Efficiency Directive (as of 
2018) 

Austria 

Denmark 

Finland 

Netherlands 

Poland 

Maximum distance (km) 

5 

5 

5–20 

3 

20 

Textbox 3 Interconnection of DHC networks 

A  solution  for  advancing  the  utilisation  of  waste  heat  and  cold  and  the  broader 
integration  of  various  sources  is  the  interconnection  of  separate  district  heating 
networks. A few examples can be identified in this regard among the case studies surveyed 
in  Table  4-4,  such  as  the  Dutch  WarmtelinQ  project  and  the  Greater  Copenhagen  DHC 
project in Denmark. 

Interconnection projects can have several advantages: 

•  Potentially  high  benefit-to-cost  ratio  due  to  investments  being  limited  to  the 
interconnector  (unless  other  investments  are necessary  to  e.g.  adapt temperature 
levels of one of the DHC networks to be interconnected) 

•  Facilitation of the utilisation of excess waste heat sources, as often the potential 
of large sources such as large industrial facilities cannot be utilised in individual DHC 
networks, or faces limitations such as e.g. low demand in summer 
Increased flexibility due to the integration of different waste heat sources, demand 
profiles and potentially thermal energy storage 

• 

The interconnection of district heating networks can bring specific challenges such 
as investments and waste heat losses in the case of long interconnectors covering several 
kms and the need for cooperation between an increased number of stakeholders, including 
multiple  municipalities  and  DHC  network  operators.  Nonetheless,  especially  as  DHC 
networks advance in a region and municipalities comprehensively assess their (waste) heat 
and cold potential and elaborate heat plans, interconnection should be considered given 
the significant potential benefits. 

An example of an interconnected network is the Greater Copenhagen area, one of the 
largest  district  heating  systems  globally.  The  transmission  system  comprises  160  km  of 
pipes,  which  interconnect  20  distribution  systems.302  The  system  has  been  undergoing 
significant changes, including substituting fossil heat supply with biomass and waste heat, 
switching  the  remaining  steam-based  systems  to  hot  water,  installing  thermal  energy 
storages  such  as  pit  and  aquifer-based,303  developing  a  cooling  network  and  potentially 
deploy CCS for its waste-to-energy facilities.304 

In addition to distance, the absence of an adequate district heating/cooling network in 
the  first  place  is  often  a  barrier  to  the  utilisation  of  WH/C,  although  mobile  thermal 
energy storage solutions are being increasingly deployed. The transport of the waste heat 

302 https://www.ramboll.com/projects/energy/district-heating-for-1-million-people 
303 https://stateofgreen.com/en/news/the-integrated-district-heating-system-in-greater-copehagen/ 
304 http://carbonneutralcities.org/wp-content/uploads/2020/12/Two-Approaches-To-Buildings-Decarbonization.pdf 

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will most often require a district heating or cooling system with suitable operating temperatures 
– a challenge particularly for non-conventional waste heat sources as discussed further below. 
This  means that  older  district  heating systems  might  not  be  suitable,  even  if  located  in the 
same region as the waste heat source. Conversely, the availability of a suitable WH/C (or a 
renewable) source is an important factor in the decision to develop district heating or cooling 
networks.305 This is supported by four stakeholders responding to the survey. Mobile thermal 
energy storage solutions constitute an alternative to district heating networks as a mean to 
transport  waste  heat  and  enable  trade,  gaining  increasing  attention  recently.306  Several 
technology  providers  are  now  established  offering  mobile  solutions,  which  also  serve  to 
address  some  of the  dependency risks  associated  with  waste  heat  utilisation (discussed  in 
section 4.3.2).  

The  development  of  new  district  heating  and  cooling  systems  or  the  connections  to 
waste heat sources can face significant spatial constraints. There are multiple competing 
uses for the available urban underground space, leading to spatial constraints and complex 
permitting and spatial planning processes, which are critical for the successful development 
of a district heating or cooling system.307 The spatial constraints affect not only heating and 
cooling pipes, but also other components such as the thermal energy storage necessary to 
address  temporal  mismatches  –  with  for  example  pit  thermal  energy  storage  being  an 
upcoming solution but  not  being feasible in all  contexts  due to the  large  space required.308 
Spatial constraints can sometimes make a waste heat utilisation project outright impossible. 

4.2.1.3. Modelling of waste heat utilisation for policy analysis 

Absent or inadequate representation of waste heat and cold in energy system models 
used to develop energy scenarios at the EU and national level is an important barrier, 
as  these  scenarios  are  used  by  policymakers  to  identify  and  assess  the  impacts  of  policy 
options. As indicated, the EU ESI Strategy and other policy documents highlight potential of 
waste heat and cold. Moreover, as reviewed in section 4.4.1 a number of new EU legislative 
provisions have been introduced focused specifically on the heating and cooling sector and 
advancing the utilisation of waste heat. Nonetheless, improved representation of waste heat 
utilisation in energy system models could further highlight to policymakers its decarbonisation 
potential. This has been raised by multiple participants of the project workshop as one of the 
most important issues for increasing the utilisation of waste heat (see results in annex section 
6.4). 

The adequate representation of waste heat and cold in energy system models is a complex 
task that requires the consideration of a number of aspects: 

• 

Inclusion  of  the  industrial  and  non-conventional  technical  and realisable  waste 
heat  potential,  which  can  be  challenging  given  the  lack  of  appropriate  potential 
assessments at the EU level. EU-wide energy system models need coherent data inputs 
for  all  Member  States,  while  as  discussed  in  section  4.2  existing  such  EU-wide 
assessments are limited; 

•  Representation  of  waste  heat  in  energy  statistics,  as  energy  scenarios  for 

policymaking should rely on official energy statistics as much as possible; 

305 Austrian Institute of Technology and Euroheat & Power (2020) Discussion Paper - The barriers to waste heat recovery and 
how to overcome them? 
306 Anandan et al. (2021) A comprehensive review on mobilized thermal energy storage 
307 TNO and DBDH (2021) Best practices for planning and construction of thermal networks identified in the EU 
308 Dahash et al. (2021) Techno-economic and exergy analysis of tank and pit thermal energy storage for renewables district 
heating systems 

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•  Appropriate  geographical  and  temporal  granularity,  achieving  a  compromise 
between  representing  the  location,  temporal  and  quality  aspects  of  (waste)  heat  and 
considering  the  data  availability  and  model  feasibility.  This  is,  however,  a  problem 
common  to  all  modelling  of  (district)  heating  and  cooling  in  the  EU,  and    modelling 
approaches such as the use of archetypes can be employed; 

•  Disaggregation of results for waste heat and cold, as for policymakers to understand 
their potential contributions to the EU’s heating and cooling sector, it is necessary that 
these contributions are not aggregated with that of renewable heat and cold. 

Eurostat  reporting  on  waste  heat  is  a  limiting  factor  for  adequate  representation  in 
energy systems models. A review of Eurostat reporting of waste heat is given by the JRC 
(2021).309 The JRC highlights that waste heat of high temperature can be used multiple times 
(‘cascading use’), but that “use of waste heat and cold is not easy to account for using the 
standard energy balances methodology”, and that hence each cascaded use of waste heat is 
accounted  for  as  new  energy,  with  a  primary  energy  factor  of  1.  Moreover,  waste  heat  is 
currently  categorised  under “other  sources”.310  In  addition  to  not  allowing  better  analysis  of 
waste  heat  statistics,  this  means  that  Eurostat  definitions  are  not  in  line  with  the  REDII. 
Therefore, while explicit accounting of waste heat in Eurostat’s energy balance would allow 
for a better representation of it by energy modellers there are actions to be taken to achieve 
this. 

The  analysis  of  relevant  heating  and  cooling  decarbonisation  scenarios  and  other 
modelling data confirms that waste heat and cold are still insufficiently represented in 
the  main  modelling  tools  used  for  EU  policymaking.  The  METIS  study  “Cost-efficient 
district  heating  development”311  demonstrates  the  capabilities  of  the  METIS  heat  model  by 
analysing the cost-efficient decarbonisation of the EU district heating systems. Nine district 
heating systems archetypes are developed, none of which rely on waste heat for some of its 
needs. The main reason for this seems to be the study maps the archetypes to 2030 based 
on  district  heating  supply  scenarios  developed  in  another  study312,  which  in  turn  did  not 
consider  the  waste  heat  potential.  Moreover,  modelling  based  on  archetypes  cannot  be 
generalised as waste heat potential are very site specific. This illustrates the importance of 
realisable waste heat potential assessments as inputs for modelling exercises.  

309 JRC (2021) Defining and accounting for waste heat and cold 
310 Eurostat (2019) Energy balance guide - Methodology guide for the construction of energy balances & Operational guide for 
the energy balance builder tool 
311 Artelys (2018) METIS Studies - Study S9 - Cost-efficient district heating development 
312 Fraunhofer ISI et al. (2017) Mapping and analyses of the current and future (2020 - 2030) heating/cooling fuel deployment 
(fossil/renewables) - Work package 3: Scenarios for heating & cooling demand and supply until 2020 and 2030; Work package 
4: Economic Analysis 

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Another example concerns the development of scenarios through the PRIMES energy system 
model. In the steam-heat model of PRIMES, the power, industrial and district heating sectors 
are  connected,  but  representation  of  industrial  or  other  waste heat  sources currently  is  not 
explicit and falls into the category of ambient heat.313 Data of policy scenarios developed with 
PRIMES  also  does  not  explicitly  report  the  contributions  of  waste  heat  –  for  example  the 
scenarios employed for the impact assessment of the Fit-for-55 package.314 

4.2.2.  Economic and financial barriers 

4.2.2.1. Profitability/long payback period 

Profitability-related  issues  of  waste  heat  utilisation  is  a  fundamental  barrier  for  the 
utilisation  of  waste  heat.  There  exists  a  number  of  interrelated  challenges  regarding  the 
economics  of  waste  heat  utilisation  (with  issues  related  to  pricing  signals  and  project 
complexity/uncertainty addressed in the following sub-sections):315 

•  High investment volumes: The recovery and utilisation of WH/C can require significant 
investments  in the form of  heat  exchanges, monitoring  and  control,  and other  on-site 
equipment.  Moreover,  depending  on  the  waste  heat  source  further  investments  are 
required to address the temporal/location/quality mismatch. Typical solutions will include 
thermal  energy  storage,  heat  pumps  to  upgrade  temperatures  (large-scale  or  at  the 
consumer sites), and refurbishing of the heating/cooling networks to reduce operating 
temperatures. Bottlenecks in the heat pump supply chain316 may also increase costs for 
non-conventional waste heat projects (or delay them); 

•  Low valuation of waste heat: District heating operators typically have a profit motive 
or a mandate to develop or purchase waste heat only when competitive to other options 
(while considering other objectives such as decarbonisation of heating systems). Thus, 
prices paid for waste heat may be low and insufficient to recover investments, especially 
in  summer  when  heat  demand  is  low  and  excess  waste  heat  is  available  from  more 
sources (as highlighted by three survey respondents); 

•  Opportunity costs for waste heat providers: In addition to potentially having a low 
valuation,  providing  waste  heat  according  to  contractual  requirements  may  in  certain 
situations  call  for  providers  changing  the  operation  of  their  assets  (see  the  EMB3Rs 
case study in the annex). Hence, an opportunity cost may be associated with waste heat 
provision that is higher than the potential revenues, making the business case infeasible; 
•  Long payback period: as a consequence of the high upfront costs and potential low 
prices  for  the  heat,  payback  periods  for  associated  investments  can  be  high  while 
providing waste heat is not a core business of the companies, which thus require low 
payback periods, such as 2-3 years. Moreover, district heating operators will have much 
longer depreciation periods for their investments (10 year or more), creating a divergent 
view between waste heat suppliers and offtakers.317 

313 E3-Modelling (2018) PRIMES model - Version 2018 - Detailed model description 
314 European Commission (2021) Policy scenarios for delivering the European Green Deal 
315 Austrian Institute of Technology and Euroheat & Power (2020) Discussion Paper - The barriers to waste heat recovery and 
how to overcome them? 
316 European Climate Foundation and European Heat Pump Association (2023) EU Heat Pump Accelerator - A joint plan for 
boosting heat pump deployment and meeting the REPowerEU targets 
317 Austrian Institute of Technology and Euroheat & Power (2020) Discussion Paper - The barriers to waste heat recovery and 
how to overcome them? 

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Profitability is an issue for all waste heat sources, for example data centres. Data centres 
have most waste heat available in summertime, and while thermal energy storage solutions 
can  be  deployed  (e.g.  aquifer  TES  in  the  Netherlands),  this  is  not  always  the  case.  Also, 
frequently  district  heating  operators  are  not  able  to  price  the  waste  heat  for  offtake  (or  are 
unwilling  to  offer  higher  prices  considering  other  alternatives).  Moreover,  investments  are 
necessary to recover the waste heat, upgrade it (as it is typically low quality in the absence of 
widespread liquid cooling in data centres) and sometimes provide heat from back-up sources, 
Hence, data centre operators argue that they often offer waste heat at a loss, but that it is still 
required to obtain a ‘social license to operate’. Five other stakeholders have supported this as 
a main barrier in their qualitative responses to the survey, highlighting aspects such as waste 
heat sale not being a core activity of the owners of industrial and unconventional waste heat 
alike. 

Although  the  profitability  and  long  payback  period  of  many  waste  heat  utilisation 
projects constitute a barrier to their development, WHU can be a competitive solution. 

As Tilia (2021)318 indicates, the decarbonisation of district heating and cooling systems brings 
economic  benefits,  and  targeted  actions  can  significantly  increase  the  competitiveness  of 
renewable and waste heat and cold such as technological innovation (particularly in system 
integration), cost reductions through learning effects and exploitation of synergies with other 
local  and  urban  infrastructure.  Thus,  public  support  to  waste  heat  utilisation  projects  is  not 
meant  to  compensate  for  the  lack  of  competitiveness  of  the  solutions  –  rather,  it  aims  to 
achieve dynamic economic efficiency by bringing down the cost of such solutions in the long-
term, and to internalise positive climate, environmental and system integration externalities of 
waste  heat  utilisation  (for  example,  reduced  air  pollution,  greenhouse  gas  emissions  or, 
compared to individual heat pump-based solutions, reduced electricity network congestion). 
As such, Tilia indicates that direct and indirect financial support instruments are a key success 
factor for the decarbonisation of heating and cooling systems. 

Even when subsidies are available to internalise positive externalities and address the 
profitability issues of WHU, they may be inadequately designed, representing a barrier 
in practice. The EMB3Rs case study (all case studies are detailed in the annex) highlights 
that support mechanisms open to various decarbonisation solutions (not only waste heat and 
cold utilisation) may not be adequate due to the specificities of waste heat utilisation due to 
for example the higher risks faced by waste heat suppliers  and district heating and cooling 
system  operators.  Moreover,  the  period  for  implementation  of  the  subsidies  may  be  short 
compared  to  the  long  lead  time  for  developing  waste  heat  projects,  as  illustrated  by  the 
Amsterdam Metropolitan Area case study. The StEB Köln / CELSIUS case study shows that 
subsidy mechanisms targeting larger projects (for example aiming to decarbonise an entire 
neighbourhood)  may  not  be  suitable  for smaller projects  leveraging  non-conventional  small 
waste heat sources for decarbonising individual end-users.  

Subsidies can also require that recipients own the subsidised assets, making it more difficult 
to implement waste heat as service solutions, where a third-party would own and operate the 
waste heat recovery assets instead of the facility owner. Furthermore, financing mechanisms 
for heating and cooling are usually targeted at projects, with a lack of support mechanisms for 

318 Tilia (2021) Integrating renewable and waste heat and cold sources into district heating and cooling systems 
Case studies analysis, replicable key success factors and potential policy implications 

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planning activities. There is also over-reliance on EU funds (as opposed to national ones) due 
to the insufficiency of national funds.319 

4.2.2.2. Inadequate pricing signals 

Inadequate price signals - when prices do not internalise all the costs and benefits of 
the different heat and cold sources - distort competition between the waste heat and 
other sources. Inadequate pricing signals involves aspects affecting both the costs as well 
as  possible  revenue  streams  (including  subsidies)  of  waste  heat  and  alternative  solutions 
(fossil-based, but also renewable heat and cold). The main issues related to price signals to 
consider are: 

•  Carbon pricing and energy taxation: Carbon pricing and energy taxation is seen as 
essential to  increase the  competitiveness  vis-à-vis fossil  sources,  a  challenge  shared 
with renewable heating and cooling sources.320,321 Thomas et al. highlight the importance 
of carbon pricing for decarbonising the building sector in EU, while indicating it needs to 
be combined with other policies in order to incentives the deployment of clean solutions, 
considering  demand  for  heating  is  highly  inelastic.  The  authors  also  indicate  that  the 
potential of adequate carbon pricing (and also energy taxation) can be enhanced if the 
revenues  are  recycled  towards  measures  incentivising  clean  heating  sources  and 
energy  efficiency  measures for  buildings.322  Lygnerud  et  al.  (2021)323  indicate  carbon 
prices should be set at the level of forecasted damages from climate change, and that 
national carbon pricing schemes have a role to complement the EU ETS. While the CO2 
pricing  can  have  incentivising  effects  to  cleaner  technologies,  economists  also 
acknowledge  that  in  absence  of  the  wide  access  to  cheaper  and  renewable  or  clean 
energy,  the  cost  effectiveness  of  the  excessive  measures  could  put  disproportionate 
burden on industries and on the purchasing power.  
This final cost of energy includes also high electricity excise taxes, other levies and VAT 
disincentivising  the  use  of  heat  pumps  to  upgrade  (waste)  heat.  For  example,  many 
Member  States  apply  the  standard  VAT  rate  for  electricity.324  Some  are  however 
considering tax exemptions on electricity consumption for the operation of heat pumps, 
such as Finland325;  

•  Subsidies  to  alternative  solutions:  while  explicit  or  implicit  subsidies  to  fossil  fuels 
may  exist  (e.g.  in  the  form  of  direct  subsidies  but  also  through  reduced  taxation 
respectively), this issue also covers the provision of subsidies to alternatives such as 
renewable heat or high-efficiency cogeneration, when the same or similar subsidies are 
not available to the utilisation of waste heat.326,327 

319 Energy Cities (2023) EU Tracker - Local Heating and Cooling Planning in EU Member States 
320 ETIP SNET and RHC (2022) Coupling of Heating/Cooling and Electricity Sectors in a Renewable Energy-Driven Europe 
321 Trinomics et al. (2021) Policy Support for Heating and Cooling Decarbonisation - Roadmap 
322 Thomas et al. (2021) Pricing is just the icing: The role of carbon pricing in a comprehensive policy framework to decarbonise 
the EU buildings sector. 
323 Lygnerud et al. (2021) Low-Temperature District Heating Implementation Guidebook. Final Report 
324 EHPA (2023) VAT on heat pumps and electricity in Europe 
325 Council Implementing Decision (EU) 2022/1004 of 17 June 2022 authorising Finland to apply a reduced rate of taxation to 
electricity supplied to certain heat pumps, electric boilers and recirculating water pumps 
326 Wheatcroft et al. (2020) The Role of Low Temperature Waste Heat Recovery in Achieving 2050 Goals: A Policy Positioning 
Paper 
327 University of Aberdeen et al. (2023) Overview of Heating and Cooling: Perceptions, Markets and Regulatory Frameworks for 
Decarbonisation. Deliverable 3 – Overview of monetary and non-monetary incentives for the uptake of District Heating and 
Cooling and Heat Pumps 

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•  Valuation of power system flexibility: In countries where power system flexibility is in 
high demand, modern district heating systems equipped with multiple sources have the 
capability to optimise their operations. By responding to pricing signals for electricity and 
heat  supply  and  demand,  these  systems  can  effectively  arbitrate  between  various 
energy sources.328  Additionally, by leveraging thermal energy storage, they can provide 
valuable  flexibility  to  the  power  system.  This  flexibility  includes  services  such  as 
balancing  the  grid  and  managing  congestion  effectively.  However,  this  requires  that 
flexibility is adequately valued by systems operators and market parties, while currently 
there are still multiple barriers for the provision of flexibility from small and new actors 
across the EU despite improvements, as indicated for example by ACER (2021)329 and 
more recently  smartEn (2023)330  and ENTSO-E  (2023).331  Both  payment for flexibility 
provision as well as signals to implicit flexibility (such as appropriate electricity network 
tariff  structures)  reflecting  the  system  benefits  of  the  flexibility  solutions  should  be 
pursued, as highlighted by one survey respondent.  
As the need for power system flexibility grows, this could become a significant source of 
revenues for waste heat providers and district heating operators, as long as the flexibility 
services are adequately valued. Moreover, non-monetised longer-term flexibility benefits 
of collective heating solutions such as avoided electricity network congestion may not 
be  appropriately  considering  in  heating  and  cooling  decarbonisation  plans  (further 
discussed in section 4.3.3). 

While energy taxation issues refer especially to low energy excise taxes on fossil fuel 
consumption, the taxation of (waste) heat may also distort pricing signals. For example, 
in  Denmark  a  surplus  heat  tax  exists,  taxing  fuel-based  waste  heat  from  processes  that  is 
used for space heating or cooling or water heating. The purpose of the tax is to incentivise 
energy  efficiency  and  reduce  the  surplus  heat  generation.  Since  2022,  companies  may  be 
exempted from the tax when selling the waste if they are part of an energy efficiency scheme 
in accordance with the Heat Supply Act. This exemption should facilitate the external utilisation 
of  waste  heat  while  at  the  same  time  incentivising  energy  efficiency  measures  by  the 
provider.332 

The  most  important  role  of  pricing  signals  is  to  guide  investment  decisions  in  the 
heating and cooling sector, although price signals also affect the operation decisions 
of  waste  heat  providers,  heat  network  operators  and  consumers.  Heat  and  cold 
production, transport and end-use equipment have long technical lifetimes, and while modern 
district heating systems operators may arbitrage between different heat sources in reaction to 
prices, investments will constrain the options available to operators and consumers. Hence, 
pricing signals will in the future play a role guiding the operational decisions of actors (thus 
also providing flexibility to the energy system), but first and foremost should effectively signal 
investments in clean heating and cooling technologies. 

328 Tilia (2021) Integrating renewable and waste heat and cold sources into district heating and cooling systems 
Case studies analysis, replicable key success factors and potential policy implications 
329 ACER (2021) ACER Electricity Wholesale Market Volume - 2020MMR. Focus: Barriers to efficient price 
formation and easy market entry and participation for new market entrants and smaller actors 
330 smartEn (2022) The smartEn Map 2022 – Ancillary Services 
331 ENTSO-E (2023) Study on Power and Heat Sectors: Interactions and Synergies 
332 Danish Tax Administration - E.A.4.6.10 Waste heat 

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4.2.2.3. Project  uncertainty,  complexity  and  risk  aversion  of  DHC 

operators/split incentives 

Complexity, uncertainty, and risk aversion for waste heat projects are critical barriers. 
Even if pricing signals are correctly set and a waste heat utilisation project is demonstrably 
profitable, it may not go ahead. The uncertainties around a waste heat utilisation project are 
multiple:333 

•  The availability and quality of the waste heat source may vary in the long-term, as 
it depends on processes in sectors such as industry, services, waste and wastewater 
management,  and  transport,  as  well  as  on  the  companies  in  those  sectors  not  going 
bankrupt  or  relocating  (so-called  termination  of  the  waste  heat  source).334  Three 
stakeholders indicated this as a main issue in their survey responses. This is different 
than  the  temporal  and  quality  mismatch  discussed  in  section  4.3.1,  although 
dependency issues are higher for high-temperature waste heat sources, as these are 
more difficult to replace; 

•  The valuation of waste heat and other pricing signals discussed in the sub-sections 
above are also uncertain, with prices of waste heat, and competing (fossil) commodity 
and  of  ETS  emission  allowances  /  national  carbon  markets  varying  and  impacting 
investment decisions; 

•  The electricity price also influences waste heat projects, which often depend on heat 
pumps  for  upgrading  or  supplementing  the  waste  heat,  thus  affecting  especially  low-
temperature waste heat sources.335 The uncertainty of electricity prices is also linked to 
uncertainty  of  flexibility  services  in  the  power  system,  although  they  are  not  fully 
correlated.  A  survey  respondent  indicates  in  this  regard  that  taxes  on  electricity 
consumption are also key. 

Uncertainty  influences  investment  decisions  of  waste  heat  providers.  Moreover,  it 
represents a barrier also due to the complexity of the waste heat utilisation projects, 
which often involved multiple parties (and at least an offtaker party). Heat offtakers such as 
district  heating  operators  typically  prefer  heat  sale  agreements  with  a  long  duration,  which 
waste heat providers may be unwilling to provide.336 Moreover, district heating operators may 
prefer  solutions  they  are  more  familiar  with,  such  as  renewable  heat  and  large-scale  heat 
pumps.337 Or certain parties may be best placed to own and operate certain assets for waste 
heat  recovery  and  transmission,  but  lack  the  required  expertise  to  operate  in  hazardous 
environments  such  as  industrial  facilities  or  sewers,  as  highlighted  by  the  StEB  Köln  / 
CELSIUS case study (detailed in the annex). 

Trade-offs  may  exist  between  addressing  project  uncertainty  and  complexity.  One 
interesting solution to address waste heat availability and counterparty bankruptcy risks is to 
source heat from multiple providers (waste and/or renewable-based). But the unbundling of 
vertically  integrated  district  heating  operators  and  the  introduction  of  third-party  access 

333 Austrian Institute of Technology and Euroheat & Power (2020) Discussion Paper - The barriers to waste heat recovery and 
how to overcome them? 
334 LSE et al. (2021) ReUseHeat D2.3 Efficient Contractual Forms and Business Models for Urban Waste Heat Recovery 
335 Lygnerud (2023) Urban waste heat recovery as an enabler of the energy transition policy implications and barriers 
336 Austrian Institute of Technology and Euroheat & Power (2020) Discussion Paper - The barriers to waste heat recovery and 
how to overcome them? 
337 Lygnerud (2023) Urban waste heat recovery as an enabler of the energy transition policy implications and barriers 

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requirements facilitates the connection of waste heat suppliers to networks but contributes to 
the  contracting  complexity  of  the  projects.338  Mobile  thermal  energy  storage  solutions  can 
serve  to  reduce  dependency  risks,  serving  as  an  alternative  to  heat  transport  through 
networks.  Mobile  thermal  energy  storage  reduces  the  dependency  of  both  end-users  and 
(waste) heat providers. In this way mobile thermal energy storage solutions allow providers to 
diversify the heat offtakers, and consumers to diversify their heat supply structure. 

In order to address the lack of incentives for district heating and cooling operators to 
connect third-party suppliers to the network, third-party access (TPA) requirements can 
be imposed but are not always an appropriate solution. Tilia (2021)339 indicates TPA rules 
are  one  of  the  national  policies  critical  for  the  successful  decarbonisation  of  heating  and 
cooling systems. However, TPA rules may not be economically efficient for all networks, as 
unbundling  between  heat/cold  production  and  distribution  may  not  be  practical  in  smaller 
networks, as the lack of coordination between multiple producers and consumers may actually 
lead  to  an  inefficient  system  operation,  and  as  other  solutions  may  be more  appropriate to 
reduce  costs  to  consumer  and  decarbonise  the  systems.  Perhaps  most  importantly,  older 
district  heating  systems  operating  at  higher  temperatures  will  just  not  be  suitable  for  many 
waste or renewable dispersed, lower-temperature heat sources. In such systems, TPA rules 
may  not  be  adequate  as  technical  aspects  limit  the  capacity  to  provide  third  parties  the 
possibility to inject heat. 

TPA rules for heating and cooling systems are not in place in many Member States, and there 
is  significant  variation  in  the  exact  rules  in  the  Member  States  that  do  have  TPA.  The 
appropriateness of TPA rules depend among other factors on the ownership structure of the 
DHC  system  and  any  unbundling  rules  in  place,  the  size  of  the  system  and  the 
competitiveness  of  third-party  heating  and  cooling  providers.  Moreover,  TPA  rules  are  in 
themselves  not  sufficient  to  ensure  the  integration  of  third-party  sources  and  need  to  be 
combined with other measures.340 

Policymakers have tried to address uncertainties through other mechanisms besides 
TPA requirements, such as regulating the (waste) heat price. Since 2022, a regulation is 
in place in Denmark setting a price ceiling for the tariffs district heating operators can charge 
for purchasing and supplying waste heat. The price ceiling is based on the average costs of 
the cheapest renewable heating alternative. The price ceiling should be robust to short-term 
cost  fluctuations  and  is  fixed  for  the  duration  of  the  heat  supply  agreement.  Waste  heat 
providers  with  a  capacity  below  250  kW  are  exempted,  and  other  exceptions  exist  for 
temporarily exceeding the price ceiling or for district heating systems with atypical costs. The 
approach should reduce uncertainty, for example for data centre operators, although a definite 
methodology  for  setting  the  price  ceiling  should  still  be  developed  by  the  Danish  energy 
regulator.341 

The  involvement  of  financial  investors  in  waste  heat  utilisation  projects  can  also 
constitute a significant financial barrier. Higher availability of funds could help address the 
profitability  barrier,  by  reducing  the  cost  of  capital  to  financing  waste  heat  projects  and 

338 University of Aberdeen et al. (2023) Overview of Heating and Cooling: Perceptions, Markets and Regulatory Frameworks for 
Decarbonisation. Deliverable 3 – Overview of monetary and non-monetary incentives for the uptake of District Heating and 
Cooling and Heat Pumps 
339 Tilia (2021) Integrating renewable and waste heat and cold sources into district heating and cooling systems. 
Case studies analysis, replicable key success factors and potential policy implications 
340 University of Aberdeen et al. (2023) Overview of Heating and Cooling: Perceptions, Markets and Regulatory Frameworks for 
Decarbonisation. Deliverable 3 – Overview of monetary and non-monetary incentives for the uptake of District Heating and 
Cooling and Heat Pumps 
341 Monsalves et al. (2022) Regulatory Frameworks and Business Models for Data Centres Integrated to the Energy System: A 
comprehensive review of the rules and incentives affecting the provision of flexibility and waste-heat recovery by data centres 
in Denmark 

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covering a funding gap in the first place. However, waste heat project promotors may lack the 
knowledge to conduct a risk assessment due diligence in line with standards from the financial 
sector,  while  investors  typically  see  the  projects  as  paradoxically  too  small  to  attract 
interest.342,343 These barriers are confirmed for example in the case of the Irish district heating 
sector.344 

4.2.3.  Legislative and regulatory barriers 

4.2.3.1. Limited  replicability  of  solutions  and 

lack  of  standardised 

contracts/tools 

is  a  challenge,  especially 

Replicating  waste  heat  utilisation  solutions 
for 
unconventional  waste  heat  resources,  and  the  transaction  costs  can  impact  the 
competitiveness of waste heat projects compared to other heat sources.345 Waste heat 
projects  are  characterised  by  their  specificity  and  locality.  While  advancements  like  pre-
insulated  pipes  have  facilitated  the  development  of  third-generation  district  heating  and 
cooling systems, the success of these systems and the utilisation of waste heat still rely on 
several  factors.  These factors  include the  location,  profile,  and quality  of  heat  sources,  the 
condition  and quality  of the  existing  building  stock, the  demand  patterns  and locations, the 
status  of  the  heating  and  cooling  networks,  and  the  overall  built  environment.  These 
considerations,  among  others,  play  a  crucial  role  in  determining  the  feasibility  and 
effectiveness of waste heat utilisation in district heating and cooling systems. The projects are 
also  complex,  involving a number  of  actors  including  equipment  and service providers  and 
local  authorities,  as  already  discussed.  Lygnerud  et  al.  (2021)  do  note  that  the  number  of 
parties  involved  in  unconventional  waste  heat  projects  should  decrease  as  experience  is 
developed.346 

Limited replicability leads to the need to develop contracts for the heat sale on a case-
by-case  basis,  and  permitting  procedures  for  the  waste  heat  utilisation  are  also  not 
standardised, potentially forming a barrier to the development of the projects. This has 
been mentioned in detail as a barrier to waste heat utilisation by a survey respondent, and 
LSE et al. (2021)347 provide a guide for developing heat supply contracts for urban waste heat 
projects exactly to address this issue. The importance of this barrier should however not be 
overstated  -  a  majority  of  stakeholders  interviewed  in  the  ReUseHeat  project  indicated  a 
preference  for  tailored  contracts,  and  the  StEB  Köln  /  CELSIUS  case  study  indicates  that 
operators are able to develop standard contracts themselves after a few waste heat utilisation 
projects. This suggests that while publicly available standard contracts could help waste heat 
utilisation, not all stakeholders agree and furthermore it is important to maintain contractual 
flexibility to account for the specificities of individual waste heat projects.348,349  

342 Lygnerud (2023) Urban waste heat recovery as an enabler of the energy transition policy implications and barriers 
343 Wheatcroft et al. (2020) The Role of Low Temperature Waste Heat Recovery in Achieving 2050 Goals: A Policy Positioning 
Paper 
344 Government of Ireland (2019) District Heating: Consultation to Inform a Policy Framework for the Development 
of District Heating in Ireland 
345 Austrian Institute of Technology and Euroheat & Power (2020) Discussion Paper - The barriers to waste heat recovery and 
how to overcome them? 
346 Lygnerud et al. (2021) Contracts, Business Models and Barriers to Investing in Low Temperature District Heating Projects 
347 LSE et al. (2021) ReUseHeat D2.3 Efficient Contractual Forms and Business Models for Urban Waste Heat Recovery 
348 Tractebel Engineering (2019) ReUseHeat D2.1 Market and stakeholder analysis 
349 Lygnerud et al. (2021) Contracts, Business Models and Barriers to Investing in Low Temperature District Heating Projects 

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4.2.3.2. Lack  of  governance  and  planning,  including  information  on 
potentials and integration across carriers and with urban planning 

A  number  of  governance  and  planning  challenges  arise  from  waste  heat  utilisation 
projects  being  highly  specific  and  complex.  More  specifically,  these  planning  and 
governance challenges related to: 

•  Assessing/mapping the waste heat potential at the national to local levels 
•  Providing  adequate  policy  signals  at  the  national  level  to  guide  regional  and  local 
authorities and other stakeholders in planning the decarbonisation of the heating and 
cooling sector. 

•  Planning of integrated urban heating and cooling systems,350 as part of broader urban 
development  /  spatial  and  energy  planning  activities,  anticipating  infrastructure 
synergies351 

Heating and cooling planning linked to spatial planning and integrated across all levels 
is critical to facilitate waste heat utilisation. Spatial planning is required to develop waste 
heat utilisation for district heating and cooling purposes, given the spatial constraints in urban 
environments detailed in section 4.3.1. The University of Aberdeen et al. (2022)352 note that 
heating and cooling planning is a central tool for municipalities to “plan and decarbonise their 
heat supply within a defined geographic area. It takes into account the local characteristics 
and potential of heat supply, using an analysis of existing and potential heat supply, scenario 
modelling  and  heat  strategy  development.”  The  authors  note  also  that  besides  further 
developing heat planning as part of the broader spatial energy planning in the Member States, 
it is important to ensure that such planning (particularly if conducted at the national level) has 
a high resolution as well as involve authorities and stakeholders from the national to the local 
level, in order to guide the decarbonisation of the heating sector at the local level.  

Trinomics  et  al.  (2021)353  further  elaborate  on  the  requirements  for  integrated  planning  at 
national, regional and local level, from the development of a vision and definition of long-term 
targets, evaluation of renewable (and waste) heat potentials, development of scenarios and 
enabling  local  authorities  to  conduct  and  implement  local  heat  plans.  These  issues  were 
viewed as critical by many participants of the project workshop (see results in annex section 
6.4). 

Heating and cooling planning practices vary significantly across Member States. While 
some  countries  are  frontrunners  in  integrated  heat  planning,  notably  Denmark  and  more 
recently Germany, Austria and Scotland, its broader application in the EU is only starting. A 
review of the first integrated National Energy and Climate Plans did not find specific mentions 
of heat planning. Nonetheless, 7 Member States linked spatial energy planning to heat (AT, 
DK, FR, LU, NL, PL, SI), 7 more implemented or planned a national strategy or programme 

350 Tractebel Engineering (2019) ReUseHeat D2.1 Market and stakeholder analysis 
351 Tilia (2021) Integrating renewable and waste heat and cold sources into district heating and cooling systems - Case studies 
analysis, replicable key success, actors and potential policy implications. 
352 University of Aberdeen et al. (2023) Overview of Heating and Cooling: Perceptions, Markets and Regulatory Frameworks for 
Decarbonisation. Deliverable 3 – Overview of monetary and non-monetary incentives for the uptake of District Heating and 
Cooling and Heat Pumps 
353 Trinomics et al. (2021) Policy Support for Heating and Cooling Decarbonisation - Roadmap 

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for  heat  (CY,  CZ,  DE,  HU,  IE,  LT,  and  SI),  and  most  Member  States  referred  to  the 
comprehensive assessment required by article 14 of the Energy Efficiency Directive.354 

Waste heat utilisation is gaining increasing attention from national authorities. Figure 
4-6 presents how many times the terms ‘waste heat’ or  ‘surplus heat’ are mentioned in the 
2019 final NECPs (for all Member States) and 2023 draft updated NEPCs (for those Member 
States  for  which  one  was  published  by  07/11/2023).  The  NECPs  analysed  do  not  contain 
relevant mentions of excess heat. Progress can be identified in several aspects: 

•  20 out of the 21 Member States with a draft updated NECP mentioned waste heat; 
•  Total mentions increased from 175 to 205 times (for the 21 Member States for which 

both NECPs were available); 

•  Three Member States that did not mention waste heat at all or barely in their 2019 final 
NECP did so in the draft update (CY, NL, RO), albeit some still to a limited extent; 
•  Most Member States that mentioned waste heat less often in the draft update started 
from a high baseline, mentioning waste heat 15 times or more already in their 2019 final 
NECP. 

Waste  heat  utilisation  still  requires  further  attention  by  national  authorities.  Five 
Member States out of 21 with published 2023 draft updated NECPs mentioned waste heat 5 
times  or  less  in  the  documents.  Moreover,  concrete  measures  to  advance  waste  heat  are 
necessary more than just mentioning it in the NECPs. An analysis by the JRC of the 2019 final 
NECPs indicated that “the potential use of waste heat and cold is often overlooked”, and that 
out of the 27 Member States, only seven MSs describe measures “enabling and promoting 
the use of waste heat from industry” while only four MSs present “an intention to increase the 
use  of  waste  heat”.355  Another  JRC  analysis,  of  the  2018  national  comprehensive 
assessments  for  heating  and  cooling,  indicates  that  “several  Comprehensive  Assessments 
evaluated  only  limited  number  of  technologies,  namely  high-efficiency  cogeneration  and 
efficient  district  heating and cooling,  since  only  those were  explicitly  required  by the  EED”, 
recommending  that  further  technologies  and  heat  sources  be  considered,  including  waste 
heat.356  

354 University of Aberdeen et al. (2023) Overview of Heating and Cooling: Perceptions, Markets and Regulatory Frameworks for 
Decarbonisation. Deliverable 3 – Overview of monetary and non-monetary incentives for the uptake of District Heating and 
Cooling and Heat Pumps 
355 JRC (2021) Assessment of heating and cooling related chapters of the national energy and climate plans (NECPs) 
356 JRC (2018) Synthesis report on the evaluation of national notifications related to Article 14 of the Energy Efficiency Directive 

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Figure 4-6 Mentions of waste or surplus heat in the 2019 final and 2023 draft updated 
NECPs 

Source: own analysis 
Notes: includes 2023 draft updated NECPs published in the Commission website as of 07/11/2023. 
NECPs analysed do not contain relevant mentions of excess heat. 

Guidance  from  national  and  local  authorities  on  the  most  cost-efficient  solutions  to 
decarbonise  heating  and  cooling  can  be  insufficient  for  private  actors  making 
decisions, and additional efforts will be required to increasing the coherence between 
national  and  local  policies. With  the  various  new  obligations  in  governance  and  planning 
arising from the revision of the EED and REDII (see section 4.4.1, a main challenge will be 
the  coordinated  development  of  waste  heat  assessments  as  part  of  the  national 
comprehensive assessments, local heating and cooling plans and NECPs. Moreover, some 
stakeholders indicate that the indicative nature of the local heating and cooling plans fail to 
provide sufficient guidance to private actors. For example, the Amsterdam Metropolitan Area 
case study (detailed in the annex) highlights that the municipality did not have the authority to 
mandate the implementation of the most cost-efficient solution identified in its heating plan for 
each  area  –  which  in  many  cases  was  renewable  and  waste-based  district  heating.  In  the 
absence of strong coordination from regional and local authorities, assurances that a district 
heating network will be commissioned on time or even an obligation to connect to it, private 
actors will often fall back on individual heating solutions. Moreover, in certain Member States, 
for example some German States, municipalities cannot mandate preferred heating solutions, 
although  this  is  expected  to  change  in  2024.  Further  coordination  is  necessary  not  only 
between national and local policies, but also with energy infrastructure planning.357 

Local planning for heating is still non-existent in almost half of EU Member States, and 
local planning for cooling in even more countries. As of September 2023, most Member 
States  still  lacked  an  appropriate  legal  and  support  framework  to  assist  regional  and  local 
authorities in implementing the EED requirements regarding local heating and cooling plans 
for  municipalities  above  45  000  inhabitants.  Denmark  and  the  Netherlands  ranked  best  in 
Energy Cities’ EU tracker for local heating and cooling plans, but no Member State was ranked 
as  having  an  ideal  mandate  and  support  framework.  Support  for  implementation,  when  it 

357 Energy Cities (2023) EU Tracker - Local Heating and Cooling Planning in EU Member States 

126 

05101520253035ATBEBGCYCZDEDKEEELESFIFRHRHUIEITLTLULVMTNLPLPTSESISKRO2019 final NECP2023 draft updated NECP2023 draft updated NECP not published as of 07/11/2023 
 
 
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exists,  generally  consists  of  guidelines,  practice  and  exchange  groups, 
technical 
assistance/helpdesks,  and  coordination  platforms  at  the  regional  level.  But  support  usually 
targets supply aspects and even individual topics such as renewable heat, failing to take a 
more integrated planning approach.358 

Governance  and  planning  barriers  are  recognised  by  a  wide  range  of  stakeholders, 
including potential providers of unconventional waste heat such as data centre operators.359 
Two  stakeholders  responding  to  the  present  project  survey  highlighted  that,  in  addition  to 
spatial resolution, assessments of the waste heat potential (supporting heat plans) need to 
have a sufficient temporal and heat quality resolution, given the frequent temporal and quality 
mismatch  of  waste  heat  sources  and  heat  demand,  as  detailed  in  section  4.3.1.  Another 
stakeholder  highlighted  that  sometimes  the  heat  potential  assessment  depends  on 
confidential data from e.g. data centre operators.  

4.2.3.3. Accounting of climate and environmental footprint/benefits of waste 

heat utilisation 

The definition of primary energy factors for waste heat by Member States varies and 
can  deviate  from  EU-level  recommendations,  disincentivising  waste  heat  utilisation. 
Several studies highlight the diversity of PEFs and methods used in Member States to define 
the carbon footprint of district heating systems and specifically of waste heat utilised in such 
systems, such as the JRC (2023),360 Trinomics et al. (2021)361 and Fraunhofer ISI (2022). AIT 
and Euroheat & Power argue that the primary energy factor (PEF) values of waste heat used 
in certain Member States such as the Netherlands and Belgium can hinder the utilisation of 
the resource.362  

When  there  is  a  requirement  to  raise  the  temperature  of  waste  heat,  and  non-renewable 
electricity is utilised for this purpose or if the waste heat originates from an industrial process 
reliant on fossil fuels, it can result in a significant carbon footprint. This high carbon footprint 
associated  with  waste  heat  may  discourage  its  utilisation,  especially  when  buildings  are 
striving  to  meet  performance  requirements.  In  such  cases,  additional  on-site  renewable 
energy sources would need to be developed to offset the carbon emissions and achieve the 
desired sustainability goals. This issue is highlighted in the survey by two stakeholders as a 
main barrier to waste heat utilisation. There is also an ongoing discussion about whether, and 
to what extent, excess heat from waste-to-energy combined-heat-and power plants may be 
counted as waste heat. 

Emission requirements for individual networks may in certain cases disincentivise the 
use of waste heat. Even if the carbon emissions are fully allocated to the industrial processes 
and not the waste heat. For example, when the interconnection of two networks with separate 
PEFs is hindered as that would lead to them having a single average PEF, thereby increasing 
that  of  the  network  with  originally  a  lower  PEF  due  to  the  use  of  renewable  and  waste 
heat.363,364 

358 Energy Cities (2023) EU Tracker - Local Heating and Cooling Planning in EU Member States 
359 NeRZ and eco (2019) Utilization of Waste Heat in the Data Center 
360 JRC (2023) Consumers in district heating and cooling 
361 Trinomics et al. (2021) Policy Support for Heating and Cooling Decarbonisation - Roadmap 
362 Austrian Institute of Technology and Euroheat & Power (2020) Discussion Paper - The barriers to waste heat recovery and 
how to overcome them? 
363 DENA (2018) Obstacles and suggestions of external waste heat projects - Panel: 5. Business models, finance and 
investment in the age of digitalisation 
364 Trinomics et al. (2021) Policy Support for Heating and Cooling Decarbonisation - Roadmap 

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Further  adjustments  could  be  considered  regarding  EU  legislation  impacting  waste 
heat  utilisation  for  indirect  applications.  Stakeholders  argue  that  the  definition  and 
recognition in applications other than for district heating and cooling such as heat-to-power 
applications  could  be  improved.  For  example,  regarding  rewarding  under  the  EU  ETS  of 
industrial sites that recover waste heat to produce electricity. These issues related to definition 
are mentioned not only in the literature but also by three survey respondents. 

4.2.4.  Societal barriers 

4.2.4.1. Stakeholders’ knowledge and acceptance of waste heat utilisation 

projects 

This barrier can be separated into knowledge and acceptance and knowledge barriers 
by  actors  directly  affecting  waste  heat  utilisation  projects  and  stakeholders,  as 
illustrated in Figure 4-7: 

•  Knowledge refers to the familiarity/awareness of different actors with waste heat 
recovery and its utilisation in different applications. It also includes the capacity 
to properly employ this knowledge in its decision making. Given the inclusion of 
issues  with  the  decision-making  process  of  stakeholders,  the  “Overview  of 
heating  and  cooling  -  Perceptions,  markets  and  regulatory  frameworks  for 
decarbonisation”  project  refers  to  this  as  the  bounded  rationality  framework 
condition365; 

•  Acceptance refers to the negative perception by various stakeholders of waste 
heat  utilisation  projects,  due  to  fear  of  negative  impacts  on  businesses’ 
operations and revenues, personal expenditures or the climate. 

Figure 4-7 Knowledge and acceptance issues of stakeholders 

Acceptance issues must be properly addressed by policymakers as part of a coherent 
approach to facilitate waste heat. To Fontaine et al. (2020)366 acceptance issues are “the 
most obvious pitfall of heat recovery” and must be considered at the facility but also societal 

365 Fraunhofer ISI et al. (2023) Overview of Heating and Cooling: Perceptions, Markets and Regulatory Frameworks for 
Decarbonisation 
366 Fontaine et al. (2020) Energy recovery on the agenda. Waste heat: a matter of public policy and social science 
concern 

128 

Stakeholder typesEU/national authoritiesLocal authorities(Potential) waste heat providersDHC system operatorsEnd-usersOperational impactsKnowledge / bounded rationalityAcceptance / perceptionIssuesRegarding potential, techs, fundingNot a core businessNegative climate impactsOperational impactsLack of human resources 
 
 
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level.  A  number  of  stakeholders  can  lack  knowledge  or  show  opposition  to  waste  heat 
recovery, including: 

•  Authorities across all levels (EU, national and local); 
•  District heating operators; 
•  Operators of installations with potential for waste heat recovery; 
•  End consumers. 

Waste heat providers for example can have numerous reasons to not be interested in 
such projects, including 1) that they are not part of the core business and will provide only 
limited  revenues,  2)  limited  human and  financial resources;  3) fears  for the  impacts  on the 
assets’ operation.367 

Several studies highlight current and future challenges with the existence of sufficient 
human  resources necessary to deploy waste heat  solutions and district  heating  and 
cooling  solutions  more  broadly.368,369  In  addition,  the  knowledge  and  capacity  of  public 
authorities is also highlighted in the literature as well as by two stakeholders in their survey 
responses. These issues are however not analysed further in this section as they is not an 
issue  specific  to  energy  system  integration,  and  can  be  solved  in  the  medium-term,  thus 
without an indication that there should be an issue in the long-term (as long as the appropriate 
measures are adopted). The Energy Cities EU tracker for local heating and cooling planning 
highlights staffing issues as the key barrier for local administrations.370 

Many stakeholders consider that despite the significant potential, the barriers to waste 
heat utilisation limit its economic potential. The results of the stakeholder workshop polls 
indicate that over half of respondents agree with the statement “waste heat could be a relevant 
but secondary source, with barriers limiting its potential” (annex section 6.4). 

Social  acceptance  can  be  an  issue  for  district  heating  and  cooling  networks  more 
broadly,  whether  they  employ  waste  heat  or  other  sources,  such  as  for  example 
disruptions caused  by  works.371  Acceptance is  indicated  in a  recent study as one of the 
most  frequently  mentioned  framework  conditions  for  the  deployment  of  district  heating  and 
cooling in the EU. Nonetheless, the perception of district heating is generally high in the EU, 
although it can vary significantly from country to country. Acceptance is also higher for existing 
users compared to non-users.372 

Acceptance  issues may  arise  not  only  from  opposition  to waste  heat  utilisation,  but 
also from a perception that its contributions to decarbonisation efforts are marginal at 
best. Stakeholders may perceive waste heat as marginal because of a focus on the electricity 
and  gas  systems,  issues  with  the  representation  of  waste  heat  in  energy  modelling373  (as 
detailed in section 4.3.1), or because of the perception that the various barriers to waste heat 

367 Austrian Institute of Technology and Euroheat & Power (2020) Discussion Paper - The barriers to waste heat recovery and 
how to overcome them? 
368 Trinomics et al. (2021) Policy Support for Heating and Cooling Decarbonisation - Roadmap 
369 Lygnerud (2023) Urban waste heat recovery as an enabler of the energy transition policy implications and barriers 
370 Energy Cities (2023) EU Tracker - Local Heating and Cooling Planning in EU Member States 
371 TNO et al. (2021) Best practices for planning and construction of thermal networks identified in the EU 
372 Fraunhofer ISI et al. (2023) Overview of Heating and Cooling: Perceptions, Markets and Regulatory Frameworks for 
Decarbonisation 
373 Austrian Institute of Technology and Euroheat & Power (2020) Discussion Paper - The barriers to waste heat recovery and 
how to overcome them? 

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utilisation  will  always  severely  limit  its  potential.  Poll  results  during  the  project  workshop 
indicate that: 

•  16  participants  agreed  with  the  statement  that  “waste  heat  could  be  a  relevant  but 

secondary source, with barriers limiting the economic potential”; 

•  Few participants were of the opinion that “Waste heat will be a marginal resource, with 

barriers severely limiting the economic potential”; 

•  Twelve  stakeholders  agreed  that  “Waste  heat  could  be  a  major  resource  for 

decarbonising the EU energy system, with a significant economic potential”. 

There  are  opposing  views  on  how  much  waste  heat  should  be  incentivised  and  its 
equivalence to renewable heat: 

•  Supporters  of  waste  heat  utilisation  put  forth  the  argument  that  the  emissions 
resulting from the activity would happen regardless, and therefore should not be 
attributed  solely  to the  waste  heat.  They  contend  that  in  the  future,  industries  and 
other sources of emissions will be required to decarbonise, largely through mechanisms 
like the EU Emissions Trading System (ETS). Consequently, waste heat, in the long run, 
is expected to originate from renewable or low-carbon sources as these decarbonisation 
efforts take effect. They argue moreover that waste heat can be used multiple times in 
sequence  (‘cascading  use’),  as  high  temperature  heat  can  be  used  in  cascading 
applications  with  gradually  lower  temperature  requirements.  This  would  be  a  highly 
efficient application that should not be disincentivised with a high (fossil) PEF. The AIT 
and Euroheat & Power374 as well as four survey respondents argue that waste heat is 
not treated as an equivalent to renewable energy. As noted in section 4.4.1 changes 
have  been  made  in  the  revised  REDII,  although  waste  heat  and  cold  are  still  not 
considered fully equivalent to renewables in the legislation. 

•  More  critical  stakeholders  argue  against  the  equivalence  of  renewable  energy  and 
waste  heat  and  cold.  In  this  regard,  a  survey  respondent  provided  a  critical  view  on 
waste  heat  utilisation,  indicating  that,  in  line  with  the  energy  efficiency  first  principle, 
waste  heat  should  be  reduced  and,  in  the  future,  even  fully  eliminated,  the  energy 
system  should  not  rely  on  the  availability  of  waste  heat  indefinitely.  The  stakeholder 
indicates district heating networks are assets with a long depreciation period, and that a 
lock-in  into  waste  heat  disincentivising  energy  moderation  or  use  of  renewable  heat 
should be avoided.  

Authorities are developing interesting approaches to try to reconcile the objectives of 
increasing  energy  efficiency  and  promoting  renewable  energy  with advancing  waste 
heat utilisation, although further progress is necessary: 

•  The  recently  agreed  amendments  to  the  Renewable  Energy  Directive  constitute  a 
middle-ground in this regard, allowing Member States to employ waste heat and cold to 

374 Austrian Institute of Technology and Euroheat & Power (2020) Discussion Paper - The barriers to waste heat recovery and 
how to overcome them? 

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meet  the  buildings,  industry,  heating  and  cooling,  and  district  heating  and  cooling 
renewable targets to varying extents; 
The Flanders Heat Plan separately reports on the renewable and non-renewable shares 
of  waste  heat.  Although  currently  only  waste  incinerations  facilities  are  assumed  to 
provide renewable waste heat, the methodology could be expanded in the future for e.g. 
industrial facilities operating on renewable fuels; 

•  Denmark has adjusted its surplus heat tax so that providers selling waste heat to district 
heating  networks  can  be  exempted  from  the  tax,  waste  if  they  are  part  of  an  energy 
efficiency scheme in accordance with the Heat Supply Act.375 

Emitting  guarantees  of  origin  for  waste  heat  should  be  possible  with  the  revised 
European Standard CEN-EN 16325 on guarantees of origin (GOs). The standard revision 
is currently under approval,376 having been expanded to include GOs for heating and cooling, 
likely  including  waste  heat  and  cold  (considering  the  draft  standard  developed  under  the 
FastGO project.377 This should allow waste heat providers to differentiate it from fossil-based 
heat, improving the acceptance of waste heat, for example from data centres.378 

4.3.  Recommendations on the utilisation of waste heat 

4.3.1.  Recent or planned policies and measures  

This section provides an overview of the recent or planned policies and measures at 
the EU level addressing the topic of waste heat and cold utilisation. The main relevant 
EU policies and measures for waste heat utilisation include: 

✓  The 2016 EU Heating and Cooling Strategy briefly addresses the utilisation of 
waste  heat  and  cold,  naming  barriers  that  are  still  relevant  today  (“lack  of 
awareness  and  of  information  on  the  resource  available;  inadequate  business 
models and incentives; a lack of heat networks; and lack of cooperation between 
industry  and  district  heating  companies”),  with  a  specific  action  to  promote 
innovation in the use of renewable and waste heat in CHP; 
The  Renewable  Energy  Directive  II  2018/2001/EU  (REDII)  adopted  in  2018 
already  introduced  specific  measures  for  renewable  and  waste  heating  and 
cooling. The compromise agreement for the amendment of the REDII agreed in 
June 2023379 contains a number of new provisions regarding waste heat and cold 
as well as district heating and cooling. The revised REDII thus contains provisions 
on: 

o  Specific  targets  for  renewables  and  waste  heat,  including  rules  of  how 

waste heat and cold can be counted, in: 

▪  Buildings - art 15a(1a) 

375 Danish Tax Administration - E.A.4.6.10 Waste heat 
376 CEN-CENELEC - prEN 16325 - Guarantees of Origin related to energy - Guarantees of Origin for Electricity, gaseous 
hydrocarbons, Hydrogen, and heating & cooling 
377 https://www.aib-net.org/sites/default/files/assets/news-events/AIB%20Project-
Consult/FaStGO/FASTGO%20task%202%20part2%20EN%2016325_revision_carrier-specific_20200525_consultation.pdf 
378 ENTSO-E (2023) Study on Power and Heat Sectors: Interactions and Synergies 
379 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CONSIL:ST_10794_2023_INIT 

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Industry – art. 22a(1) 

▪ 
▪  Heating and cooling - art. 23(1) 
▪  District heating and cooling – art. 24(4) 

o  Requirement  for  Member  States  to  conduct  an  assessment  of  their 
potential of energy from renewable sources and of the use of waste heat 
and cold in the heating and cooling sector - art. 23(1a); 
Inclusion of the creation of risk mitigation frameworks to reduce the cost of 
capital for renewable heat and cooling and waste heat and cold projects 
as an option for Member State to achieve the heating and cooling sectoral 
target – art. 23(4-5); 

o 

o  Requirement for Member States to ensure operators of district heating or 
cooling  systems  above  25  MWth  are  encouraged  to  connect  third-party 
suppliers, including of waste heat and cold art. 24(4a); 

o  Requirement for Member States to put in place a coordination framework 

for facilitating waste heat and cold, where needed – art. 24(6); 

o  Requirement for Member States on assessing and promoting the valuation 

of system services from district heating and cooling – art 24(8); 

o  Extension  of  the  guarantee  of  origin  system  for  other  carriers  than 
electricity,  being  implemented  for  waste  heat  through  the  revised 
European Standard CEN-EN 16325, currently under approval. 
✓  The recast Energy Efficiency Directive 2023/1791 (EEDII) contains provisions 
related  to  (waste)  heat  and  cold  utilisation.  The  recast  version  includes  thus 
provisions related to: 

o  Metering for heating and cooling- art. 14; 
o  Revised  rules  for  the  national  comprehensive  heating  and  cooling 

assessment and associated cost-benefit analysis – art. 25; 

o  Requirement  for  regional  and  local  authorities  in  municipalities  with  a 
population higher than 45 000 to prepare local heating and cooling plans 
– art. 25(6) 

o  Revised  definition  of  efficient  district  heating  and  cooling  systems  –  art. 

26(1); 

o  Requirement for Member States ensuring non-efficient district heating and 
cooling system operators develop a plan to increase energy efficiency and 
renewable energy – art. 26(5); 

o  Requirement for waste heat utilisation for data centres – art. 26(6) 
o  Requirements for installation level cost-benefit analysis for specific types 
of installations above a certain total energy input threshold, with Member 
States having to remove barriers and provide support for the utilisation of 
waste heat from new or refurbished facilities – art. 26(7); 

o  New  requirements  for  Member  States  developing  the  comprehensive 
assessment  of  national  heating  and  cooling  potentials,  including  the 
consideration of waste heat (Annex X). 

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✓  The Governance Regulation (EU) 2018/1999, which includes specific Member 
State reporting requirements on the heating and cooling sector as well as on waste 
heat specifically – art. 20 and Annex I; 

✓  The 2020 EU Strategy for Energy System Integration highlights the importance 
of WHU as part of the “circular energy system and ‘energy-efficiency-first’” pillar, 
with a specific action for promoting the reuse of waste heat from industrial sites 
and  data  centres  “through  strengthened  requirements  for  connection  to  district 
heating  networks,  energy  performance  accounting  and  contractual  frameworks” 
as part of the revision of the REDII and the EED; 

✓  The REPowerEU Plan explores the impacts of and how to achieve a higher RES 
target  in  2030,  including  what this  would mean  for  the  heating and cooling  and 
district heating and cooling (DHC) sub-targets.380 

✓  The proposed revision of the Energy Taxation Directive aims to introduce a new 
structure  for  minimum  tax  rates  based  on  the  real  energy  content  and 
environmental performance of fuels and electricity, which will ensure that the most 
polluting fuels are taxed the highest; 

✓  The  new  EU  Emissions  Trading  Scheme  (ETS  2)  was  agreed  in  2023  and 
should  price  emissions  from  fuel  combustion  in  the  buildings,  transport  and 
additionally sectors (especially small industry not covered by the original EU ETS), 
with a launch scheduled for 2027. 

4.3.2.  Recommendations  to  advance  waste  heat  utilisation  in  the 

EU 

This section  provides recommendations  to  advance  waste heat  utilisation in the  EU. 
There are many  possible measures that could be adopted in the short and medium-
term,  which  need  to  consider  the  progress  already  done.  Several  new  provisions  to 
promote the utilisation of waste heat and cold in the EU have been introduced with the revision 
of  the  REDII  and  EED  among  others,  as  indicated  in  the  previous  section.  These  new 
provisions take into account some of the recommendations from stakeholders put forward in 
various studies and policy papers and are expected to partially or fully address some of the 
barriers identified.  

The impacts of these new provisions will need to be evaluated in the future before introducing 
related additional measures to close remaining gaps. But the decarbonisation of the heating 
and  cooling  sector  requires  significant  planning  and  long-term  investments,  and  as  such 
achieving  impacts  by  2030  will  require  immediate  action,  while  any  projects  to  be 
commissioned by 2040 should start planning in the early 2030s. These considerations frame 
the recommendations detailed in this section, which aim to complement the recently adopted 
provisions, and monitor their implementation in order to address remaining gaps in the next 
policy cycle. Recommendations are generally addressing the European Commission, if other 
stakeholders are needed or addressed, they are explicitly mentioned. 

380 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52022SC0230&from=EN 

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4.3.2.1. Recommendations to address the technical barriers 

Recommendation 1: Increase support within research and innovation programming for 
technologies enabling utilisation of certain waste heat sources 
Addressee: European Commission 
Related policies & measures: Horizon Europe, SET Plan and Energy Technology & Innovation 
Platforms 
Expected impacts: 2040 

The attention dedicated by policy makers, academia and industry to waste heat compared to 
renewable heat seems to be limited, as evidenced by the proportion of EU funding allocated 
to  waste heat  utilisation  (see  section  4.2.1)  and  the  Renewable  Heating  and  Cooling  ETIP 
Strategic Research and Innovation Agenda,381 which mentions waste/excess heat only a few 
times.  In  the  long-term  to  2040  and  beyond,  a  number  of  new  challenges  should  become 
increasingly apparent for wase heat utilisation. 

These include the need for leveraging unconventional sources of waste heat, including from 
the tertiary sector and hydrogen electrolysers. While the potential and temperatures of such 
sources are smaller than that of industrial waste heat, they should be explored nonetheless 
as they could sometimes be more easily exploited – for example new installations could be 
designed already with the aim to recover waste heat or be combined with the development of 
low-temperature district heating networks.  

Moreover, cooling demand will increase significantly, and thus also the possibility of integration 
of  heating  and  cooling  in  5th  generation  district  heating  (and  cooling)  systems,  with  low-
temperature and possibly double-loop networks. Tilia (2021)382 highlights that district cooling 
is a key success factor for the decarbonisation of heating and cooling system, due to the ability 
to integrate ambient energy and waste cold sources and the synergies with district heating 
systems. 

Hence,  further  EU  support  could  be  given  to  technologies  and  applications  related  to  the 
utilisation of waste heat and cold. Examples where further technological innovation is needed 
and/or scaling up to commercial levels is required comprise: 

•  5th generation district heating and cooling (double-loop) systems; 
•  Mobile thermal energy storage technologies; 
•  Liquid cooling technology for e.g. data centre and electrolysers; 
•  Waste heat recovery from small sources such as wastewater and tertiary buildings; 
•  Waste  heat  recovery  from  future  sources,  including  electrolysers,  methanation 

processes and waste-to-energy with CCS and other CCS applications. 

381 https://www.rhc-platform.org/content/uploads/2020/10/EUREC-Brochure-RHC-SRI-06-2022-WEB.pdf 
382 Tilia (2021) Integrating renewable and waste heat and cold sources into district heating and cooling systems. 
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Recommendation  2:  Provide  guidance  for  Member  States  revising  the  maximum 
feasible distances for transporting waste heat and other thresholds related to the CBA 
exemptions under Article 26(8) of the Energy Efficiency Directive (EU) 2023/1791. 
Addressee: European Commission 
Related policies & measures: Energy Efficiency Directive 
Expected impacts: 2030/2040 

Member  States  can  exempt  installations  from  the  installation-level  cost-benefit  analysis 
defined in Article 26(7) of the Energy Efficiency Directive (EU) 2023/1791. However, Member 
States  tend  to  consider  that  waste  heat  utilisation  is  economically  feasible  within  at  most 
around 20 km from the source, while that distance could be significantly higher depending on 
specific  technical  and  economic  conditions.  The  Commission  could  provide  a  technical 
guidance for Member States to use when defining the distance and other thresholds so that a 
larger number of installations where waste heat utilisation would be economically feasible fall 
under the Article 26(7) CBA requirement. 

Recommendation 3: Improve waste heat accounting in Eurostat’s energy balance. 
Addressee: European Commission, particularly Eurostat 
Related policies & measures: Energy Statistics Regulation, Renewable Energy Directive 
Expected impacts: 2040 

It is difficult with the current energy balance methodology to account for the ‘cascading’ nature 
of waste heat, and moreover waste heat sources are categorised as ‘other sources.’ The latest 
energy balance methodology has been published in 2019.383 The revision of the methodology 
and  (based  on  a  Commission  proposal)  of  the  Regulation  on  Energy  Statistics  (EC)  No 
1099/2008 could introduce a number of improvements that would not only allow to identify the 
specific contributions of waste heat but also facilitate the development of databases for energy 
system modelling. The improvements could include a way to identify how many times a GWh 
of (waste) heat is used in cascaded manner, as well as introducing specific source categories 
(such  as  ‘industrial  waste  heat’  and  ‘non-conventional  waste  heat’).  Discussions  regarding 
waste  heat  statistics  have  taken  place  as  part  of  the  Concerted  Action  on  the  Renewable 
Energy Directive,384 but a clear path should still be identified. 

Recommendation 4: Improve the representation of waste heat in EU policy scenarios. 
Addressee: European Commission 
Related policies & measures: Energy Statistics Regulation, Renewable Energy Directive 
Expected impacts: 2040 

Current major energy system models used to develop EU policy scenarios still insufficiently 
represent the potential and contributions of waste heat. This is due to both data limitations 
(see  for  example  the  recommendation  3)  and  how  waste  heat  is  represented  within  the 
models. Moreover, the  reporting  of modelling  results  often  does  not  provide  data for  waste 
heat  separately.  The  Commission  plays  a  central  role  in  the  development  of  these  major 
models  by  indicating  priorities  and  specifying  the  improvements  to  be  made  in  modelling 
contracts.  In  conjunction  with  efforts  to  improve  the  data  availability,  the  Commission  can 
require and fund the better representation of waste heat utilisation in energy system models. 

383 Eurostat (2019) Energy balance guide - Methodology guide for the construction of energy balances & Operational guide for 
the energy balance builder tool 
384 CA-RES Core Theme 3: Decarbonising Heating and Cooling. CT3 Session Highlights of the 1st, 2nd, 3rd and 4th Plenary 
Meeting 

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4.3.2.2. Recommendations to address the economic and financial barriers 

It is important to emphasise that EU-level actions aimed at addressing economic and 
financial barriers must be developed in strong collaboration with Member States. This 
principle  applies  to  all  EU  measures,  but  it  holds  particular  significance  for  those  targeting 
economic  and  financial  barriers.  The  recent  revisions  of  the  Renewable  Energy  Directive 
(REDII) and the Energy Efficiency Directive (EED) include measures that directly tackle many 
of  the  identified  economic  and  financial  barriers.  These  measures  generally  provide 
incentives, rather than imposing obligations, for Member States to implement specific actions. 
For example, Member States must implement measures to advance the heating and cooling 
renewable energy target of the REDII, among whose options is included the creation of risk 
mitigation frameworks to reduce the cost of capital for renewable heat and cooling and waste 
heat and cold projects.  

Member States should also incentivise larger DHC network operators to connect third-party 
heat suppliers, but not necessarily mandate third-party access. Thus, how far reaching are the 
measures that address the low profitability, uncertainty and complexity of waste heat utilisation 
projects  is  largely  a  choice  of  the  Member  States,  with  EU  provisions  providing  high-level 
requirements  in  this  regard.  Moreover,  funding  for  waste  heat  utilisation  projects  comes 
disproportionately from EU instruments, particularly in countries with no dedicated instruments 
to  district  heating  systems.  This  rationale  underpins  most  of  the  recommendations  of  this 
section. 

Recommendation 5: Provide additional funding for planning and feasibility studies, in 
cooperation with Member States. 
Addressee: European Commission 
Related policies & measures: Renewable Energy Directive, Energy Efficiency Directive, EU 
funding for the energy sector 
Expected impacts: 2030 
Waste  heat  utilisation  faces  many  profitability  and  financial  challenges.  Assessing  the 
feasibility of waste heat projects is central to not only identifying the opportunities, but also 
correctly assessing the associated benefits, costs, and other constraints. The lack of a proper 
assessment leads to delays, cost overruns and frequently the cancellation of projects. Hence, 
feasibility studies can significantly improve the chances of success for waste heat utilisation. 
But as shown, there is a general lack of funding instruments supporting waste heat projects 
more  broadly  and feasibility  studies specifically, particularly in  countries with no tradition  in 
district heating. Regional and local authorities have also been assigned new responsibilities 
regarding  the  local  heating  and  cooling  plans  and  will  require  the  financial  resources  to 
develop  them.  By  increasing  funding  for  heating  and  cooling  planning  and  waste  heat 
utilisation feasibility studies, the EU can support waste heating and cooling utilisation uptake 
in a cost-efficient manner. Member States are then in turn best placed to provide the bulk of 
the support for construction of the projects (although this could also be supported through EU 
funds managed by the Member States, such as was done among others with the Recovery 
and Resilience Facility).  

Recommendation  6:  Provide  technical  assistance  for  Member  States  designing  and 
implementing  support schemes,  including risk mitigation  measures such  as  through 
insurance/guarantee schemes. 
Addressee: European Commission, Member States 
Related policies & measures: Renewable Energy Directive, Energy Efficiency Directive 
Expected impacts: 2040 

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In many cases, national funding schemes for waste heat and cold are either nonexistent or 
have  significant  drawbacks.  These  drawbacks  can  include  the  lack  of  support  for  local 
planning or feasibility studies, limited availability to larger projects only, or excessively short 
timeframes for project completion. These issues pose challenges, particularly considering the 
extensive  lead  time  required  for  waste  heat  projects.  Funding  schemes  where  only  other 
sources of heat are eligible may distort competition, further deteriorating the business case for 
waste  heat.  And  implementing  waste  heat  projects  is  challenging  in  the  first  place,  even 
without  considering  these  factors,  given  their  complexity  and  the  significant  associated 
uncertainties.  Moreover,  paragraph  23(4)  of  the  amended  Renewable  Energy  Directive  II 
requires Member States to implement measures to mainstream renewable energy in heating 
and cooling, including “risk mitigation frameworks to reduce the cost of capital for renewable 
heat and cooling”. 

Therefore, an opportunity exists for Member States introducing or improving support schemes 
for  waste  heat  utilisation,  through  direct  grants  or  loans,  but  also  de-risking  mechanisms. 
However, there have been limited studies dedicated to the best way to design such support, 
no EU-level guidance on the matter exists, nor is there a repository of examples in the Member 
States.  The  Commission  could  therefore  support  Member  States  in  complying  with  article 
23(4) of the Renewable Energy Directive by providing technical assistance to develop the risk 
mitigation frameworks and other support schemes. These could address the different types of 
risks  waste  heat  suppliers,  network  operators  and  consumers  are  subject  to,  including  for 
example counterparty (e.g. bankruptcy), disruption of supply, and opportunity cost risks.  

Recommendation 7: Disseminate good practices for improving pricing signals to waste 
heat utilisation between Member States 
Addressee: European Commission 
Related policies & measures: Energy Taxation Directive, EU ETS 2, Electricity Regulation and 
Directive 
Expected impacts: 2030 
The economic and financial barriers to the utilisation of waste heat arise from factors which 
are  inherent  to  it  but  also  factors  which  are  external.  External  factors  include  how  GHG 
emissions are priced, energy consumption is taxed, which subsidies are available the different 
energy carriers and applications, and how flexibility services are valued.  

As there exists several EU-level initiatives aimed at improving such price signals, including 
the ongoing reform of the electricity market design, revision of the Energy Taxation Directive, 
and creation of a new EU ETS to buildings and transport. Nonetheless, Member States still 
have an important role to address the economic and financial barriers for waste heat utilisation.  
Furthermore, they can anticipate some of the ongoing EU initiatives, particularly the Energy 
Taxation Directive. 

While attention to improving price signals for the heating and cooling sector is increasing, there 
is  limited  information  on  how  to  address  issues  specific  to  waste  heat  utilisation.  Good 
practices do exist – recent examples of Member States which have sought to incentivise the 
utilisation of waste heat and increased energy efficiency include the Danish reform reducing 
taxes  and  removing  administrative  barriers  for  the  consumption  of  waste  heat385  and  the 
reduction in Finland of the electricity tax for data centres which comply with certain energy 
efficiency requirements, including regarding waste heat recovery.386 The Commission could 

385 https://www.emb3rs.eu/danish-parliament-cuts-taxes-on-excess-heat/ 
386 https://www.motiva.fi/files/20768/Energy_Efficiency_of_Data_Centers_in_Finland_-_November_2022.pdf 

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play a role in disseminating such practices and highlighting how they align with already existing 
EU principles for ensuring a level playing field in the energy sector. 

Recommendation 8: Research regulatory and price-based mechanisms to reduce heat 
emissions 
Addressee: European Commission 
Related policies & measures: Industrial Emissions Directive 
Expected impacts: 2040 

The taxation of heat emissions was mentioned frequently by stakeholders as a measure to 
incentivise  waste  heat  recovery  for  on-  or  off-site  utilisation.  The  underlying  principle  for 
restricting heat emissions should be the aim to internalise negative externalities. 

Clear externalities exist related to the consumption of the energy products necessary for heat 
production,  which  could  warrant  measures  restricting  heat  emissions  to  increase  energy 
efficiency. However, such externalities may already be priced in the cost for acquiring these 
energy products. In any case any non-internalised negative externalities upstream of the value 
chain should be priced in that purchase cost. 

Hence the restriction of heat emissions should be based on the direct negative externalities 
caused by the emissions themselves. The question thus arises whether heat emissions are a 
form  of  pollution  or  not.  This  is  clearly  the  case  of  heat  emissions  to  water,  which  impact 
biological processes. But is also the case of heat emissions to air. Positive feedback exists 
between heat waves and the urban heat island effect caused by heat emissions from buildings 
due  to  air  conditioner  use.387  Europe  will  see  more  frequent  and  severe  heat  waves,  with 
important impacts on health,388 which could be worsened by positive feedback between heat 
emissions and the urban island effect. 

There is therefore a rationale for limiting heat emissions – although this needs to be confirmed 
by an impact assessment weighing the costs of environmental and health impacts from the 
heat emissions versus the costs of limiting these emissions. But by incentivising on-site energy 
efficiency measures and the utilisation of waste heat, it is possible measures targeting heat 
emissions  would  show  a  net  societal  benefit  and  even  a  net  financial  gain  for  the  actors 
implementing them. 

Disincentivising emissions could use regulatory (that is, establishing emission limits) or price-
based mechanisms (such as a heat emission tax). There are many challenges with introducing 
either approach to limit heat emissions. The Commission could initiate a study on the topic, 
covering aspects such as: 

•  Determining the societal cost of heat emissions to water, air and soil; 
•  Advantages and disadvantages of a regulatory vs price-based approach; 
•  Sources covered, such as industry, power generation, the built environment and others. 

Given the novelty of such measure, it is unlikely it would be in force by 2030. Moreover, there 
should be a clear reason why the EU should act. Therefore, any study should also assess the 
EU added value as well as consider the subsidiarity principle. There could be an argument for 

387 Luo et al. (2020) City-Scale Building Anthropogenic Heating during Heat Waves 
388 EEA (2021) Europe's changing climate hazards — an index-based interactive EEA report 

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action by Member States separately instead of the EU, but the Commission could still start the 
debate and guide interested Member States in adopting similar measures. 

4.3.2.3. Recommendations  to  address  the  legislative  and  regulatory 

barriers 

Challenges related to the governance and planning of waste heat projects are a central 
barrier from the system integration perspective. Appropriate governance and planning are 
critical to identify the most beneficial options for utilisation of waste heat and decarbonisation 
of the EU heating and cooling systems. Tilia (2021)389 among others highlights appropriate 
governance and planning as key success factor for the decarbonisation of heating and cooling 
systems. 

Recommendation 9: Clarify the contributions of waste heat and develop principles for 
its utilisation towards the upcoming 2040 climate & energy targets. 
Addressee: European Commission 
Related policies & measures: Climate Target Plan 2040, European Climate Law, Renewable 
Energy Directive, Energy Efficiency Directive 
Expected impacts: 2040 

The  EU  Energy  System  Integration  Strategy  explicitly  recognises  the  importance  of  waste 
heat. Moreover, the potential contributions of waste heat are recognised in e.g. the Renewable 
Energy Directive and the Energy Efficiency Directive. 

But  on  one  hand,  there  are  arguments  to  minimising  waste  heat  creation.  The  energy 
efficiency  1st  principle  sets  the  reduction  of  energy  consumption  as  the  first  priority,  which 
means that heat production should be first and foremost reduced and waste heat recovered 
for on-site use. Only unavoidable waste heat should be traded and used off-site. Moreover, 
achieving full net decarbonisation of the EU economy by 2050 means that unabated fossil fuel 
consumption should be phased out (potentially with consumption in very hard-to-decarbonise 
sectors being offset by negative emissions elsewhere – but this will likely not be the case for 
any sector producing waste heat). Hence waste heat from unabated fossil fuel consumption 
should not be incentivised in any manner whatsoever. 

On the other hand, utilisation of unavoidable waste heat (renewable or fossil-based) can make 
a significant contribution to decarbonisation by substituting fossil heat generated through other 
means. Moreover, it is impossible to eliminate waste heat altogether - as industry and other 
sectors decarbonise, there will be a supply of renewable-based waste heat which should be 
utilised whenever cost-efficient. 

Such apparently conflicting policy aims are at the heart of stakeholder positions towards or 
against waste heat utilisation. The EU should walk therefore a tight rope regarding its policy 
towards waste heat: 

•  Avoidable waste heat should be disincentivised and unavoidable but fossil-based waste 

heat phased out; 

•  But  unavoidable  waste  heat  utilisation  should  be  incentivised  (as  long  as  it  is  a  by-
product, i.e. that the main aim of the process was generating the waste heat), including 
in the long-term in the case of renewable-based waste heat. 

389 Tilia (2021) Integrating renewable and waste heat and cold sources into district heating and cooling systems. 
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Achieving our decarbonisation targets will benefit from a clear EU policy which indicates under 
which  conditions  waste  heat  utilisation  is  deemed  beneficial.  The  Commission  could  thus 
refine its policy towards waste heat utilisation by detailing the main principles for waste heat 
utilisation,  in  order  to  guide  the  adoption  or  revision  of  waste  heat-related  measures  as 
proposed  in  other  recommendations  of  this  section  (e.g.  revision  of  the  energy  statistics 
methodology  or  representation  of  waste  heat  in  energy  systems  modelling  and  scenarios). 
This should be paired with overall increased attention to the topic in new or revised heating 
and  cooling  and  system  integration-related  policy  documents,  such  as  the  upcoming  Heat 
Pump Action Plan.390 

Recommendation  10:  Support  national  and 
assessment and planning efforts. 
Addressee: European Commission, Member States 
Related policies & measures: Renewable Energy Directive, Energy Efficiency Directive 
Expected impacts: 2030/2040 

local  authorities 

in  coordinating 

The recent revision of the EED and amendment of the REDII introduced or updated several 
provisions  regarding  the  assessment  of  waste  heat  potentials  and  heating  and  cooling 
planning. These measures are applicable to national and local authorities, as well as different 
categories of operators above a certain annual energy input (as indicated in section 4.4.1). 

A main challenge arising will be the coordinated development of the national comprehensive 
assessments,  the  local  heating  and  cooling  plans,  and  installation-specific  cost-benefit 
assessments. Such policy initiatives will need be coordinated with others such as spatial plans, 
the  NECPs  and  the  Long-Term  Renovation  Strategies.  The  present  analysis  indicates  it  is 
critical  these  employ  the  right  data  and  assumptions,  including  regarding  the  temporal, 
locational and temperature granularity. 

The new requirements will require additional resources from national and local authorities, but 
as seen many Member States to not have yet the regulatory or support framework to empower 
and  help  local  authorities  meet  their  obligations.  Member  States  are  nonetheless  required 
under  the  revised  EEDII  article  30(5)  to  “promote  the  establishment  of  local  expertise  and 
technical assistance, where appropriate through existing networks and facilities, to advise on 
best  practices  with  regard  to  achieving  the  decarbonisation  of  local  district  heating  and 
cooling”. 

Hence  the  Commission  can  play  a  role  by  facilitating  the  sharing  of  best  practices  in 
national/local level planning and coordination activities taking place at the various levels, as 
well  as  providing  direct 
for  planning  and  coordination  (see 
recommendation  5).  This  could  also  include  providing  common  guidance  on  e.g.  how  to 
consider  positive  externalities  of  collective  heating  solutions  (such  as  electricity  network 
investment deferral) in local heating and cooling plans. 

financial  assistance 

390 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13771-Heat-pumps-action-plan-to-accelerate-roll-out-
across-the-EU_en 

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Some related initiatives are already ongoing. For example, as part of the Concerted Action on 
the  Renewable  Energy Directive,  a  specific  heating  and  cooling  session discussed in  2023 
aspects related to the update of the NECPs, with further discussions planned for 2024.391 

Recommendation 11: Evaluate and compare the latest and upcoming national reports 
related  to  heating  and  cooling,  providing  recommendations  for  advancing  the 
utilisation of waste heat and cold. 
Addressee: European Commission 
Related  policies  &  measures:  Renewable  Energy  Directive,  Energy  Efficiency  Directive, 
Governance Regulation 
Expected impacts 2030 

National-level plans and assessments for the basis for guiding stakeholders from the national 
to the local level on how to decarbonise heating and cooling. The EU already evaluates and 
provides recommendations  on many  of  such  documents, for  example the  evaluation  of the 
national  comprehensive  assessments  conducted  or  of  the  heating  and  cooling  related 
chapters of the national energy and climate plans (NECPs) by the JRC.392,393 

The latest national comprehensive assessments have not been evaluated yet. Member States 
should publish new comprehensive assessments in the future, which will need to be evaluated. 
Regarding  NECPs,  the  assessment  of  heating  and  cooling  related  chapters  of  the  2019 
NECPs only briefly covered waste heat and cold due to the lack of attention of Member States 
to its potential in the NECPs, with the JRC assessment including a dedicated recommendation 
in  this  regard.394  The  ongoing  2nd  JRC  evaluation  faces  a  lack  of  data,  particularly  for 
cooling.395  As  of  November  2023,  some  Member  States  had  yet  to  submit  their  2023  draft 
updated NECPs, and revised final versions were due in 2024. 

Hence, there is an immediate opportunity for the Commission dedicating increased attention 
to waste heat utilisation aspects in evaluating the national comprehensive assessments and 
the NECPs, as well as supporting the Member States in improving them in this regard. The 
evaluation and comparison of these reporting milestones could incentivise Member States to 
address waste heat and cold utilisation more extensively and coherently. 

Recommendation  12:  Structurally  gather  data  and  monitor  the  efficacy  of  the  new 
provisions regarding local heating and cooling plans and make the provisions stricter 
if necessary. 
Addressee: European Commission 
Related policies & measures: Energy Efficiency Directive 
Expected impacts: 2040 

The  co-legislators  have  opted  not  to  make  obligatory  the  implementation  of  the  measures 
proposed in the local heating and cooling plans within the revised EED. It remains to be seen 
to  which  degree  local  authorities  will  follow-up  with  the  implementation  of  the  measures 
recommended in the heating and cooling plans – this will strongly depend on the available 
financial resources and expertise, among other factors. The Commission is required according 

391 CA-RES Core Theme 3: Decarbonising Heating and Cooling. CT3 Session Highlights of the 1st, 2nd, 3rd and 4th Plenary 
Meeting 
392 JRC (2018) Synthesis report on the evaluation of national notifications related to Article 14 of the Energy Efficiency Directive 
393 JRC (2021) Assessment of heating and cooling related chapters of the national energy and climate plans (NECPs) 
394 JRC (2021) Assessment of heating and cooling related chapters of the national energy and climate plans (NECPs) 
395 CA-RES Core Theme 3: Decarbonising Heating and Cooling. CT3 Session Highlights of the 1st, 2nd, 3rd and 4th Plenary 
Meeting 

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to the article 35(2) of the EEDII to “evaluate the existing measures to achieve energy efficiency 
increase and decarbonisation in heating and cooling” by 31 October 2025 and every 4 years 
thereafter. 

The periodic monitoring of the implementation of the local heating and cooling plans would 
provide useful information on good practices and common challenges faced by regional and 
local authorities. While the evaluation of the relevant provision of the EEDII should consider 
its efficacy, by the time the Commission launches an evaluation of the relevant provisions as 
part of its obligation under article 35(2), it will be challenging to gather the necessary evidence. 
Evaluating the efficacy of the local heating and cooling plans is also a challenging task given 
the multitude of plans that will exist across the EU. Hence, pro-actively monitoring the efficacy 
of  the  plans  in  a  structured  manner  will  provide  immediate  benefits  in  the  sharing  of  best 
practices as well as in eventually revising the relevant provisions the EEDII. At that time, the 
monitoring  exercise  would  indicate  whether  the  provisions  are  effective,  or  whether  they 
should  be  strengthened  by  e.g.  making  the  implementation  of  cost-efficient  measures 
mandatory.  Further  measures  could  also  then  be  considered,  for  example  requiring  the 
publication  of  (parts  of)  the  results  of  the  installation  level  cost-benefit  analysis  defined  in 
article 26(7) of the recast Energy Efficiency Directive. 

4.3.2.4. Recommendations to address the societal barriers 

Recommendation 13: Ensure that waste heat and cold is included in the curricula for 
initiatives aiming to increase the skills available in the heating and cooling sector. 
Addressee: European Commission 
Related  policies  &  measures:  Net-Zero  Industry  Act,  Heat  Pump  Action  Plan,  funding 
opportunities addressing skills such as LIFE calls 
Expected impacts: 2030 
Skills-related barriers in clean energy technologies have gained much attention. The proposed 
Net-Zero  Industry  Act396  proposes  to,  among  other  measures,  enhance  skills  for  net-zero 
energy technologies and create Net-Zero Europe Platforms for discussions with industry and 
other stakeholders. The proposed net-zero technologies comprise heat-related technologies 
such as heat pumps and geothermal energy, solar thermal, and storage. Other specific heating 
and cooling skills initiatives exist, such as LIFE calls397 and the upcoming Heat Pump Action 
Plan.398 

Waste  heat  projects  face  shortages related to  skills  as  much  as  other  heating  and  cooling 
decarbonisation projects. Moreover, the analysis has shown that stakeholders, from potential 
waste heat providers to network operators and consumers, may have a negative perception 
of waste heat utilisation. Increasing waste heat-related skills would improve both issues, and 
in anyway the curricula for waste heat projects overlaps significantly (but not fully) with other 
heating  and  cooling  areas.  Projects  have  sought  to  increase  skills  in  waste  heat  utilisation 
directly,  but  if  the  EU  is  to  significantly  accelerate  it,  further  human  resources  will  be 
necessary. Hence, while a dedicated large-scale initiative may not be necessary, it would be 
worthwhile to dedicate further attention to waste heat and cold in the curricula for initiatives 
aiming to increase the skills in the heating and cooling sector more broadly. 

396 https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal/green-deal-industrial-plan/net-
zero-industry-act_en 
397 European Commission (2023) District heating and cooling: Enabling modernisation and fuel switch through support for 
investment plans and skills development 
398 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13771-Heat-pumps-action-plan-to-accelerate-roll-out-
across-the-EU_en 

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Recommendation 14: Expand energy source mix disclosure obligations to include gas 
and heat, and provide guidance regarding the carbon footprint of waste heat 
Addressee: Member States, European Commission 
Related policies & measures: Renewable Energy Directive, Energy Efficiency Directive 
Expected impacts: 2030 
Addressing perception issues for waste heat and cold utilisation involves among other aspects 
increasing its visibility to consumers and communicating on its benefits. The EU has already 
adopted  measures  in  this  regard  for  renewable  electricity  through  the  guarantees  of  origin 
system (which should be expanded to renewable fuels and heat with the upcoming approval 
of the revised standard CEN-EN 16325) and energy source mix disclosure obligations as set 
in the Electricity Directive and Regulation.399 

The extension of the electricity supply mix disclosure obligation to other energy carriers would 
increase  consumer  knowledge  and  facilitate  the  comparison  of  various  collective  and 
individual heating and cooling options from a sustainability perspective. Moreover, as waste 
heat  is  the  proposed  revised  standard  CEN-EN  16325,  it  would  improve  perception  as  the 
source  would  be  classified  jointly  (but  reported  separately)  with  renewable  heat  sources. 
Although  many  heat  suppliers  already  do  so,  including  such  requirement  would  ensure  all 
disclosed  their  energy  source  mix,  including  a  minimum  number  of  parameters  to  ensure 
comparability among suppliers. 

4.4.  Case studies on the utilisation of waste heat 

This section details concrete projects on waste heat utilisation in the EU, in order to identify 
barriers,  best  practices and recommendations  arising  from  these projects  and  thus  provide 
inputs to  the  main  analysis  conducted  in  sections  4.2  and  4.3.  The  projects  are  detailed  at 
different levels: 

•  Table 4-3 presents a non-exhaustive overview of waste heat and cold projects in 
the EU, with summary information on aspects such as technical capacities, waste and 
renewable  heat/cold  sources  employed,  best  practices,  energy  production/savings, 
economic aspects and climate and environmental benefits reported; 

•  The  annex  (section  6.6)  presents  detailed  case  studies  on  four  projects  aiming  to 
advance waste heat and cold in Europe. The case studies are based desk research as 
well as interviews with the actors involved in the projects, leading to an in-depth analysis 
and presenting information not available in published reports. Table 4-3 presents four 
projects selected for the case studies. 

399 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32019L0944 

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Table 4-3 Waste heat utilisation case studies 

Case study 

Project detailed 

Matching waste heat sources with potential 
demand 
Urban WHU at different levels for DHC (building, 
sewage, treatment plant) 
Utilisation of waste heat for non-district heating 
applications 

Data centre waste heat utilisation 

EMB3Rs 

StEB Köln and the Celsius project 

CO2OLHEAT waste heat-to-power 

Digital Heat in the Amsterdam Metropolitan 
Area 

Various  publications  already  overview  district  heating  and  cooling  or  waste  heat  and  cold 
projects,  such  as  the  study  “District  heating  and  cooling  in  the  European  Union”  for  DG 
ENER400,  the  JRC  study  “Efficient  district  heating  and  cooling  markets  in  the  EU”401  or  the 
study “Integrating renewable and waste heat and cold sources into district heating and cooling 
systems”402 for the JRC. It must be noted that such analyses often do not focus only on waste 
heat utilisation, rather focusing on renewable heat or its coupling with waste heat sources to 
decarbonise heating and cooling systems.   

Considering the projects listed in Table 4-3, the following high-level conclusions can be drawn: 

✓  Most  projects  are  focused  on  the  utilisation  of  a  single  waste  heat  source  for  district 

heating and cooling applications; 

✓  A limited number of projects explores synergies such as the interconnection of individual 
district heating and cooling systems or the simultaneous utilisation of waste heat and 
cold; 

✓  The projects are of medium size, frequently involving investments of up to tens of million 
Euros, but rarely requiring investments in the order of a hundred or more million Euros; 

400 Tilia et al. (2022) District heating and cooling in the European Union - Overview of markets and regulatory frameworks under 
the revised Renewable Energy Directive 
401 JRC (2022) Efficient district heating and cooling markets in the EU: Case studies analysis, replicable key success factors 
and potential policy implications 
402 Tilia (2021) Integrating renewable and waste heat and cold sources into district heating and cooling systems - Case studies 
analysis, replicable key success, actors and potential policy implications 

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Table 4-4 Overview of case studies for the utilisation of waste heat and cold 

Name 

MS 

Commis-
sioning403 

Technical 
capacities 

Waste/RE 
heat 
sources 

Best practices 

Energy 
production/savings 

Investments/ 
cost savings 

Environmental/ 
Climate benefits 

Graz DH404 

AT  2010-2018 

712 MW DH 
WHR 51 MW 

Industry 
Waste-to-
heat 

WHR + RES 
Thermal energy 
storage 

35 MW (paper mill 
WHR) 

23 M€ inv. 
(paper mill 
WHR) 

GHG, 
NOx,hydrocarbons, 
SO2, dust emission 
reductions 
20 kt CO2/y (paper 
mil WHR) 

Eneregio 
SOBOS405 

AT, 
DE 

Feasibility 
stage 

Unspecified 

Antwerp North 
heat network407 

BE 

2022-
2026408 

60 MW 

CHP 
Industry 
Other 
energy 
production 
processes 

Industrial 
waste 
processing 

Cross-border DH 
system 
Diverse WHR + 
RES sources  

Integrated 
roadmap 
Regulatory 
framework 
analysis 

CO2OLHEAT 
Prachovice410 

CZ  2023 

16 MW 

Industry 
(cement) 

Waste heat-to-
power 

2 TWh /y production 

200 000 € 
(feasibility 
study)406 

GHG emission 
reduction 

59 GWh demand 
(2030) 

210 M€ inv.409 

12 kt CO2/y (2030) 

2.5-3 M€ inv. 
750 k€/y 
savings411 

GHG emission 
reduction 
Water and material 
use savings 

403 Of relevant waste H/C utilization solution 
404 https://op.europa.eu/en/publication-detail/-/publication/5e1fd499-eabf-11ec-a534-01aa75ed71a1/language-en  
405 https://r-cr.de/files/medien/230110%20CEF%20Energy%20Abstract%20Basic%20Presentation%20SOBOS%20DHC%20PMM%20.pdf 
406 https://cinea.ec.europa.eu/news-events/news/cef-energy-eu-invests-around-eur-300000-studies-future-cross-border-renewable-energy-projects-2022-08-30_en 
407 https://indaver.com/expertise/heat-networks/north-antwerp-heat-network  
408 https://indaver.com/fileadmin/Indavercom-files/Documents/Roadmap2030_Warmtenetten_GK_college__3_.pdf 
409 Including all projects of the Antwerp district heating roadmap  
410 https://co2olheat-h2020.eu/demonstration-site/  
411 https://co2olheat-h2020.eu/about-the-project/expected-impacts/  

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Name 

MS 

Commis-
sioning403 

Technical 
capacities 

Berlin Qwark412 

DE  2022 

8 MW HP 

Waste/RE 
heat 
sources 

District cold 
network 

Integrated use of 
cooling and 
heating 

55 GWh of heat/y 

Best practices 

Energy 
production/savings 

Investments/ 
cost savings 

Environmental/ 
Climate benefits 

Geothermal 
energy from 
lignite mining413 

DE  2014 

865 kW heat 
pump 
314 kW CHP 
1860 + 2300 
kW gas-fired 
boilers 
25 m3 TES 

Celsius 
Cologne414 

DE  2013415 

200 + 158 kW 

Odense DHC416 

DK  2019-2020 

1509 MW DH 

6.5 kt CO2/y 
120 000 m3/y 
cooling water 

CO2 emission 
reduction by 32% 
Decreased 
groundwater 
temperature 

42 kt CO2/y 

Open pit 
sump water 
(27 ºC) 

WHR + HP + 
CHP + gas-fired 
boilers 

Reduced fossil fuel 
demand by 26% 

Not mentioned 

Municipal 
wastewater 

Data 
centres 
Industry 
CHP 
Waste-to-
energy 

WWHR at 3 
different levels 
(building, sewage, 
treatment plant) 

WHR + RES 
Thermal heat 
storage 
Coupling with 
electricity sector 

1.7 GWh/y 
production 
(497 MWh/y savings) 

- 

65 MW HPs for WHR 

Data centre: 
17.5 M€ inv 
(data centre 
WHR) 
9.4 M€/y 
savings 

71% CO2 emissions 
reduction 
28% increased 
energy efficiency 

412 https://assets.siemens-energy.com/siemens/assets/api/uuid:7fd9f82d-0c66-4768-aaba-a76953f79f73/SE-Euro-Heat-and-Power-May-22_original.pdf  
413 https://www.euroheat.org/resource/excess-heat-from-lignite-mining-in-bergheim-germany.html  
414 https://smart-cities-marketplace.ec.europa.eu/projects-and-sites/projects/celsius/celsius-site-cologne  
415 https://celsiuscity.eu/wp-content/uploads/2020/02/126-Guidelines-for-the-replicability-of-the-Cologne-Wahn-Demonstrator.pdf  
416 https://op.europa.eu/en/publication-detail/-/publication/5e1fd499-eabf-11ec-a534-01aa75ed71a1/language-en  

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Name 

MS 

Commis-
sioning403 

Technical 
capacities 

Greater 
Copenhagen 
DHC417 

DK 

2019 
(new 
incinerator) 

3000 MW DH 
70 MW DC 
Waste-to-
energy 400 
MW 

Kalundborg 
wastewater as 
heat source418 

DK  2017 

10 000 kW 
heat pump 

Waste/RE 
heat 
sources 

Tertiary 
buildings 
Ambient 
energy 
Wastewater 
treatment 
Waste-to-
energy 
Electrolyser 
waste heat 
(project) 

Municipal 
wastewater 
(20-25 ºC) 

EMB3Rs419 

DK,  
EL, 
PT, 
SE 

Feasibility 
stage 

Various 

Industrial 
Waste-to-
energy 
Data centre 

Aranda del 
Duero420 

ES  2019 

24 MW DH 
Industrial 
WHR 12 MW 

Thermal 
storage 
Industry 
CHP 

Best practices 

Energy 
production/savings 

Investments/ 
cost savings 

Environmental/ 
Climate benefits 

Interconnection of 
DHC networks 
State-of-the-art 
waste-to-energy 
facility 
DC clusters 
BECCS/methane 
production project 

WHR + HP 
Waste heat for 
biogas 
catalysation 

Heat/cold 
resource and 
demand mapping 
 Industry-to-
industry exchange 
Industrial waste 
hot waster 
recovery to DH 
WHR + RES 

WHR + RES 

Waste-to-energy: 
30% of energy 
production 

- 

- 

Decommissioning of 
5.1+8.7 MW fossil-
fired boilers 

7.25 M€ 
investment 
Savings of 
33.6 k€/week 
in 2017-2019 

Not mentioned 

Various 

Various 

Various 

Industrial WHR: 3.6 
GWh/y (potential 15-
40 GWh/y) 

1 M€ inv. 
25-30% 
heating bill 
savings 

1.6 kt CO2/y 
emission reductions 
(expected to grow to 
11 kt CO2/y) 

417 https://op.europa.eu/en/publication-detail/-/publication/5e1fd499-eabf-11ec-a534-01aa75ed71a1/language-en  
418 https://www.euroheat.org/resource/waste-water-as-heat-source-in-kalundborg.html  
419 https://www.emb3rs.eu/case-studies/  
420 https://op.europa.eu/en/publication-detail/-/publication/5e1fd499-eabf-11ec-a534-01aa75ed71a1/language-en  

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Name 

MS 

Commis-
sioning403 

Technical 
capacities 

Waste/RE 
heat 
sources 

Best practices 

Energy 
production/savings 

Investments/ 
cost savings 

Environmental/ 
Climate benefits 

Data centre 

WHR 

- 

- 

1.5 kt CO2/y 

Tallaght District 
Heating421 

IE 

2023 

Paris-Saclay 
district heating 

FR  2022 

4 MW waste 
heat422 
3 MW heat 
pump423 
3 MW electric 
boiler 
50 MW total 
H/C supply424 

Data centre 
Geothermal 

WHR 

Grenoble Pont-
de-Claix427 

FR  2018 

30 MW 
industrial 
waste heat 

Chemical 
industry 

WarmtelinQ 
(Rotterdam 
harbor heat 
regional 
distribution429 

NL  2025 

23 km 
(Vlaardingen-
Den Haag) 
20 km 
(Rijswijk-
Leiden) 

Industrial 
waste heat 

Bidirectional 
(winter/summer) 
heat trade with 
chemical cluster 
WHR + RES 
WHR + RES  
Integrated design 
for future 
expansion to 
whole of South 
Holland430 

26 MW (heating) 
7 MWh (cooling) 
30 MW waste heat 
recovery (winter) 
8 MW heat provision 
to industrial cluster 
(summer) 

51.7 M€ (1st 
phase)425 

6.1 kt CO2/y426 

7 M€ inv. 

150 t SOx/y 
5000 tCO2/y428 

- 

Rijswijk-
Leiden: 108.3 
M€ in 
investments431 

CO2 emission 
reduction by 60%432  
Rijswijk-Leiden:433 
102 kt CO2/y by 
2030 
32 t NOx/y by 2030 

421 https://www.codema.ie/projects/local-projects/tallaght-district-heating-scheme/  
422 https://www.philiplee.ie/south-dublin-county-council-district-heating-project/ 
423 https://www.seai.ie/publications/District-Heating-and-Cooling.pdf 
424 https://epa-paris-saclay.fr/nos-missions/amenager-durablement/le-reseau-dechange-de-chaleur-et-de-froid-de-paris-saclay-un-modele-innovant-au-service-de-la-transition-energetique/ 
425 https://epa-paris-saclay.fr/wp-content/uploads/2021/12/Mission-Ame%CC%81nager-durable-DOC-1-20190624_DP_Re%CC%81seau-de%CC%81change-de-chaleur-et-de-froid-Paris-
Saclay_VDEF.pdf 
426 https://www.ecologie.gouv.fr/francois-rugy-inaugurera-nouveau-reseau-dechange-chaleur-et-froid-paris-saclay 
427 https://www.compagniedechauffage.fr/2346-innovation.htm  
428 http://oteenga.com/synergies-reseaux-chaleur/ 
429 https://www.warmtelinq.nl/  
430 https://www.warmtelinq.nl/uploads/fckconnector/1cd481f5-b5d3-5881-8ba1-d6ecdc18c4f4  
431 https://www.zuid-holland.nl/publish/besluitenattachments/evaluatie-warmtelevering-leidse-regio/evaluatie-verkenningsfase-warmtelinq-rijswijk-leiden.pdf  
432 https://www.zuid-holland.nl/onderwerpen/energie/warmtelinqtrace-vlaardingen-den-haag/ 
433 https://www.zuid-holland.nl/publish/besluitenattachments/evaluatie-warmtelevering-leidse-regio/evaluatie-verkenningsfase-warmtelinq-rijswijk-leiden.pdf 

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Name 

MS 

Commis-
sioning403 

Technical 
capacities 

Hengelo DH 

NL  2018434 

60 MW435 

Waste/RE 
heat 
sources 

Waste-to-
energy 

Best practices 

Energy 
production/savings 

Investments/ 
cost savings 

Environmental/ 
Climate benefits 

Waste heat and 
steam utilisation 
(heat cascading) 
Industry-to-
industry exchange 

140 GWh 

- 

40 kt CO2/y436 

Hensingborg DH 
Evita 
interconnector437 

SE  2015 

DH 320 MW 
Evita pipe: 60 
MW 
Waste-to-
energy CHP 
73 MW 
Chemistry 
industry WHR 
45 MW 
WWHR 30 
MW 

Thermal 
storage 
Industry 
Wastewater 
treatment 
Waste-to-
energy 

Interconnection of 
DH networks 
Joint feasibility 
studies for WHR 
WHR + RES 
Thermal energy 
storage 

182 GWh exchange 
through Evita (2018) 

31.3 M€ inv. 
2.45 M€/y 
savings 

Reduction of carbon 
footpring to 48 
g/kWh 

434 https://www.greendeals.nl/green-deals/warmtenet-hengelo-backbone-en-htsp-campus  
435 https://ennatuurlijk.nl/zakelijk/blogs/hengelo-het-meest-innovatieve-warmtenet-van-nederland  
436 https://www.1twente.nl/artikel/235539/warmtenet-enschede-gestookt-met-afval 
437 https://op.europa.eu/en/publication-detail/-/publication/5e1fd499-eabf-11ec-a534-01aa75ed71a1/language-en  

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5.  Cross-cutting topics on energy system integration 

5.1.  Introduction 

This chapter addresses additional cross-cutting aspects of energy system integration 
that are not covered in detail in the analysis of specific aspects but are still considered 
as important challenges. 

The  section  provides  an  analysis  of  barriers  and  recommendations  to  issues  of  1)  more 
integrated  energy  infrastructure,  2)  energy  storage  3)  digitalisation  and  innovation,  4) 
monitoring  and  reporting,  as  well  as  5)  issues  not  addressed  in  the  ESI  strategy,  such  as 
resource use and skills/employment. It also lists pending actions of the ESI strategy.    

For a more integrated energy infrastructure, issues such as the currently insufficient 
utilisation  of  interconnector  capacities  and  the  lacking  interoperability  of  grid 
technology solutions need to be addressed, and overall better integration and coupling 
of  different  energy  vectors  is  needed.  The  recommendations  also  emphasise  the 
importance of addressing the increasing complexity of balancing distribution systems, 
necessitating improved coordination between DSOs and TSOs. The need to accelerate 
the  expansion  and  reinforcement  of  the  electricity  networks,  and  to  enable  investments  in 
decentralised renewable electricity generation as well in demand-side assets, is identified as 
a key factor to tackle delays to further electrification and DER integration. Additional integration 
benefits can be reaped in collaboration is fostered between ENTSO-E and ENTSOG (and in 
the future ENNOH), with a focus on revising their respective models to include short and long-
term resolutions. 

To  facilitate  cross-border  trading  and  create  a  level-playing  field  for  market 
participants, a harmonisation of regulatory frameworks is needed, including rules on 
grid access, tariffs, trading, and capacity allocation; as well as rules for compliance, 
permitting and licensing for cross-border projects. The Commission should also support 
Member States better in the implementation of regulatory frameworks and investments into 
dedicated cross-border CO2 transport infrastructure.  

Concerning  energy  storage,  the  most  important  barriers  are  the  long  permitting 
procedures,  the  lack  of  consideration  of  the  double  role  of  storage  and  inadequate 
capacity  mechanisms.  An  update  of  existing  regulatory  frameworks  combined  with  lifting 
fiscal barriers for energy storage is recommended. As an economic driver, the value of storage 
could be more transparent if adequate assessments and valuations of storage needs would 
be done.   

While digitalisation  in the  energy  sector is already underway  and  a series  of  actions 
have  been  defined  on  EU  level,  the  implementation  of  these  can  benefit  from  the 
harmonisation of legislative acts, standards and regulations on the EU and MS level. 
This  will  help  to  create  a  safe  European-level  data-sharing  infrastructure  to  support  a  vast 
integrated energy system.  

For many topics of the study as well as for the cross-cutting issues, the focus should 
be  on  implementation  of  existing  policies  and  measures.  A  monitoring  framework  to 
assess the effectiveness of these measures is recommended, with indicators that focus on 
electricity grids, energy storage and digitalisation. Periodic reports could be distributed to aid 
stakeholders  in  understanding  progress  and  identifying  remaining  actions.  As  many  of  the 
specific recommendations of this study, e.g. regarding the deployment of distributed energy 
resources, will have socio-economic impacts – positive or negative – further attention from the 

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Commission  is  necessary  to  ensure  acceptance  and  accelerate  deployment  of  the 
technologies while minimising potential negative impacts.  

5.2.  Barriers to a more integrated energy infrastructure 
This  section  assesses  barriers  to  one  of  the  pillars  of  the  EU  ESI  Strategy:  energy 
infrastructure integration. The assessment of barriers and subsequent recommendations is 
based  on  a  literature  review,  as  well  as  survey  replies  to  the  following  questions  (with  the 
majority of answers coming from business associations and industry):   

•  What are relevant barriers to developing the integration of energy infrastructure in your 

member state or at member state level? 

•  What  are  relevant  overarching  barriers  to  developing  the  integration  of  energy 

infrastructure on EU-level? 

Table 5-1 presents the list of barriers (apart from those raised in previous chapters) hindering 
energy  infrastructure  integration  as  well  as  relevant  EU  policies  and  measures  (existing  or 
proposed)  which  could  address  the  barriers  partially  or  fully.  Only  EU  provisions  which 
represent a mandatory requirement for the Commission or Member States are mentioned.  

Table 5-1 Barriers for integrated energy infrastructure 

Pillar 

Barrier type 

Barrier 

5 

5, 6 

5 

2,5  

1,2, 5 

Regulatory, 
economic 

Technical, 
governance 

Regulatory, 
technical 

Technical, 
governance 

Regulatory, 
technical, 
governance 

Insufficient utilisation of 
interconnector capacity  

Lack of interoperability across 
grid technology solutions 

Electricity network to further 
integrate other vectors and 
flexibility solutions at the 
transmission and distribution 
level 
Current scenarios used for 
assessing infrastructure projects 
not sufficiently driven by climate 
goals 
Lack of provisions for dedicated 
CO2 transport and storage 
infrastructure for CCU/S 

Relevant  EU  policies  and 
measures 

Electricity Market Reform 

Net Zero Industry Act, Climate 
target plan, Offshore Network 
Development Plans 

Electricity Market Reform, 
TEN-E regulation 

Hydrogen and Decarbonised 
Gas Market Package, TEN-E 
regulation, TYNDPs 

Net Zero Industry Act, TEN-E 
Regulation 

Below  we  highlight  some  important  barriers  to  be  considered  for  future  policy  actions,  and 
propose corresponding recommendations, and discuss whether the listed policy measures are 
sufficient to address the barrier.  

1.  Availability  and  better  utilisation  of  interconnector  capacity  by  grid  operators: 
availability of existing interconnector capacity for market trade in the EU is still below the 

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70% requirement438 due to issues such as structural congestion in some geographies 
and for specific network elements.  To alleviate congestion, lifting of certain constraints 
like the reconfiguration of bidding zones, further market coupling and fine-tuning product 
definitions are possible solutions. For planning purposes, TYNDPs should also include 
information on internal network elements with significant cross-border impacts.439 The 
issue  of  insufficient  interconnector  capacities  is  significant  as  the  need  for  costly 
remedial measures for managing congestion is expected to increase in the future, in the 
absence  of  other  interventions.  Solving  it  requires  thinking  about  long-term  solutions 
beyond the 2030 horizon to increase interconnector availability and to contain the costs 
of congestion management. 

2.  Lack  of  interoperability  across  power  grid  technology  solutions440  from  different 
technology  providers  and  pace  of  Research  &  Innovation  could  hamper  plans  for 
increased  cross-border  integration  of  infrastructure,  especially  with  energy  islands  or 
offshore hubs;441 Siloed industry standards, including data management systems and 
APIs pose a barrier for creating a digital ecosystem of integrated services for the sector.  
3.  Electricity  network  planning  does  not  yet  sufficiently  integrate  other  vectors 
(renewable and low-carbon methane gases and H2), and flexibility solutions at the 
transmission and distribution level, partially due to lack of coordination between TSO 
and  DSO  levels.  Synergies  between  electricity,  H2  and  storage  infrastructure  need 
special  focus  when  aiming  at  integrated  planning,442  of  a  mostly  renewable-based 
electricity  system.  Next  to  increased  electrification,  system  integration  also  calls  for 
sector coupling with renewable-based district heating and cooling networks, as set out 
in Article 20(3) of the revised REDII.443 

4.  Current processes and scenarios assessing infrastructure projects (notably in the 
scope of the TYNDP) are not sufficiently driven by climate neutrality and resilience 
imperatives:444 

o  Despite harmonisation efforts, TYNDPs and the TEN-E process needs to be 
further  improved  to  take  adequate  account  of  the  EU’s  decarbonisation 
objectives while also safeguarding the EU’s energy infrastructure against the 
impacts  of  climate  change,  including  via  shared  scenarios  and  Cost-Benefit 
Analysis  (CBA)  methodologies  which  consider  the  whole  energy  system,  its 
various vectors and their interaction with climate goals and risks.445 
If  the  EU  were  to  set  out  achieving  EU  net  emission  reductions  of  90-95% 
before 2040 as advised by the European Scientific Advisory Board on Climate 
Change (ESABCC), this would imply a 2040 energy system largely dependent 
on a fully decarbonised electricity supply, to the support of which no European 

o 

438 ACER (2023), Assessment of emergency measures in electricity markets 
https://acer.europa.eu/Publications/2023_MMR_EmergencyMeasures.pdf 
439 ACER (2021), Opinion 05-2021 on electricity national development plans  
440 Including both hardware (high-voltage substations, solid-state transformers, HDVC circuit breakers etc.) and software 
(system operation solutions) 
441 Based on consultation feedback from industry on the EU 2040 climate target 
442 Based on consultation feedback from industry on the EU 2040 climate target  
443 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32023L2413&qid=1699364355105  
444 European Scientific Advisory Board on Climate Change (2023): Towards a decarbonised and climate-resilient EU energy 
infrastructure: recommendations on a harmonised EU energy system-wide cost–benefit analysis 
445 ENTSO-E (2022): RDI monitoring report, Cross-sector integration  

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grid model currently exists – there is need for ‘decarbonisation reference grids’, 
that are compatible with carbon budgets.446 

5.  Scarce provisions for and investments into dedicated cross-border CO2 transport 
infrastructure. While the importance of carbon capture, utilisation and storage (CCU/S) 
in the energy transition is recognised in the ESI strategy, and the inclusion of related 
infrastructure  in  EU-wide  planning  via  TEN-E  has  commenced,  concrete  plans  and 
investments  for  dedicated  pipelines  for  transporting  CO2 (and  networks  of  these)  are 
scarce. Apart from transport pipelines and underground storage facilities, infrastructure 
serving ships, barges, trucks and trains is referenced, but not picked up further in TEN-
E447.  Investment  appetite  depends  a  lot  on  industrial  emitters’  commitment  to 
decarbonisation,  and  carbon  capture  projects  and  storage  sites  are  attracting  more 
investments  than  transport  networks.448  The  new  List  on  PCIs  and  PMIs  released  on 
Nov  28449  already  includes  14  cross-border  carbon  dioxide  network  projects,  which  if 
successfully permitted, will partially help tackle this barrier.   

From the barriers listed in Table 5-1, the following ones were reflected on most often 
by stakeholders during the survey (see Annex), and thus will be looked at in more detail: 

✓  Availability and better utilisation of interconnector capacity  
✓  Lack of interoperability across grid technology solutions 
✓  Electricity  network  to  further  integrate  other  vectors  and  flexibility  solutions  at  the 

transmission and distribution level 

✓  Scarce provisions for dedicated CO2 transport and storage infrastructure for CCU/S 

Recommendations to overcome barriers  

For  the  barriers  mentioned  above,  stakeholders  have  formulated  recommendations  in  the 
survey responses, summarised below. 

In  November  2023  the  EU  Action  Plan  for  Grids  was  published,  as  the  present  report  was 
being  finalised.  The  Action  Plan  contains  numerous  actions  which  aim  to  address  many 
barriers indicated above:450 

•  Accelerating the  implementation of  Projects  of  Common  Interest  and developing  new 

• 

• 

• 

projects through political steering, reinforced monitoring and more proposals; 
Improving  the  long-term  planning  of  grids  to  accommodate  more  renewables  and 
electrified  demand,  including  hydrogen,  in the  energy  system  by steering  the  work  of 
system operators as well as national regulators; 
Introducing  regulatory  incentives  through  guidance  on  anticipatory,  forward-looking 
investments and on cross-border cost sharing for offshore projects; 
Incentivising  a  better  usage  of  the  grids  with  enhanced  transparency  and  improved 
network tariffs for smarter grids, efficiency, and innovative technologies and solutions by 

446 Based on consultation feedback from industry on the EU 2040 climate target  
447 IEA (2022): TEN-E CCUS 
448 EC DG ENER (2023), Report on EU regulation for the development of the market for CO2 transport and storage  
449 https://energy.ec.europa.eu/system/files/2023-11/Annex%20PCI%20PMI%20list.pdf  
450 European Commission (2023) Grids, the missing link - An EU Action Plan for Grids COM(2023) 

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• 

supporting  the  cooperation  between  system  operators  and  recommendations  by  the 
Agency for the Cooperation of Energy Regulators (ACER); 
Improving access to finance for grids projects by increasing visibility on opportunities for 
EU  funding  programmes,  especially  for  smart  grids  and  modernisation  of  distribution 
grids; 

•  Stimulating  faster  permitting  for  grids  deployment  by  providing  technical  support  for 

• 

authorities and guidance on better engaging stakeholders and communities; 
Improving  and  securing  grid  supply  chains,  including  by  harmonising  industry 
manufacturing requirements for generation and demand connection. 

Recommendation  1:  Mandate  electricity  DSOs  to  upgrade  interfaces  with  electricity 
TSOs 
Addressee: European Commission 
Related policies & measures: EU Action plan for Grids, Electricity Directive (EU) 2019/944 
Expected impacts: 2030 

The interfaces between the DSOs and TSOs should be further enhanced and guidelines 
for their cooperative approach, including planning, grid and congestion management, 
data exchange and IT compatibility need to be provided at regulatory level. 

This recommendation also includes the improvement of interoperability of technologies and 
set  common  standards,  the  development  of  sector  coupling  and  integrated  solutions, 
electricity distribution grid reinforcement and improvement of capacity planning. 

Further  electrification  and  DER  will  make  the  balancing  of  the  distribution  system  an  even 
more complex process, which is not possible to address cost-efficiently at the local level alone. 
This means that DSOs need to develop market operation abilities and further coordinate and 
integrate their practices and actions with the concerned TSOs and neighbouring DSOs. The 
DSOs should be prepared to have a more active role including by supporting the reliability and 
security of the system. 

Moreover, active involvement of DERs is transforming power markets, from managing single 
direction  flows  of  energy  and  money  to  multidirectional  exchanges  of  energy  and  other 
products.  In  traditional  centralised  energy  networks,  energy  producers,  transmission  and 
distribution  operators,  and  suppliers  work  together  in  this  order  to  bring  electricity  to 
consumers.  Advances  in  DERs  and  digitalisation  allows  for  a  more  active  role  for  the 
consumer,  providing  tools  to  become  active  on  buying  and  selling  energy,  storing  or 
redistributing energy, at local/decentralised or centrally managed levels. 

The role of the DSO starts to have similar characteristics with the role of the TSO, managing 
the balancing of the system at local level, and being equally involved on supporting energy 
exchanges at decentralised level, similarly to the way the TSO is managing energy exchanges 
at the central level. For this reason, the coordination of the two operators, TSO and DSO, who 
need  to  support  energy  exchanges  to  central  and  local  level  respectively,  ensure  that 
participants exchange products across levels.    

Member  States  need  to  ensure  that  DSOs  are  empowered  to  manage  at  local  level  the 
increasing  number  of  players  like  demand  side  response,  local  decentralised  generation, 
storage and energy sharing.  

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Technical  challenges  can  be  addressed  by  establishing  common  technical  standards  that 
ensure interoperability of technologies within the power sector. This includes compatibility of 
different renewable technologies and grids, as well as their management systems, addressing 
energy  storage  and  conversion  issues,  and  enabling  seamless  integration.  The  Net  Zero 
Industry Act,451 building on the Green Deal Industrial Plan and the Climate target plan already 
paves the way for a simpler and more predictable legal framework for grids and renewable 
technologies  in the  power  sector,  and  specific  connection  types  and standards  for  e.g.  the 
wind industry could be introduced in Offshore Network Development Plans. Data sovereignty 
concerns by industrial players have to be addressed before establishing shared ecosystems, 
with their increased involvement in the developments of standards.   

Develop  and  implement  technical  solutions  that  enable  seamless  integration  of  different 
energy carriers. This includes finding ways and smart solutions to link and interdependently 
operate  electricity,  methane,  hydrogen  and  heat  markets  and  infrastructures  within  an 
integrated EU energy system. Future market designs should underpin this interdependency 
by allowing for flexibility tools to optimise the value of growing shares of intermittent generation 
and to balance increased volatility. 

Next  to  EU-wide  and  regional  transmission  grid  enforcements  that  are  essential  for  a 
renewables-based  electricity  system,  there  is  a  need  to  recognise  distribution  grids  as 
enablers of the energy transition. With the connection of numerous decentralised renewable 
generators, focus on the accelerated expansion of electricity grids and simultaneous transition 
of gas grids (as discussed in more detail in chapter 2).  

Adequate planning of electricity and (low-carbon) gas transmission and distribution networks 
is  crucial  to  ensure  that  capacity  exists  in  the  networks  to  reinforce  the  integration  of  new 
renewables. This applies to both internal and cross-zonal capacities. The current Electricity 
Market  Design  reform  proposal  already  includes  the  possibility  to  reserve  interconnection 
capacities over longer terms in power markets, which helps this issue.  

Incentivise  anticipatory  development  of 

Recommendation  2: 
grid/network and review connection principles 
Addressee: European Commission 
Related policies & measures: EU Action plan for Grids, Electricity Directive (EU) 2019/944 
Expected impacts: 2030/2040 

the  electricity 

The need to accelerate the expansion and reinforcement of the electricity networks, to 
enable  investments  in  decentralised  renewable  electricity  generation  as  well  in 
demand-side  assets,  is  identified  as  a  key  factor  to  tackle  delays  to  further 
electrification and DER integration.  

This  recommendation  also  includes  enhancing  cross-border  collaboration  and  fostering 
collaboration between ENTSO-E and ENTSOG (and in the future ENNOH). 

Many participants in the survey expressed concerns for delays in investments for increasing 
the capacity of the networks to accommodate the anticipated increased bidirectional energy 
flows.  Balancing  supply  and  demand  also  at  distribution  level  is  becoming  an  increasingly 
challenging  and  complex  task.  The  current  modes  of  operation  are  still  considered  to  be 
functioning reasonably well in the short term but are certainly not adequate for the medium 

451 https://single-market-economy.ec.europa.eu/industry/sustainability/net-zero-industry-act_en  

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and long term. Limited electricity network capacity also leads to delays in accommodating the 
increasing  number  of  connection  requests  for  renewable  electricity  production  and  storage 
assets;  in many Member States bottlenecks in ensuring connection capacity to RES facilities 
and new loads have been reported.452 Although the technical constraints coming from limited 
network  capacity  are  already  evident,  further  electrification  and  DER  will  continue  to  put 
pressure  on  the  need  for  continuous  investments  and  innovation  in  the  distribution  and 
transmission systems in the medium and long term. 

As  referred  to  in  the  EU  Action  plan  for  Grids,453  published  on  28  November  2023, 
anticipatory  grid  investments  are  specifically  relevant,  for  instance  for  offshore 
networks  to  allow  future  expansions  of  meshed  and  hybrid  grids,  or  for  onshore 
networks  in  zones  with  high  untapped  renewable  energy  potential  (e.g.  such  as 
renewable  energy  acceleration  areas  defined  in  accordance  with  the  RED).  Network 
development  plans  should  strongly  encourage  anticipatory investments454  and  ensure  that 
different  technical  solutions  (e.g.,  demand  response  or  utility-scale  dispatchable  storage 
solutions such as batteries, pumped hydro and hydrogen production & storage) are treated on 
an equal footing through a systematic and more integrated approach.455  

In this regard, the Electricity Directive (EU) 2019/944 already requires TSOs in their TYNDPs 
and DSOs in their Distribution National Development Plans to consider the potential of using 
demand  response,  energy  storage,  and  other  resources  as  alternatives  to  traditional  wire-
based  solutions. Moreover, the  EU  DSO  Entity  has legal  tasks to promote the  coordinated 
planning  of  distribution  and  transmission  networks  and  to  cooperate  with  ENTSO-E  in  this 
respect and adopt best practices on the coordinated planning of transmission and distribution 
systems.  The  EU  Action  Plan  for  Grids  outlines  the  need  for  specific  actions  at  EU  level, 
including  mandating  the  EU  DSO  Entity,  by  mid-2024,  to  explore  case  studies  and  best 
practices and publish recommendations to improve distribution network planning. Moreover, 
NRAs, in cooperation with ACER and CEER, are mandated, by Q4 2024, provide guidance to 
DSOs on planning and promote consistency among plans. 

The  magnitude of  the  investment  needs  requires  a  new  approach  to  the way  networks  are 
developed  and  operated.  Distribution  system  operators  used  to  prepare  their  Development 
Plans following an incremental approach, additions and reinforcements are based on historic 
and statistical data from the past, and mainly focused on the short term. This approach should 
be replaced by an anticipatory development approach, according to which new projects are 
not only to serve the actual and short-term needs but also aim at much larger scale plans, to 
accommodate  future  needs,  such  a  bidirectional  flows  and  local  supply  and  demand 
balancing.       

A  key  element  of  anticipatory  planning  is  that  the  DSOs  need  to  have  a  clear  view  of  the 
projects that market participants are planning for in the short and medium term, and their level 
of engagement. In this regard the Action Plan outlines the need for network users to provide 
data  on  their  respective  power  capacities  and  project  locations  to  support  DSOs  in 
understanding new power flow patterns within their grids. Market participants’ projects should 
be included in the DSOs Development Plan as an integral part of it. The DSOs should design 
and  plan  projects  in  such  a  way  that  they  can  efficiently  combine  their  own  projects  with 
projects  developed  by  system  users.  To  produce  similar  effects  and  offering  substitute 
products and services to the system as compared to the projects developed by the operators. 
Projects  like  home  storage  facilities  may  efficiently  support  the  operation  of  distribution 

452 IEA (2023) Electricity Grids and Secure Energy Transitions 
453 EUR-Lex - 52023DC0757 - EN - EUR-Lex (europa.eu) 
454 Eurelectric (2023) Power System of the Future: Keys to delivering capacity on the distribution grid 
455 FSR (2021) The modernisation of the energy infrastructure to ensure consistency with the Green Deal objectives  

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systems,  reducing  congestion  and  improving  reliability,  reducing  overall  system  costs.  This 
approach may result in the deferral of transmission and distribution network investments, as 
third-party  projects  may  efficiently  offer  services  to  the  system  operation,  which  otherwise 
should be supported by further investments in grid reinforcement and expansion.  

Critical prerequisites for operators to integrate third party projects into anticipatory planning, 
are the following: 

1.  Incentivise  DSOs  to  include  third  party  projects  in their  planning. Inherently, this  is  in 
conflict with the business objectives of the distribution operator, as it entails that the DSO 
will not invest in and receive return on capital through new projects (that are part of its 
‘Regulated Asset Base’), but instead purchase services from third parties, the cost of 
which will be recovered through network tariffs. 

2.  Set  up  the  framework  to  organise  platforms  in  order  to  ensure:  (a)  the  availability  of 
reliable  data  regarding  system  operation,  project  planning,  level  of  engagement  and 
participation (b) efficient coordination and synchronisation of projects’ execution.  

Anticipatory  development  should  include  plans  for  projects  for  the  expansion, 
modernisation, and digitalisation of the network, with a longer-term view to 2040. The 
DSOs should be incentivised by regulatory authorities to prepare their Network Development 
Plans with a forward-looking approach, aligning this preparation with the National Energy and 
Climate Plans. 

Changing the way how the development plans for networks are prepared and new projects 
are  implemented,  including  infrastructure,  new  services,  training  and  reskilling  personnel 
projects, is lengthy and needs time to produce visible results. It has also to be aligned with the 
way DSOs are remunerated, to ensure the bankability of their development plans, and manage 
the impacts of higher grid costs on the electricity bills. In this regard, the EU Action Plan on 
Grids  mandates  NRAs  to  regularly  review  their  network  tariff  setting  or  methodologies, 
including how they set long-term incentives, support peak demand shifting and incentivise the 
deployment of technologies that increase the efficiency and operability of the grids.  

Regarding  the  electrification  of  road  transport  in  particular,  the  growing  number  of  electric 
vehicles  already  today  poses  a  challenge  for  DSOs  to  connect  the  necessary  recharging 
infrastructure. A challenge that will intensify in the coming years when more electric vehicles 
enter  the  market,  including  heavy  duty  vehicles  with  a  much  greater  need  for  high  power 
recharging infrastructure of up to 1 MW per recharging point.  This will put further pressure on 
the DSOs to accommodate a higher electricity demand from charging stations. This requires 
anticipatory investments in sufficient grid capacity, in line with the aspects highlighted in the 
EU  Action  Plan  for  Grids,  to  connect  high  power  recharging  pools  but  also  employing 
innovative  technical  solutions,  including  smart  charging,  boosting,  combining  local  storage 
with fast charging stations.   

Anticipatory  design  is  a necessity  and  DSOs  should take  all  preliminary actions to  develop 
structures  and  skills  to  gradually  implement  new  processes  and  procedures.  This  process 
needs  significant  time  to  mature,  and  in  the  meantime,  the  DSOs  should  accelerate  the 
implementation of no regret projects, to achieve “easy wins” and to ensure a higher level of 
assurance to market participants and users of the network that projects will be delivered on 

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time and the planning and execution of grid projects is aligned to the business plans of grid 
users.456     

Harmonise regulatory frameworks, technical requirements, and administrative procedures at 
the EU level, and support their implementation by Member States. This harmonisation should 
include the following: rules on grid access, tariffs, trading, capacity allocation; as well as rules 
for  compliance,  permitting  and  licensing  for  cross-border  projects.    These  measures  would 
facilitate cross-border trading and create a level-playing field for market participants.  

ACER’s  latest  market  monitoring  report457  still  finds  that  interconnector  capacity  for  cross-
zonal electricity trade is below the 70% target, and that lifting both internal and cross-zonal 
trade  constraints  would  help  getting  closer  to  this  requirement.  Lessons  learned  from 
emergency measures in 2022 once again confirm the essential role of cross-border capacity 
in guaranteeing system resilience, and how non-aligned measures between Member States 
can  cause  costly  divergences.  Ultimately,  the  current  EU  regulation  on  network  codes  and 
permitting,  complemented  by  measures  in  the  Electricity  Market  Design  reform  proposal, 
should allow for system operators and Member States to fully maximise their efficiency and 
mitigate market shocks, difficulties lying with the implementation of these.   

Foster collaboration between ENTSO-E and ENTSOG (and in the future ENNOH), with a focus 
on revising their respective models to include short and long-term resolutions. Quantify the 
benefits  of  gas  and  hydrogen  infrastructure  in  terms  of  additionality,  temporal  correlation 
requirements, flexibility needs, and security of supply, and further integrate models used for 
the TYNDPs. TYNDPs and the TEN-E process needs to be further improved to take adequate 
account  of  the  EU’s  decarbonisation  objectives  while  also  safeguarding  the  EU’s  energy 
infrastructure against the impacts of climate change, including via Cost-Benefit Analysis (CBA) 
methodologies  which  consider  the  whole  energy  system,  its  various  vectors  and  their 
interaction  with  climate  goals  and  risks.  The  revised  TEN-E  (Regulation  (EU)  2022/869) 
already created the legislative basis for collaboration with requiring ENTSO-E and ENTSO-G 
to develop common scenarios for their TYNDPs. 

Recommendation 3: Support Member States better in the implementation of regulatory 
frameworks and investments into dedicated cross-border CO2 transport infrastructure  
Addressee: European Commission, Member States 
Related policies & measures: Electricity Market Reform, TEN-E Regulation  
Expected impacts: 2030/2040 

With all the above regulations and provisions already in place, and especially the Electricity 
Market  design  reform  proposal,  there  is  a  supportive  regulatory  framework  that  can  help 
stimulate flexibility and facilitates the integration of energy infrastructure. Member States must 
themselves ramp up implementation and enact structural reforms to address issues such as 
scarce capacity on the power grid and integrated planning of energy networks (electricity, gas, 
hydrogen and heat) as well as CO2 networks. 

Even  though  the  inclusion  of  related  infrastructure  in  EU-wide  planning  via  TEN-E  has 
commenced, investments into dedicated CO2 pipeline networks are scarce, and transport via 
ships,  barges,  trucks  and  trains  is  referenced  but  not  picked  up  further  in  TEN-E.  CO2 
infrastructure  will  enable458  the  widespread  deployment  of  carbon  capture,  including  direct 

456 E.DSO (2023) E.DSO Agenda for Strategic Grid Investments 
457 ACER (2023) Assessment of emergency measures in electricity markets 
https://acer.europa.eu/Publications/2023_MMR_EmergencyMeasures.pdf  
458 https://www.iea.org/energy-system/carbon-capture-utilisation-and-storage/co2-transport-and-storage  

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removals and CCU/S, and this essential role calls for better government and  private sector 
collaboration. Just as in the case of waste heat utilisation, easing scrutiny over carbon-related 
infrastructure  (e.g.  repurposed  NG  pipelines)  is  essential  to  attract  more  investments  into 
these  networks.  The  6th  Union  List  released  on  Nov  28459,  publishing  key  PCIs  and  PMI 
infrastructure projects under the revised TEN-E Regulation, already includes 14 cross-border 
carbon  dioxide  network  projects,  which  if  successfully  permitted  and  commissioned,  would 
partially fulfil this recommendation.  

5.3.  Barriers to energy storage  

5.3.1.  Summary of survey results on the energy storage aspects  

The most important barriers to energy storage are the long permitting procedures, the 
lack  of  consideration  of  the  double  role  of  storage  and  inadequate  capacity 
mechanisms.  The  lack  of  flexibility  assessments  and  insufficient  remuneration  for  certain 
system services are also still perceived as hindering factors.  

The  assessment  of  barriers  and  subsequent  recommendations  is  mainly  based  on  open 
answers obtained in the survey to the following questions: 

•  Please detail the most important barriers highlighted in the previous question.  
•  Are there specific barriers to long-duration energy storage technologies? Please specify 

which technologies 

•  What  priority  policies  and  measures  are  required  to  address  the  above-mentioned 

barriers in your member state or at member state level? 

•  What overarching policies and measures are required to address the above-mentioned 

barriers at EU-level? 

Open answers give more insights into perceived barriers:  

•  One fundamental challenge is the lack of awareness regarding the optimal storage of 
energy  as  molecules  like  CH4  and  H2,  rather  than  as  electrons  in  batteries.  This 
perspective  underscores  the  importance  of  harnessing  the  unique  qualities  of  each 
energy  vector  for  optimal  integration.  Some  responses  emphasise  the  importance  of 
addressing  the  role  discussion,  especially  when  DSOs  are  involved,  as  it  poses  a 
blocking issue. 

•  Efforts to enhance energy storage also face technical barriers. These include the need 
for more efficient batteries with low EU-rare materials, the acceleration of salt cavern 
capacity preparation, clarity in optimising storage strategies and efficiency, as well as 
addressing rare material issues in technologies like membrane-less electrolysers. 
•  The assessment of flexibility needs emerges as a key barrier, although we note that a 
more  structured  EU-wide  approach  on  this  is  expected,  including  mandatory 
assessments  by  Member  States.  These  analyses  should  encompass  various  time 
scales,  from  intra-day  to  inter-seasonal,  and  should  avoid  being  overly  technology 
oriented. Addressing issues related to capacity mechanisms, remuneration for system 

459 https://energy.ec.europa.eu/system/files/2023-11/Delegated%20Regulation%20PCI%20PMI%20list.pdf  

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services,  and  market-based  investments  is  crucial  in  promoting  a  balanced  and  fair 
approach to energy storage development. 

Regulatory  and  financial  barriers  are  also  significant:  complex  permitting  procedures  for 
renewable energy projects and related infrastructure hinder timely investments. The value of 
energy storage is intrinsically linked to dispatchable capacity, necessitating the development 
of appropriate financing schemes to support such projects. In some Member States, electricity 
storage (e.g., EVs and V2G technologies, pumped hydro storage) and power-to-gas systems 
are  exposed to  double taxes  and  levies  and/or to grid  tariffs.  The revised  REDII460  already 
introduces accelerated permit-granting procedures for storage installations too, which should 
help mitigate this barrier.  

Lastly,  an  integrated  approach to  infrastructure resilience is  crucial,  while there is  need for 
better planning and realisation of long-term storage requirements as electrification advances. 
Furthermore, addressing financing difficulties, complex permitting processes, and awareness 
gaps around energy storage's potential as a renewable source is essential.  

Specifically related to long-duration storage technologies, the stakeholders highlighted the 
following barriers: 

•  Limited experience: A lack of experience and expertise in the field hinders effective 

implementation. 

•  Capacity preparation: Accelerating the readiness of salt caverns for storage is crucial, 

particularly for hydrogen. 

• 

•  Financing  uncertainty:  The  business  models  for  long-duration  storage  rely  on 
uncertain seasonal price gaps, requiring measures like financial support and contracts 
to mitigate risk. 
Integration challenges: Proper integration into the energy system is vital for optimising 
efficiency and benefits. 
Infrastructure conversion: Converting and utilising existing gas storage capacity for 
hydrogen  and  biomethane  storage  is  promising,  but  conversion  risks  (financial, 
environmental) need to be addressed. 

• 

5.3.2.  Recommendations to overcome barriers  

For the barriers mentioned above, stakeholders have formulated a few recommendations in 
the survey responses, which we summarise below. If existing EU provisions already address 
these barriers, this will be outlined.  

460 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32023L2413&qid=1699364355105  

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Recommendation  4:  Further integrate  energy  system  planning  and provide  guidance 
on the needs for and development of EU energy infrastructure 
Addressee: European Commission, Member States 
Related policies & measures: Electricity Directive, Regulation  
Expected impacts: 2030 

Many  EU  Member  States  are  facing  challenges  related  to  the  timely  reinforcement  and 
extension  of  EU  electricity networks,  and  ACER raises increasing  congestion management 
costs as a main issue in its latest wholesale market monitoring report.461 This highlights the 
challenges  for  energy  networks  as  central  enablers  of the  energy transition.  As  seen,  after 
reducing energy demand the main step for decarbonising the energy system is to choose and 
implement the technology and energy carriers that are best suited. This choice is intrinsically 
linked to the development of energy networks. Section 5.2 provides specific recommendations 
on the planning and operation of EU energy infrastructure.  

Member states should prioritise comprehensive integration and planning to effectively address 
the  absence  of  a  transverse  view  across  various  energy  vectors  and  scales.  Policies  that 
encourage  the  seamless  integration  of  electricity,  heat,  and  other  energy  vectors  will  help 
optimise the deployment and operation storage technologies, especially that of long-duration 
energy storage (LDES). A truly integrated vision for the EU energy system could consider an 
even closer structural cooperation between electricity, gas and hydrogen TSOs and their EU 
associations regarding the planning of cross-border energy infrastructure.462 For example, a 
higher integration of the energy systems modelling for the planning of energy infrastructure at 
the EU level could be sought, beyond the use of common scenarios and the consideration of 
sector interlinkages. At the same time, planning for each sector will still need to have a higher 
granularity to consider its own specificities, requiring a fine balance. 

Recommendation 5: Carry out assessment and valuation of storage needs to make its 
value more transparent 
Addressee: European Commission, Member States 
Related policies & measures: Electricity Directive, Regulation  
Expected impacts: 2030 

A critical step to overcome barriers is the provision of financial support to storage operators. 
Offering financial guarantees can expedite the preparation, testing, and deployment of long-
duration storage solutions.  

Member  states  should  establish  mechanisms  to  accurately  assess  storage  needs  at  the 
Member  State  level.  This  entails  evaluating  both  electricity  and  heat  storage  requirements 
based on the local energy landscape. Policymakers can then align incentives and regulations 
to  support  the  development  of  production  methods  that  effectively  utilise  storage  systems, 
such as solar thermal and electric boilers. 

To  incentivise  the  development  of  thermal  underground  storage,  Member  States  should 
devise clear  mechanisms  for  recognising  the  value  of these systems.  Proper  remuneration 
and valuation will encourage stakeholders to invest in and operate thermal storage facilities, 
which are crucial for maintaining grid stability and meeting inter-seasonal flexibility needs. 

461 ACER (2023) Progress of EU electricity wholesale market integration - 2023 Market Monitoring Report 
462 Meeus et al. (2023) Energy policy ideas for the next European Commission: from targets to investments 

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Member  States  should  establish  transparent  and  fair  rules  for  market  participation  and 
compensation  mechanisms  for  investors  in  energy  storage  projects.  Clear  guidelines  on 
participation in capacity mechanisms and other incentives will attract private investment and 
reduce economic barriers to entry for long-duration storage solutions. Currently, ACER finds463 
that important flexibility resources - like storage and demand response - receive significantly 
lower,  to  marginal,  support  in  remuneration  in  existing  capacity  mechanisms  compared  to 
conventional  fossil  fuel  assets  (CHPs,  OCGTs  and  CCGTs,  despite  providing  low-carbon 
flexibility solutions in critical times.  

Despite this, batteries are getting increasingly popular on CRM auctions464 for future periods, 
bringing system adequacy benefits. All Member States should fully implement the June 2019 
market  design  directive  (EU/2019/944),  as  well  as  the  various  provisions  of  the  electricity 
market design reform once stepping into force465,  by adopting a definition for energy storage, 
removing  price  caps,  reducing  minimum  bid  sizes,  and  developing  new  flexibility  services 
where needed. Is it key to avoid non-remunerated, non-frequency ancillary services as these 
can bring significant socio-economic benefits.  

Recommendation  6:  Update  regulatory  frameworks  and  lift  fiscal  barriers  for  energy 
storage 
Addressee: Member States 
Related policies & measures: EPBD, revised REDII  
Expected impacts: until 2030 

Member  States  should  actively  align  their  regulatory  frameworks  with  the  latest  electricity 
market  recommendations466  to  define  storage  and  address  challenges  such  as  double  grid 
tariffs  for  storage  facilities.  Furthermore,  fostering  a  clear  and  supportive  regulatory 
environment for the conversion of energy infrastructure, especially for methane and hydrogen 
systems, will encourage private investments and technological innovation. 

In Member  States  where electricity storage  is  still  exposed to  double  taxes or tariffs, these 
need to be lifted (in line with article 15 of the Electricity Directive).467 Energy storage needs to 
be  recognised  as  an  independent  pillar  of  energy  supply,  with  adequate  recognition  for  its 
double  generator-consumer  role,  and  storage  facilities  (especially  those  that  provide 
decentralised consumer flexibility, like EVs or V2G) should not be taxed. The elimination of 
double  taxation  for  storage  is  also  set  out  to  be  included  in  the  revised  Energy  Taxation 
Directive, once agreed on and adopted.  

The Directive on Deployment of Alternative Fuels Infrastructure (AFIR) should be effectively 
implemented  too,  as  well  as  dedicated  provisions  in  the  recast  Energy  Performance  of 
Buildings  Directive  (EPBD),468  to deploy and mainstream  private  EV  charging  in residential 
buildings.  Implementation  of  the  revised  REDII  is  also  needed  to  facilitate  investments  in 
innovative  charging  technologies,  such  as  smart  and  bidirectional  charging.  Access  to  in-
vehicle data is required to properly account for the flexibility provided by vehicles, and good 
data management practices are needed avoid vendor lock-in and bring this technology to the 
wider markets.  

463 ACER (2023), Security of EU security of supply  
464 See, for example, Elia’s latest CRM auction report for the 2027-2028 delivery period  
465 Provisional agreement reached between the Council and Parliament on 14.12.2023 
466 European Commission (2023) Energy Storage - Underpinning a decarbonised and secure EU energy system 
467 calling for MSs to ensure that active constomers who own storage are not subject to any double charges, incl. network 
charges: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32019L0944  
468 Provisional agreement reached between the Council and Parliament on 7.12.2023 

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On  the  EU  level,  stakeholders  highlight  the  need  for  financial  support  and  research 
stimulation,  binding  targets  and  roadmaps  for  storage  (an  EU-level  electricity  storage 
strategy), which combined with a supportive and harmonised regulatory framework could well 
advance  the  deployment  of  storage  technologies.  The  Commission’s  recommendation  on 
storage469 already points at important regulatory barriers and calls for better consideration of 
storage in grid planning and financing, but a stricter framework would better incentivise the 
actual take-up of these recommendations, as well as the scale-up of available technologies.  

5.4.  Barriers  to  digitalisation  and  innovation  in  the  energy 

sector 

5.4.1.  Summary  of  survey  results  on 

the  digitalisation  and 

innovation aspect 

The  assessment  of  barriers  and  subsequent  recommendations  was  based  on  the  survey 
replies  to  the  following  questions,  with  the  majority  of  answers  coming  from  business 
associations and individual companies: 

•  What are relevant barriers to developing the integration of energy system digitalisation 

and innovation in your member state or at member state level?  

•  What are relevant overarching barriers to developing the integration of energy system 

digitalisation and innovation on EU-level?  

•  What  priority  policies  and  measures  are  required  to  address  the  above-mentioned 

barriers in your member state or at member state level? 

Solely based on the survey responses from stakeholders, the below are the most prevalent 
barriers  for  energy  system  integration  regarding  digitalisation  and  innovation,  and  the 
recommended actions to overcome them.  

Identified barriers: 

1.  Lack  of  interoperability  and  data  sharing:  Limited  cross-sector  data  sharing  and 

collaboration, siloed standards preventing integrated services. 

2.  Lack  of  regulatory  support  and  incentives:  Absence  of  regulatory  support  for 

innovation, insufficient incentives for digitalisation and technology adoption. 

3.  Data privacy and security concerns: Stringent data privacy regulations hinder data 

sharing; cybersecurity concerns require attention. 

4.  Lack of clear business models: Lack of clear business models for sector coupling and 
integrated energy system development. This is partially due to a fragmented regulatory 
landscape and the lack of harmonised standards and regulations across EU Member 
States. This concerns district heating and cooling networks especially, which pursuant 
to Article 20(3) of the revised RED II should provide RES-based heating and cooling via 
a variety of cost-effective and flexible sources, yet are mostly fossil-fuel based to date.    
5.  Insufficient infrastructure and grid modernisation: Ageing energy infrastructure and 

outdated equipment hinder integration of new digital technologies. 

6.  Lack  of  knowledge  and  education:  Limited  understanding  of  energy  systems  and 

digital technologies, insufficient skilled workforce. 

469 https://energy.ec.europa.eu/topics/research-and-technology/energy-storage/recommendations-energy-storage_en  

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7.  Lack  of  EU  framework  for  R&D  and  Innovation:  Lack  of  EU-level  support  for 
regulatory  sandbox-promoting  research  and  development  activities,  hindering  new 
business models. More consideration needed to source critical materials and intellectual 
property from Member States to reduce supply dependence from non-EU countries.  

5.4.2.  Recommendations 

to  overcome  barriers 

related 

to 

digitalisation and innovation 

The following recommendations are based on the survey results. 

Recommendation 7: Promote the harmonisation of standards and regulations  
Addressee: European Commission, Member States 
Related policies & measures: EPBD, Data Act 
Expected impacts: until 2030 

Harmonise regulations and standards through legislative tools like the Data Act470, Codes of 
Conduct  (interoperability  of  Energy  Smart  Appliances471),  electricity  market  design,  self-
monitoring and the EPBD to avoid additional administrative burden. 

Accelerate  the  standardisation  process  for  data-exchange  languages  like  ESDL  (TNO)  to 
enhance interoperability. 

Mandate  open  and  standardised  Application  Programming 
for 
communication  from  distributed  energy  resource  devices  with  grid  operators  to  minimise 
integration costs. 

Interfaces 

(APIs) 

Recommendation 8: Promote the coordination at the European level of data-sharing via 
digitalisation  
Addressee: European Commission, Member States 
Related policies & measures: SEEG, D4E, Data Act 
Expected impacts: until 2030 

Develop a European data-sharing infrastructure for energy data spaces, focusing on common 
data representations, semantic models, and secure data sharing.  

Establish more coordination mechanisms like the EU’s Smart Energy Expert Group (SEEG) 
and  its  D4E  working  group  to  create  synergies  between  data-related  initiatives  and  avoid 
duplication. 

Ensure  consistent  interoperability  requirements  for  connected  devices  across  EU  markets. 
Balance grid investments between physical reinforcements and digitalisation. 

Strengthen  education  and  training  programs  to  develop  a  skilled  workforce  capable  of 
managing digital transformation. 

470 https://digital-strategy.ec.europa.eu/en/policies/data-act  
471 https://ses.jrc.ec.europa.eu/development-of-policy-proposals-for-energy-smart-appliances  

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Recommendation 9: Enhance R&D on cybersecurity and smart grid KPIs  
Addressee: Member States 
Related policies & measures: Network Code on Cybersecurity 
Expected impacts: until 2030/2040 

There  are  higher  risks  stemming  from  an  increasingly  digitalised  energy  system  that 
accommodates  an  increasing  number  of  participants.  Implement  systemic  cybersecurity 
standards and rules to ensure end-to-end security of interconnected power systems.  

Introducing  regulatory  sandboxes  would  encourage  research,  development,  and  innovation 
projects by TSOs. These need to account for necessary infrastructure investment costs. 

Grid operators should be remunerated based on smart grid Key Performance Indicators (KPIs) 
to incentivise efficient grid capacity increase. 

The responsibility to take actions for overcoming the barriers seems to mainly lie with 
national  governments  (as  answered  by  44%  of  the  respondents)  and  EU  institutions 
(42%)  followed  by  NRAs  (39%)  and  EU  agencies  like  CEN  or  CELENEC  (33%). 
Standardisation bodies seem to have much less power (15%) in addressing them according 
to the stakeholders asked.  

Digitalisation  in  the  sector  is  already  underway,  and  the  Commission  recognises  smart, 
interconnected energy systems facing most of the challenges identified. The digitalisation of 
the  energy  system  as  policy  priority  is  linked  to  the  European  Green  Deal  and  the  Digital 
Decade Policy Programme 2030, and a series of actions, including establishing a common 
European energy data space, and attention to cybersecurity issues, have already been 
outlined in the EU Action Plan on Digitalising the energy system472. As suggested above 
too, the Data Act, the Data Governance Act473 can both be further leveraged to strengthen and 
securitise  data  sharing  mechanisms.  Implementing  digitalisation-relevant  legislation  by  the 
Member States will require a coordinated approach by both the EU and the public authorities, 
given the complex set of legal and operational arrangements that need to be in place once 
standardisation processes start, along with the right technical requirements and guidelines. 

5.5.  Monitoring and reporting 

The analysis of this study allows to draw a few high-level recommendations regarding energy 
system integration in the EU, which would complement the more specific recommendations 
provided in subsequent chapters and illustrated in the above figure. 

Recommendation  10:  Develop  indicators  to  monitor  the  progress  towards  energy 
system integration 
Addressee: European Commission 
Related policies & measures: EU Action Plan for Grids, EU Action Plan for Digitalisation 
Expected impacts: until 2030/2040 

This study discusses multiple barriers specific to certain topics or cross-cutting, affecting the 
whole EU energy system, and identifies a number of adopted or proposed EU policies and 
measures. These should address many of the barriers fully or partially, but often were only 
recently  adopted  and  still  need to  be  implemented at  the  EU  and Member  State  level  (see 

472 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022DC0552&qid=1666369684560  
473 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022DC0552&qid=1666369684560#footnote12  

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section  6.5  for  a  list  of  relevant  policies  and  measures).  The  development  of  indicators  to 
monitor the status of the multiple barriers identified would provide an overview of the progress 
of energy system integration in the EU and of the effectiveness of the policies and measures 
being implemented and serve to highlight the need for any additional action at the EU level. 

In particular, electricity grids, energy storage and digitalisation are important topics which have 
gained increased attention from policymakers recently, including at the EU level. As detailed 
in the chapter, the Commission has adopted recently an EU Action Plan for Grids,474 and EU 
Action  Plan  for  Digitalising  the  Energy  System,475  and  a  staff  working  document  and 
recommendations to Member States on energy storage.476 The actions and recommendations 
should address the identified barriers to a significant extent. Hence, as for many topics of this 
study,  the  focus  should  be  on  implementation.  To  support  this,  the  Commission  could 
specifically monitor and report on progress on the action plans and recommendations. The 
Commission already tracks the progress of actions proposed in its plans, and publishing this 
periodically will help stakeholders to assess progress and drawn attention to the remaining 
actions and barriers. For energy storage, monitoring implementation of the (frequently non-
binding477)  recommendations  at  the  national  level  will  again  serve  as  a  means  to  bring 
attention to remaining issues. 

Recommendation 11: Specifically address societal aspects in studies and legislation 
related to energy system integration 
Addressee: European Commission 
Related policies & measures: EU Social Climate Fund, new EU ETS for transport and buildings 
Expected impacts: until 2030/2040 

Social impacts of the energy transition are already increasingly recognised for example with 
the adoption of the EU Social Climate Fund to mitigate the socio-economic impacts of the new 
EU ETS for transport and buildings. These impacts have been exacerbated with the recent 
energy  crisis.  Many  of  the  specific  recommendations  of  this  study,  e.g.  regarding  the 
deployment of distributed energy resources, will have a socio-economic impact – positive or 
negative  –  which  needs  to  be  considered.  Not  all  consumers  have  the  capacity  to  adopt 
specific clean energy technologies without public support such as financing, and we should 
not expect all consumers to adopt such technologies in the first place – in which case they 
should not be ‘left behind’. Moreover, we discuss in this study a number of other societal issues 
related  to  the  knowledge  and  acceptance  of  various  system  integration-related  energy 
technologies.  Further  attention  is  thus  necessary  to  the  social  aspects  of  energy  system 
integration  to  ensure  acceptance  and  accelerate  deployment  of  the  technologies  while 
minimising potential negative impacts. 

5.6.  Pillars  and  challenges  not  addressed  in  the  EU  ESI 

Strategy 

In this section an assessment is made of further pillars or challenges that are relevant 
for ESI in the EU, which were not included in the Strategy. We focus on three issues in 
more  detail:    that  of  raw  material  cost  and  availability,  and  skills  and  employment 
aspects, to consider as potential new areas being considered as elements of energy 
system integration. 

474 https://ec.europa.eu/commission/presscorner/detail/en/ip_23_6044 
475 https://ec.europa.eu/commission/presscorner/detail/en/ip_22_6228 
476 https://energy.ec.europa.eu/news/commission-recommendations-how-exploit-potential-energy-storage-2023-03-14_en 
477 Noting that some recommendations such as on national flexibility needs assessments have become binding in the electricity 
market reform provisionally agreed in December 2023. 

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These issues were raised especially by businesses and their associations. For example, the 
ESI Strategy mentions the challenge of promoting the circular economy, thus increasing 
not only energy - but also resource efficiency, but the listed actions in the Strategy concern 
only energy - and not resource efficiency. There could thus be room for further considering 
resource  efficiency  across  the  energy  value  chain,  in  line  with  the  recent  attention  paid  to 
critical raw  material dependencies  of  clean  energy technologies. Other  areas  that  could  be 
developed are that of skilled workforce and employment, the energy-water nexus, and the 
interaction  between  nature  protection  and  the  development  of  energy  infrastructure.  Raw 
materials and skills aspects are discussed in more detail below. 

5.6.1.  Raw materials’ cost and availability 

Resource  efficiency  is  a  critical  consideration  in  planning  a  low-carbon  energy 
infrastructure, and this extends to the responsible extraction of critical raw materials.478 
These  materials,  often  essential  for  technologies  like  batteries,  solar  panels,  and  wind 
turbines, are vital for the success of a low-carbon transition, as also emphasised in the EU’s 
Critical  Raw  Materials  Act479.  Prioritising  responsible  extraction  not  only  mitigates 
environmental  damage  but  also  ensures  a  stable  supply  chain.  A  combined  approach  of 
sustainable mining in the EU and green procurement practices with suppliers is necessary to 
guarantees the long-term viability of the low-carbon energy infrastructure. The revised SET 
Plan480 will also have more focus on critical raw materials’ availability and circularity in relation 
to the manufacturing of clean energy technologies.  

Stakeholders have voiced the below concerns regarding material use efficiency and scarcity 
in the survey:   

•  Scarcity and dependency on third countries for rare materials and metals for solar PV, 
storage and wind turbines can result in higher LCOE than predicted (as is already the 
case today). The EU’s new competitiveness report on clean energy technologies481 also 
concludes that albeit clean energy technologies still remain highly cost competitive in 
the  EU,  the  EU’s  manufacturing  industry  is  facing  increasing  competition  from  non-
European  producers,  concerning  raw  materials  to  key  intermediate  components  and 
final technologies.  

•  Heterogeneity of industrial sub-sectors presents a barrier for widespread electrification 

in terms of process design and development.  

•  The  EU  industry  for  critical  raw  materials  processing  and  for  manufacturing  of  key 
components  for  RES  systems  is  underdeveloped,  and  in  need  of  harmonised 
administrative procedures. 

•  Promotion of responsible critical raw materials extraction: Development in EU of industry 
for critical raw materials processing and for manufacturing of key components for RES 
systems. 

478 Including but not limited to lithium, cobalt, graphite, copper, nickel etc.  
479 https://ec.europa.eu/commission/presscorner/detail/en/ip_23_1661, as adopted in 2023 November, legislation coming into 
force after adoption by the Parliament and the Council  
480 https://research-and-innovation.ec.europa.eu/system/files/2023-10/com_2023_634_1_en_act_part1.pdf  
481 Published as part of the 2023 State of the Energy Union Report 

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5.6.2.  Employment needs/skilled workforce 

The  availability  of  skilled  workers  has  also  been  raised  by  respondents  as  possible 
bottleneck for system integration and needs more attention in the ESI strategy. As global 
focus  intensifies  on  reducing  carbon  emissions  and  embracing  renewables,  a  workforce 
equipped  with  specialised  knowledge  is  vital  for  the  planning,  development,  and 
maintenance of these innovative technologies. In EU alone, it is estimated that 18 million 
people will need to be retrained or reskilled to reach climate goals, mainly in the solar and 
wind sector.482 This may require a more integrated approach to developing the necessary skills 
across  the  energy  sector,  and  the  Commission  indicates  that  labour  shortages  could  slow 
downs the energy transition.483  

The need for various specialised jobs will emerge, spanning over various sectors such as: 

✓ 

In  solar  energy,  photovoltaic  system  installers  are  pivotal  in  setting  up  solar  panels 
efficiently, while heat pump installations also require specialised technicians.   

✓  Wind turbine technicians ensure the smooth operation and maintenance of wind farms, 

optimising their energy output. 

✓  Regarding the mining and processing of critical materials, future skilled workers who can 
adopt environmentally responsible methods while extracting these valuable resources: 
metallurgical  and  mining  engineers  need  to  be  trained  and  proficient  in  sustainable 
extraction  techniques,  and  ethical  supply  chain  managers  need  to  comply  with 
increasingly strict environmental rules. 

✓  For increased demand-side participation in energy markets, technicians are needed who 
can  install  demand-side flexibility  technologies  such  as smart  meters, smart  charging 
facilities or behind the meter storage.  

This issue is partially addressed on the EU level by the Pact for Skills Initiative and its large-
scale  RES  skills  partnership  set  up  for  the  renewable  energy  industrial  ecosystem.  The 
partnership484 was established by renewable energy trade associations and representatives 
of installers of clean technologies and will contribute to the Net Zero Industry Act objectives. 
The EU Heat Pump Action Plan485, aiming to accelerate the heat pump market and currently 
waiting for Commission adoption, will also contain a dedicated industry partnership which can 
foster exchanges on re-and upskilling needs in the sector.  

5.6.3.  Pending actions of the ESI strategy 

One action of the ESI Strategy, as referred to at the beginning of this section, is only partially 
implemented. Action 20 sets out to “consider additional measures to support renewable and 
low-carbon  fuels,  possibly  through  minimum  shares  or  quotas  in  specific  end-use  sectors 
(including aviation and maritime), through the revision of the Renewable Energy Directive and 
building  on  its  sectoral  targets,  complemented,  where  appropriate,  by  additional  measures 
assessed  under  the  REFUEL  Aviation  and  FUEL  Maritime  initiatives  (2020).  The  support 

482 https://www.weforum.org/agenda/2023/05/europe-green-skills-solar-wind/  
483 European Commission (2023) Progress on competitiveness of clean energy technologies 
484 https://energy.ec.europa.eu/news/pact-skills-launch-large-scale-renewable-energy-skills-partnership-2023-03-21_en  
485 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13771-Heat-pumps-action-plan-to-accelerate-roll-out-
across-the-EU_en  

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regime  for  hydrogen  will  be  more  targeted,  allowing  shares  or  quota  only  for  renewable 
hydrogen.” 

Currently, no end-use specific minimum shares or quotas for low-carbon fuels are set in the 
revised  REDII.    Member  States  can  choose  between  “(i)  a  new  binding  target  of  14.5% 
reduction of greenhouse gas intensity in transport from the use of renewables by 2030 or a 
binding target of at least 29% share of renewables within the final consumption of energy in 
the transport sector by 2030 (instead of 14%); (ii) a combined binding sub-target of 5.5% for 
advanced biofuels and renewable liquid and gaseous transport fuels of non-biological origin 
(RFNBOs  –  which  include  renewable  hydrogen  and  synthetic  fuels),  including  a  minimum 
binding 1% level for RFNBO.” Additional measures to support low-carbon fuels in the RED, 
with extra sectoral targets, should be considered. Thus, this is suggested in recommendation 
5. For a more detailed assessment of the progress with the ESI strategy’s different provisions, 
see chapter 6.4 Status of actions in the EU Energy System Integration Strategy. 

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6.  Annexes 

6.1.  Overview of recommendations 

Table 6-1 Recommendations on electrification of end-uses and decentralised renewable energy integration 

Recommendation: 

Addressee: 

Related policies & measures:  

Expected 
impacts: 

Relevant 
sectors: 

1: Provide guidelines to maximise benefits of 
smart meter networks  

European 
Commission 

2: Review electricity grid connection principles 

3: Further promote R&D to improve efficiency of 
heat pumps at (very) high temperatures for 
electrification of industrial processes  
4: Promote pilot projects and develop works 
protocol/ manual for replacing AC to DC 

5: Support emerging business models for 
financing of upfront equipment and installation 
costs 

6: Implement dynamic electricity commodity 
pricing to enhance competition at the supply 
side  

7: Implement cost-reflective Time of Use (ToU) 
grid tariffs to provide adequate price signals for 
demand response 

European 
Commission 

European 
Commission 

European 
Commission 
European 
Commission, 
Member 
States 
European 
Commission, 
Member 
States 
European 
Commission, 
Member 
States 

JRC Guidelines for cost-benefit analysis of smart metering 
deployment, Commission Recommendation for the roll-out 
of smart metering systems, Electricity Directive, 
Regulation (EU) 2023/1162 
JRC Guidelines for cost-benefit analysis of smart metering 
deployment, Commission Recommendation for the roll-out 
of smart metering systems, Electricity Directive, 
Regulation (EU) 2023/1162 

2030 

2030 

Energy Efficiency Directive, Renewable Energy Directive 

2030 

Energy Efficiency Directive, Electricity Directive 

Renewable Energy Directive, Energy Efficiency Directive 

Electricity Regulation and Directive 

Electricity Regulation and Directive 

170 

2040 

2030/ 
2040 

2030/ 
2040 

2030/ 
2040 

Building and 
transport 
sectors 

Building, 
industry and 
transport 
sectors 
Building and 
industry 
sectors 
Building 
sectors  

Building and 
transport 
sectors 

Building and 
transport 
sectors 

Building and 
transport 
sectors 

 
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Recommendation: 

Addressee: 

Related policies & measures:  

8: Promote flexible and partial industrial 
electrification  

9: Formulate an actionable strategy for 
Electrification 

European 
Commission, 
Member 
States 

European 
Commission 

Electricity Regulation and Directive 

Electricity Directive 

10: Monitoring report concerning the access of 
DERs in markets, and progress on business 
models (ESCOs, Aggregators) 

European 
Commission/ 
ACER 

Electricity Directive 

11: Support national and local authorities in 
coordinating assessment and planning efforts 

12: Adopt and implement common European 
standards to ensure interoperability, including for 
smart and bidirectional charging 

European 
Commission, 
Member 
States 
European 
Commission, 
Member 
States and 
manufacturers 

Renewable Energy Directive, Energy Efficiency Directive 

AFIR Regulation  

Expected 
impacts: 

Relevant 
sectors: 

2030/ 
2040 

Industry 
sectors 

2030 

2030 

2030/ 
2040 

Building, 
Industry and 
transport 
sectors 
Building, 
Industry and 
transport 
sectors 
Building, 
Industry and 
transport 
sectors 

2030 

Transport 
sector 

13: Develop training programmes for sector 
professionals on electrical equipment and EVs 

European 
Commission 

Net-Zero Industry Act, Heat Pump Action Plan, funding 
opportunities addressing skills such as LIFE calls 

2030 

Building, 
Industry and 
transport 
sectors 

Table 6-2 Recommendations on uptake of hydrogen 

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Recommendation: 

Addressee: 

Related policies & measures:  

Expected 
impacts: 

Scope: 

1: Further R&D on technical challenges 

2: Consider water scarcity issues 

3: Address upstream methane emissions. 

4: Share risks for infrastructure build-out through 
regulated markets and appropriate financing and 
funding schemes also considering energy 
system integration aspects 
5: Support Hydrogen storage development 
through geological surveys, additional revenue 
streams and adjusted transmission fees to 
storage operators. 

6: Better understand the implications of CCU/S 
through scientific evaluations, and if needed, 
consider a CO2 infrastructure build-out.  

7: Remove fossil fuel subsidies  

8: Further develop existing subsidy concepts 
and sufficiently fund the respective financial pots 
to achieve the 2030 hydrogen targets 

European 
Commission 
and Member 
States 
European 
Commission 
and Member 
States 
European 
Commission 
and Member 
States 
European 
Commission 
and Member 
States 
European 
Commission 
and Member 
States 
European 
Commission 
and Member 
States 
European 
Commission 
and Member 
States 
European 
Commission 
and Member 
States 

Clean Hydrogen Partnership, Horizon Europe, other R&D 
programs 

2040 

Overarching 

Industrial Emissions Directive, Clean Hydrogen 
Partnership, Horizon Europe 

2030 

Renewable 

CCS Directive, Methane Emissions regulation, Horizon 
Europe 

2030/ 
2040 

Low-carbon 

Hydrogen and Gas Market Decarbonisation Package, 
Electricity Market Design 

2030 

Overarching 

Clean Hydrogen Partnership, Hydrogen and Gas Market 
Decarbonisation Package, Electricity Market Design 

2030/ 
2040 

Overarching 

CCS Directive, Methane Emissions Directive, Hydrogen 
and Gas Market Decarbonisation Package, Net-Zero 
Industry Act, Clean Hydrogen Partnership 

2040 

Low-carbon 

European Trading System, Energy Taxation Directive, 
Competition Policy 

2030 

Overarching 

EU Taxonomy, European Hydrogen Bank, Innovation 
Fund, Connecting Europe Facility, IPCEIs and (other 
funding schemes) 

2030 

Overarching 

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Recommendation: 

Addressee: 

Related policies & measures:  

Expected 
impacts: 

Scope: 

9: Consider expanding funding opportunities to 
low-carbon H2 and provide clarity on conditions.  

10: Enable additional revenue streams for 
electrolysers and consider electricity network 
tariff exemptions. 

11: Consider defining binding targets for low-
carbon hydrogen types and specific to industry 
sectors. 

12: Further improve gas market through 
transparency and protection of consumer 
interests. 

13: Adopt rapidly DAs on GHG methodology for 
low-carbon hydrogen. 

14: Strive for harmonisation where possible 

15: Develop EU-level regulatory sandboxes for 
hydrogen. 

16: Consider (further) differentiation of low-
carbon hydrogen into at least fossil + CCS and 
electrolytic low-carbon hydrogen. 
17: Address global competition and hold further 
Q&A sessions on applicability of EU 
requirements in non-EU countries. 

European 
Commission  
European 
Commission 
and Member 
States 

European Hydrogen Bank, EU Taxonomy 

2030 

Low-carbon 

Electricity Market Design, Network Codes 

2030 

Renewable 

European 
Commission  

EU Taxonomy, Amended Renewable Energy Directive, 
ReFuelEU Aviation, FuelEU Maritime  

2030 

Overarching 

European 
Commission 
and Member 
States 
European 
Commission  
European 
Commission 
and Member 
States 
European 
Commission 
and Member 
States 

Hydrogen and Gas Market Decarbonisation Package 

2040 

Overarching 

Hydrogen and Gas Market Decarbonisation Package 

2030 

Low-carbon 

n.a. 

2040 

Overarching 

Net-Zero Industry Act, Hydrogen and Gas Market 
Decarbonisation Package, Amended Renewable Energy 
Directive 

2030 

Overarching 

European 
Commission  

Hydrogen and Gas Market Decarbonisation Package, EU 
Taxonomy 

2040 

Low-carbon 

European 
Commission  

Amended Renewable Energy Directive, Carbon Border 
Adjustment Mechanism 

2030 

Overarching 

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Recommendation: 

Addressee: 

Related policies & measures:  

Expected 
impacts: 

Scope: 

18: Expand on the concept of PPAs (long-term) 
to enable long-term procurement of electricity 
and reduce associated planning risks of 
hydrogen projects. 

19: Further accelerate permitting processes 
especially through increasing hydrogen 
competence in NRAs and digitalisation. 

20: Expand on concepts such as the European 
Hydrogen Academy. 

21: Transparent testing of safety of hydrogen 
and derivatives and CO2-related infrastructure. 

22: Keep emphasising the opportunities for a 
just transition by hydrogen technologies. 

European 
Commission  

Electricity Market Design, Hydrogen and Gas Market 
Decarbonisation Package  

2030 

Renewable 

European 
Commission 
and Member 
States 
European 
Commission  
European 
Commission 
and Member 
States 
European 
Commission 
and Member 
States 

Emergency Regulation on Permit-Granting, European 
Hydrogen Academy, Net Zero Industry Act 

2030 

Overarching 

European Hydrogen Academy 

2030 

Overarching 

Horizon Europe, Union certification framework for carbon 
removals 

2030/204
0 

Overarching 

Just Transition Fund, Recovery and resilience Facility, 
European Regional Development fund 

2030 

Overarching 

Table 6-3 Recommendations on waste heat utilisation 

Recommendation: 

1: Increase support within research and innovation programming for 
technologies enabling utilisation of certain waste heat sources 
2: Provide guidance for Member States revising the maximum feasible 
distances for transporting waste heat and other thresholds related to the CBA 
exemptions under Article 26(8) of the Energy Efficiency Directive (EU) 
2023/1791. 

3: Improve waste heat accounting in Eurostat’s energy balance. 

Addressee:  Related policies & measures:  

European 
Commission 

Horizon Europe, SET Plan and Energy 
Technology & Innovation Platforms 

Expected 
impacts:  

2040 

European 
Commission 

European 
Commission, 
particularly 
Eurostat 

Energy Efficiency Directive 

2030/2040 

Energy Statistics Regulation, Renewable 
Energy Directive 

2040 

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Recommendation: 

Addressee:  Related policies & measures:  

4: Improve the representation of waste heat in EU policy scenarios. 

5: Provide additional funding for planning and feasibility studies, in 
cooperation with Member States. 

6: Provide technical assistance for Member States designing and 
implementing support schemes, including risk mitigation measures such as 
through insurance/guarantee schemes. 

7: Disseminate good practices for improving pricing signals to waste heat 
utilisation between Member States 
8: Research regulatory and price-based mechanisms to reduce heat 
emissions 

9: Clarify the contributions of waste heat and develop principles for its 
utilisation towards the upcoming 2040 climate & energy targets. 

10: Support national and local authorities in coordinating assessment and 
planning efforts. 

11: Evaluate and compare the latest and upcoming national reports related to 
heating and cooling, providing recommendations for advancing the utilisation 
of waste heat and cold. 
12: Structurally gather data and monitor the efficacy of the new provisions 
regarding local heating and cooling plans, and make the provisions stricter if 
necessary. 

European 
Commission 

European 
Commission 

European 
Commission, 
Member 
States 
European 
Commission 
European 
Commission 

European 
Commission 

European 
Commission, 
Member 
States 

Energy Statistics Regulation, Renewable 
Energy Directive 
Renewable Energy Directive, Energy 
Efficiency Directive, EU funding for the 
energy sector 

Renewable Energy Directive, Energy 
Efficiency Directive 

Energy Taxation Directive, EU ETS 2, 
Electricity Regulation and Directive 

Industrial Emissions Directive 

Climate Target Plan 2040, European Climate 
Law, Renewable Energy Directive, Energy 
Efficiency Directive 

Renewable Energy Directive, Energy 
Efficiency Directive 

European 
Commission 

Renewable Energy Directive, Energy 
Efficiency Directive, Governance Regulation 

European 
Commission 

Energy Efficiency Directive 

13: Ensure that waste heat and cold is included in the curricula for initiatives 
aiming to increase the skills available in the heating and cooling sector. 

European 
Commission 

14: Expand energy source mix disclosure obligations to include gas and heat, 
and provide guidance regarding the carbon footprint of waste heat 

Member 
States 
European 
Commission 

Net-Zero Industry Act, Heat Pump Action 
Plan, funding opportunities addressing skills 
such as LIFE calls 

Renewable Energy Directive, Energy 
Efficiency Directive 

Expected 
impacts:  

2040 

2030 

2040 

2030 

2040 

2040 

2030/2040 

Expected 
impacts 
2030 

2040 

2030 

2030 

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Recommendation: 

Addressee:  Related policies & measures:  

Table 6-4 Recommendations on assessment of cross-cutting topics 

1: Mandate electricity DSOs to upgrade interfaces with electricity TSOs 

2: Incentivise anticipatory development of the electricity grid/network and 
review connection principles 

3: Support Member States better in the implementation of regulatory 
frameworks and investments into dedicated cross-border CO2 transport 
infrastructure  

4: Further integrate energy system planning and provide guidance on the 
needs for and development of EU energy infrastructure 

5: Carry out assessment and valuation of storage needs to make its value 
more transparent 

6: Update regulatory frameworks and lift fiscal barriers for energy storage 

7: Promote the harmonisation of standards and regulations  

8: Promote the coordination at the European level of data-sharing via 
digitalisation  

9: Enhance R&D on cybersecurity and smart grid KPIs  

10: Develop indicators to monitor the progress towards energy system 
integration 

European 
Commission 
European 
Commission 
European 
Commission, 
Member 
States 
European 
Commission, 
Member 
States 
European 
Commission, 
Member 
States 
Member 
States 
European 
Commission, 
Member 
States 
European 
Commission, 
Member 
States 
Member 
States 
European 
Commission 

176 

EU Action plan for Grids, Electricity Directive 
(EU) 2019/944 
EU Action plan for Grids, Electricity Directive 
(EU) 2019/944 

Expected 
impacts:  

2030 

2030/2040 

Electricity Market design reform proposal, 
revised TEN-E Regulation  

2030/2040 

Electricity Directive, Grids regulation  

2030 

Electricity Directive, Grids regulation  

2030 

EPBD, revised REDII  

until 2030 

EPBD, Data Act,  

until 2030 

SEEG, D4E, Data Act,  

until 2030 

n.a. 

EU Action Plan for Grids, EU Action Plan for 
Digitalisation 

until 
2030/2040 
until 
2030/2040 

 
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Recommendation: 

Addressee:  Related policies & measures:  

11: Specifically address societal aspects in studies and legislation related to 
energy system integration 

European 
Commission 

EU Social Climate Fund, new EU ETS for 
transport and buildings 

Expected 
impacts:  
until 
2030/2040 

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6.2.  Stakeholder survey 

Between 1/6/2023 and 10/7/2023 an online survey has been open for responses from key 
stakeholders on energy system integration to request their responses on the key barriers 
and  policy  solutions  to  overcome  these  barriers.  The  project  team  created  a  list  of 
stakeholders and DG ENER also forwarded the link to the questionnaire to their network. 
This section will summarise the key responses received.  

6.2.1.  Overall survey results 

In total 120 responses were received, 37 responses were considered invalid since these 
were either (almost) empty or were initially double counted, leading to 83 valid responses. 
Table 6-5 shows the spread of responses over the EU MSs: 

Table 6-5 Representativeness of the responses over the EU MSs 

EU-27 

17  France (FR) 

16  Netherlands (NL) 

Austria (AT) 

4  Germany (DE) 

10  Poland (PL) 

Belgium (BE) 

7  Greece (EL) 

2  Portugal (PT) 

Bulgaria (BG) 

4  Hungary (HU) 

1  Romania (RO) 

Croatia (HR) 

1 

Ireland (IE) 

2  Slovakia (SK) 

Cyprus (CY) 

0 

Italy (IT) 

6  Slovenia (SI) 

Czechia (CZ) 

2  Latvia (LV) 

0  Spain (ES) 

Denmark (DK) 

5  Lithuania (LT) 

1  Sweden (SE) 

Estonia (EE) 

3  Luxembourg (LU) 

0  Other 

8 

3 

8 

2 

1 

1 

9 

5 

5 

Finland (FI) 

4  Malta (MT) 

0  TOTAL 

127 

Note: here respondents may be active in more than one MS and/or in EU27 as a whole.  

Figure  6-1  presents  the  number  of  responses  to  transversal  aspects  of  energy  system 
integration: 

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Figure 6-1 Number of responses and percentages related to the survey aspects on 
energy system integration 

The above graph shows that hydrogen uptake received the highest number of responses 
closely followed by integration of energy infrastructure and electrification and decentralised 
RES integration. Interestingly, a relatively low number of responses was received for waste 
heat utilisation. The information provided by stakeholders is incorporated directly into the 
relevant  aspects  detailed  in  chapters  2  to  5,  both  through  dedicated  sections  on  the 
stakeholder feedback in each aspect analysis; and it is mentioned throughout the analysis 
when a particular information is derived from the survey. 

6.2.2.  Stakeholder views on the electrification and decentralised 

RES integration 

The barriers to electrification of end-uses and renewable energy integration are complex 
and multifaceted.  Figure  6-2  presents the  responses from  the  stakeholder  survey  on  the 
main barriers for electrification and decentralised RES integration per stakeholder category. 
All  three  elements  are  equally  considered  to  be  barriers  to  the  electrification  and  RES 
integration: The “quick roll out of smart meters” is seen as the most fundamental, however 
by  a  small  margin  compared  to  the  other  two  elements.  However,  that  implies  that  the 
different stakeholders –the DSO, the vendor and the end-consumer – must equally be able 
to  accomplish  their  roles.  This  is  also  one  of  the  biggest  challenges  because  it  requires 
orchestration and a clear roadmap for all stakeholders to feel confident that everyone is on 
the same page with regard to the desired outcome. 

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Figure 6-2 Responses on barriers to electrification and decentralised RES 
integration per stakeholder category 

Figure  6-3  summarises  the  responses  on  the  barriers  to  electrification  in  the  three  key 
sectors. The building sector is perceived to face the greatest barriers to electrification. The 
barrier groups with the greatest concern among survey participants for all categories were 
the economic and financial issues including funding. The legislative and regulatory aspects 
followed along with and the societal challenges. Technical issues in general were perceived 
to be the least critical category. 

Economic and financial issues also represent the major barriers in the industry and transport 
sectors, but to a lesser degree than in the building sector, where this is assessed as being 
“fundamental” by most respondents. Among the three different sectors, stakeholders from 
the transport sector have less concern on the regulatory and legislative framework, which 
implies  that  more  regulatory  effort  is  needed  in  industry  and  building  sectors  than  in 
transport. 

Figure 6-3 Responses on barriers to electrification and decentralised RES 
integration for three sectors 

Figure 6-4 breaks down the responses for each barrier category. Some of the elements that 
stand out are mentioned below. The grid development is identified as a major bottleneck for 
the  industrial  sector.  Lack  of  financing  mechanisms/market  remuneration  (especially  for 
industry)  and  lack  of  incentives  (mainly  for  industry  and  buildings)  are  perceived  as 

180 

01020304050DSO level: Quick rollout of smart metersUtilities: Design and advertise tariffsexposing market prices to end consumersProduct vendors: Design and promote smartdevices that will automatically or (semiautomatically) react to pricesElectrification and decentralised RES integrationnon existingminorimportantfundamentalno opinion051015202530TechnicalEconomic and financialFinancing (incl. funding)Legislative and regulatorySocietalTransportnon existingminorimportantfundamentalno opinion0510152025303540TechnicalEconomic and financialFinancing (incl. funding)Legislative and regulatorySocietalBuildingsnon existingminorimportantfundamentalno opinion05101520253035TechnicalEconomic and financialFinancing (incl. funding)Legislative and regulatorySocietalIndustrynon existingminorimportantfundamentalno opinion 
 
 
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important barriers. High cost of equipment is considered by stakeholders as the key barrier 
in the transport sector.  

Figure 6-4 Responses on detailed barriers to electrification and decentralised RES 
integration for three sectors 

Figure 6-5 presents the responses on who should take action to overcome the barriers in 
the three sectors of the electrification and decentralised RES integration transversal aspect. 
In this case national governments are identified as the main actor to take action to overcome 
the barriers, closely followed by EU institutions, and DSOs and TSOs. NRAs can also play 
an important role in overcoming the barriers. Differences between the sectors are small.  

Figure 6-5 Responses on who should take action to overcome the barriers in the 
three sectors of electrification and decentralised RES integration 

181 

051015202530Availability of equipment in yourcountry/regionGrid development/stabilityEnd user technological maturityLack of EU wide standards for grid-connected equipmentHigh cost of equipmentHigh cost of installationLack of financing mechanisms/marketremunerationLack of incentivesRegulatory procedure too complexLack of regulatory and legislative frameworkGrid codes not standardisedLack of dedicated skills to set up projectsusing these technologiesLow awareness around these technologiesand market schemesLimited financial incentivesTechnical barriereconomic and financialbarrierlegislative andregulatory barriersocietal barrierTransportnon existingminorimportantfundamentalno opinion0510152025303540Availability of equipment in yourcountry/regionGrid development/stabilityEnd user technological maturityLack of EU wide standards for grid-connected equipmentHigh cost of equipmentHigh cost of installationLack of financing mechanisms/marketremunerationLack of incentivesRegulatory procedure too complexLack of regulatory and legislative frameworkGrid codes not standardisedLack of dedicated skills to set up projectsusing these technologiesLow awareness around these technologiesand market schemesLimited financial incentivesTechnical barriereconomic and financialbarrierlegislative andregulatory barriersocietal barrierBuildingsnon existingminorimportantfundamentalno opinion051015202530Availability of equipment in yourcountry/regionGrid development/stabilityEnd user technological maturityLack of EU wide standards for grid-connected equipmentHigh cost of equipmentHigh cost of installationLack of financing mechanisms/marketremunerationLack of incentivesRegulatory procedure too complexLack of regulatory and legislative frameworkGrid codes not standardisedLack of dedicated skills to set up projectsusing these technologiesLow awareness around these technologiesand market schemesLimited financial incentivesTechnical barriereconomic and financialbarrierlegislative andregulatory barriersocietal barrierIndustrynon existingminorimportantfundamentalno opinion 
 
 
 
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6.2.2.1. Stakeholder  recommendations  to  advance  electrification  and 

decentralised renewable energy integration 

Stakeholders have proposed in their survey responses the following policies and measures 
to advance electrification and decentralised renewable energy integration, as shown in the 
table below. While some recommendations are specific, others are more general and refer 
to  the  need  for  policy  makers  at  the  EU,  national  or  local  level  to  address  the  barriers 
identified. The topic recommendations are presented in section 2.4.2. 

Table 6-6 Recommendations to advance electrification and decentralised renewable 
energy integration 

Recommendation 
Common 
Address the lack of skilled workforce 
-  Stakeholder engagement and training campaigns 
-  Cooperation  between  relevant  national  authorities, 
vocational  education  and  training  institutions  and 
training platforms  

Level 

Stakeholders 

EU/National 

8 

National 

National 

National 

National 

flexibility 

regulatory 

investments 

EU/National 

for  demand 

transpose  EU 

legislative  and 

incentives/signals 

in  grid  reinforcement  and 

Accelerate 
expansion 
Timely 
framework  
Raise  public  awareness  on  and  acceptance  of 
electrification solutions 
Revise grid related administrative and permit procedures  EU/National 
EU/National  
Terminate subsidies and tax reliefs for fossil fuels 
National 
Accelerate and complete the roll out of smart meters 
Promote demand-side flexibility automation 
National 
Provide more favorable financing options for installation 
of decentralised RES units 
Enhance 
(dynamic tariffs, flexibility services, EV fleet) 
Set EU-wide standards for grid-connected equipment  
Harmonise  functionalities  and  use  cases  for  smart 
meters in Europe 
Support  the  development  of  manufacturing  base  in 
Europe for clean energy technology 
Require  network  tariffs  to  take  into  account  flexibility 
functionalities 
Harmonise flexibility and capacity mechanisms principles 
across the EU 
Ensure  standardisation  of  communication  protocols  for 
grid-connected smart devices 
Support digitalisation of distribution grid 
Remove barriers on energy data access and sharing 
Implement  EU  provisions  for  flexible  consumption  and 
generation 
Provide  guidance  to  consumers  on  new  ways  of 
contracting  services 
(PPA 
aggregation, flexibility mechanisms, etc.) 
Provide  financial  support  (e.g.  subsidies)  for  EVs  and 
storage 

for  electricity  supply 

National 
National 

National 

National 

National 

EU 

EU 

EU 

EU 

EU 

EU 

182 

7 

4 

4 

3 
3 
3 
2 

2 

2 

2 

1 

1 

1 

1 

1 

1 
1 

1 

1 

1 

 
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(e.g. 

financial 

incentives 

incentives 

to  stimulate  building 

Buildings 
Increase  subsidies  and 
reduce 
taxes/levies)  as  well  as  access  to  credit  for  heat  pump 
equipment and installation 
Phase out the sale of stand-alone fossil fuel boilers and 
mandate an increasing share of clean heating 
Set  mandatory  requirements  for  installation  of  PVs  in 
rooftops of public buildings 
Promote  innovative  ways  of  financing  heat  pumps,  like 
heat as a service and pay-as-you-save schemes 
Provide 
renovation rates 
Industry 
Provide  financial  incentives  for  electrification  of  energy 
intensive  industries  (e.g.  guarantee  fund  for  supply 
interruptions/failures) 
Promote R&D on conversion from fuel-based to electrical 
technologies for integrated industrial processes 
Develop EU Industrial Heat Electrification Strategy 
Regulate the phase down of fossil fuel use in industrial 
heat applications 
Promote industrial support policies for early deployment 
of electrification technologies 
Prioritise grid reinforcement for industrial electrification in 
network development plans 
Transportation 
Require  bi-directional  charging  capability  of  EVs  and 
recharging infrastructure 
Increase subsidies for electric vehicles 
Support  expansion  of  EV  recharging  infrastructure 
network 

National 

EU 

EU 

EU 

National 

National 

EU 

EU 

EU 

EU 

National 

EU 

National 

National 

5 

3 

1 

1 

1 

3 

1 

1 

1 

1 

1 

1 

1 

1 

6.2.3.  Stakeholder views on the uptake of hydrogen 

This  section  presents  the  stakeholder  views  on  the  uptake  of  hydrogen  based  on  the 
responses to the  survey  carried  out  in May-July 2023.  The  overall  number  of  responses 
received for the aspect reach 59 for the multiple-choice questions and up to 42 answers for 
the specific (free text) questions. A large majority (67% or two thirds) comes from business 
backgrounds (associations or companies) of which a majority is already active in (natural) 
gas related activities. Of the received answers, also a large majority of Member States was 
covered.  

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Figure 6-6 Number of responses per user category for the hydrogen uptake aspect 

In  line  with  the  project  plan  as  set  out  in  the  inception  report,  the  survey  asked  for 
differentiated views on barriers for hydrogen uptake from different sources: 

•  Renewable  electricity  production  allowing  to  produce  renewables  based 

hydrogen 

•  Three types of low-carbon feedstocks for hydrogen production: 

o  Nuclear energy 
o  Fossil fuels with CCS technology 
o  Recycled carbon fuels 

The results are presented in the aggregated Figure 6-7. As the overall context of the survey 
was asking for hydrogen as means to enable energy system integration, not surprisingly a 
large  majority  of  answers  was  given  in  the  context  of  renewable  hydrogen,  which  is 
intrinsically tied to the increasing need for renewable electricity in the energy system. The 
most important barrier identified for renewable hydrogen is the (remaining) cost gap.  

Hydrogen  from  nuclear  energy  faces  the  largest  challenges  from  missing  certification 
opportunities. The same holds true for fossil & CCS low-carbon hydrogen. For hydrogen 
sourced  from  fossil  sources  with  CCS  technology,  permitting  is  further  identified  as 
important or even fundamental by all stakeholders.  

Availability  levels  across  the  differently  sourced  hydrogen  types  differ  such  that  it  is 
generally seen as a smaller problem for fossil & CCS sourced hydrogen, while hydrogen as 
RCF  is  seen  as  currently  not  available  (in  line  with  the  relatively  recent  uptake  into  the 
discussion).  Regarding  technological  development,  fossil-based  hydrogen  with  CCS  is 
clearly seen as the most advanced with over half of the stakeholders considering it to be of 
“minor” importance in terms of barriers. Regarding other barrier categories, no fundamental 
differences or clear trends can be identified. To further elaborate on the differences between 
hydrogen  types,  the  survey  asked:  “If  you  have  checked  the  list  of  barriers  for  both 
renewable  and  low-carbon  hydrogen  above,  where  and  why  have  you  decided  to 
differentiate your answers?” 

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Figure 6-7 Multiple-choice answers to indicate prioritisation of different barrier 
categories - for hydrogen from different sources (renewable, nuclear, fossil with 
CCS, RCF) 

In the provided responses, two distinct types of responses can be identified: The first type 
of response addresses the different barriers that renewable and low-carbon hydrogen are 
exposed  to,  while  the  second  one  addresses  the  overarching  question  regarding  the 
recognition and inclusion of low-carbon hydrogen. Concerning the recognition of low-carbon 
hydrogen,  different  perspectives  become  apparent.  Seven  of  the  respondents  are  of  the 
opinion that low-carbon hydrogen should be given greater recognition and better integration 
within  the  EU  targets.  On  the  other  hand,  three  participants  believe  that  low-carbon 
hydrogen should not be promoted, meaning that while it may exist it should not profit from 
subsidies or other incentives. The other answers are on the topic of the difference in barriers 
between renewable and low-carbon hydrogen and basically restate the findings from the 
multiple-choice answers: 45% of the respondents highlight differences between renewable 
and low-carbon hydrogen concerning the situation of the economic barriers (and thus cost 
gap).  The  barrier  regarding  the  availabilities  is  mentioned  in  four  responses.  Further 
respondents  mention  the  distinctions  between  barriers  of  the  different  hydrogen  types 
concerning certification and standards, as well as sourcing.  

Next to the simple categorisation through multiple-choice answers, stakeholders also had 
the opportunity to explain and elaborate their thinking in further free-text questions. Since 
the  overall  number  of  responses  (42  on  overarching  barriers  on  EU-  level  and  18  on 
recommendations to address these barriers) was also high for this part of the survey, we 
have evaluated these answers in detail: 

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Generally,  it  is  evident  that  barrier  categories  from  free-text  answers  in  the  survey 
correspond to the same categories that were mentioned in the literature review and were 
provided in the multiple-choice options of the survey.  

Most  frequently  mentioned  were  the  missing  infrastructure,  funding  and  financing,  and  a 
missing regulatory framework486. With regards to differentiated answers between MS- and 
EU-level,  respondents  slightly  emphasised  more  the  technical  barriers  such  as  missing 
infrastructure  and  technical  developments  for  the  MS-level.  E.g.  for  the  Czech  Republic 
(and  representative  for  other  MSs  with  little  activities  with  regards  to  hydrogen),  it  is 
emphasised that hydrogen as energy vector is not defined from a legislation point of view, 
leading  to  difficulties  to  access  funding.  In that  context,  the  importance  of  a  harmonised 
understanding  across  all  Members  States  is  emphasised:  “There  is  a  huge  risk  that 
hydrogen  types  are  not  transferrable  to  another  Member  State  when  it  comes  to  being 
eligible for the targets of that Member State (as we can observe today for biomethane and 
biofuels for transport)”. 

Interestingly,  while  highly  emphasised  in  the  multiple-choice  answers,  the  cost-gap  (of 
renewable  hydrogen)  received  less  attention  (still  mentioned  by  about  a  third  of  the 
stakeholders). This is in line with the recommendations which see the cost gap as a complex 
and  intertwined  issue  to  be  addressed  by  a  general  development  consisting  of  many 
components.  

The  survey  also  provided  some  inputs  regarding  which  entities  are  perceived  as  being 
mainly responsible for promoting system integration through actions. As already shown in 
Figure 6-7 the stakeholders still see it as the responsibility of the legislative bodies, reflecting 
the fact that significant parts of the regulatory framework are still under development. It may, 
however, be mentioned that the lay-out of the survey clearly mentioned the commission as 
the  studies’  initiator,  thus  providing  a  pre-bias  with  regards  to  addressees  of  the 
stakeholders’ comments. 

In the paragraphs of section 4.2 we explain the barriers in more detail and highlight where 
stakeholders have provided additional inputs beyond the literature analysis. 

6.2.4.  Stakeholder views on waste heat utilisation 

This section presents the stakeholder views on waste heat and cold utilisation based 
on  the  responses  to  the  survey  implemented  in  May-July  2023.  19  responses  were 
received (14 completed, i.e. submitted, and 5 partially filled), although not all respondents 
filled in all questions. As can be seen in Figure 6-8, almost half (9 out of 19 respondents) 
were business associations, with individual companies making up the next largest group of 
respondents (5 responses). 

486 The regulatory framework is under development in the EU and while there are still ongoing discussions many of the 
barriers may in fact be addressed already. This will be considered when drafting the concluding recommendations. 

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Figure 6-8 Number of responses per user category for the utilisation of waste heat 

Figure  6-9  presents  the  responses  on  qualifying  the  barriers  for  developing  waste  heat 
projects (out of a total of 12 respondents who filled in the question). It can be seen that the 
barriers which are ranked most frequently as fundamental include: 

•  Location/temporal/quality  mismatch 

(6  stakeholders  considering 

it  a 

fundamental barrier) 

•  Planning aspects (6 stakeholders) 
•  Profitability and long payback period issues (5 stakeholders) 
•  Adequacy/complexity of support measures (4 stakeholders) 
• 

Inadequate pricing signals (4 stakeholders) 

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Figure 6-9 Responses on qualifying the barriers for developing waste heat projects  

In contrast, technical  performance  issues, replicability,  knowledge  and capacity  of  public 
authorities as well as customer knowledge and behavioural issues are not considered as 
fundamental  barriers  (although  they  are  still  considered  important  by  a  large  number  of 
respondents, with at least 6 out of 12 respondents considering it important). 

It is also important to analyse the qualitative inputs provided by the respondents. Barriers 
mentioned  by  stakeholders  include  the  following  (without  barriers  mentioned  first  being 
more important): 

•  Further  promoting  ESI  including  new  sources  and  carriers,  such  as 
biomethane (and CHP), waste heat, geothermal and solid biomass, switching 
among them based on prices; 

•  Use  of  electrolysis  waste  heat  and  the  ability  of  district  heating  systems  to 

cope with its variability; 

•  Existence, profitability of and access to district heating networks; 
•  Accounting of energy and climate impacts (e.g. primary energy factor-related 
issues), definition of waste heat and issues regarding it societal acceptability 
as sustainable 

•  Competition of collective vs individual heating solutions 
• 

Identification,  quantification  and  maintenance  of  register  on  potential  waste 
heat sources and sinks, particularly for unconventional and small sources 
•  Barriers for market participation of sector integration technologies and lack of 

internalisation of positive and negative externalities 

188 

02468101214Location/temporal/quality mismatchPlanning, including information on potentials andintegrationProfitability/long payback periodAdequacy/complexity of support measuresInadequate pricing signalsInterest/risk aversion of waste heat owner/splitincentivesProject uncertainty, complexity and risk aversion ofDHC operatorsTechnical performance of waste heat recovery andDHC systemsCustomer knowledge and behavioural issuesKnowledge/capacity of public authoritiesLimited replicability of solutions and lack ofstandardised contracts/toolsfundamentalimportantminornon existingno opinion 
 
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•  Distortive taxation policies and network tariff structures 
•  Lack of contractual standardisation. 

While  the  barriers  indicated  by  the  stakeholders  largely  match  those  identified  in  the 
literature  review,  we  note  two  specific  issues  which  were  highlighted  and  are  worth 
considering in the analysis: 

•  The  possibility for  utilisation of the  waste  heat  of  electrolysers  in  the future, 
whose  potential  should  grow  significantly  in  the  future  in  line  with  the  EU’s 
ambitions  regarding  hydrogen  and  other  RFNBOs  (highlighted  by  2 
stakeholders); 

•  The  importance  of  pricing  signals  for  heat  producers  and  consumers 
arbitraging  flexibility  between  different  sources  and  technologies,  which 
highlights  that  waste  heat  utilisation  will  involve  not  only  planning  and 
investment decisions but increasingly smart operation of heating and cooling 
systems (highlighted by 7 stakeholders). 

Figure 6-10 presents the responses on who should take action to overcome the barriers 
regarding the waste heat aspect. It can be seen that stakeholders consider actions at the 
EU and national levels (including by NRAs) to be the most appropriate. Other stakeholders, 
such  as  local  authorities,  are  also  mentioned  frequently,  reflecting  the  need  to  involve 
authorities in all levels for waste heat utilisation.  

Figure 6-10 Responses on whom should take action to overcome the barriers in the 
waste heat aspect 

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6.2.4.1. Stakeholder recommendations to advance waste heat utilisation 

Stakeholders have proposed in their survey responses the following policies and measures 
to advance waste heat and cold utilisation, as shown in the table below. It can be seen that 
while some recommendations are specific, others are more general and refer to the need 
for policy makers at the EU, national or local level to address the barriers that have been 
raised by the stakeholders. While generally only one or two stakeholders provided a certain 
recommendation, these have been compared to the other stakeholder inputs (in interviews 
and workshops) as well as the literature before being critically considered for the present 
report. The study recommendations are presented in section 4.4.2, while the stakeholder 
recommendations presented here are not necessarily endorsed. 

Table 6-7 Recommendations to advance waste heat utilisation proposed in the 
survey responses 

Recommendation 
Improve  energy  taxation  to  promote  WHU,  such  as  in  the 
form  of  tax  benefits  to  specific  operators,  conditional  on 
meeting  certain  energy  efficiency  requirements  (including 
waste heat utilisation requirements) 
Improve the role of heating strategies at the EU, national and 
local levels 
Integrate  DHC  networks  into  national  building  renovation 
strategies 
Facilitate  hybrid  heating  solutions  combining  DHC  with 
individual heating solutions 
Harmonise  regulations  for  buildings  and  DHC  networks 
using WH, such as regarding the calculation of final energy 
consumption and PEFs 
Support lower temperature systems for buildings 
Promote thermal energy storage systems 
Create a global public funding framework to: 
-  Qualify stakeholders with limited DHC/WHU knowledge 

- 

- 

such as public authorities 
Improve communication, knowledge and trust between 
waste heat stakeholders 
Involve the general public  and increase  acceptance  of 
WHU solutions 

Create  incentives  for  waste  heat  providers  to  collect  WH 
data and contract with WH users 
Support  risk  management  mechanisms  for  WHU  projects, 
including  risk  assessment,  credit/insurance  mechanism 
pilots, identification of best practices, and training of financial 
sector actors 
Consider  unavoidable  waste  heat  at  the  same  level  as 
renewable energy 
Implement  a  broader  definition  of  waste  heat,  covering  all 
applications 
Create framework for securing investments 
Create incentive framework for waste heat providers 
Promote  long-term  urban  planning,  with  DHC  integral  to 
NECPs and national renovation strategies 
Require operators to develop WHU plans 
Require cities to develop heat plans, including assessment 
of future sources 

190 

Level 

Stakeholders 

National 

2 

National 

National 

EU 

National 

National 
National 

1 

1 

1 

1 

1 
1 

National 

1 

National 

1 

National 

1 

EU 

EU 

EU 
EU 

EU 

EU 

EU 

2 

1 

1 
1 

1 

1 

2 

 
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Remove entry barriers to energy markets and internalise all 
positive/negative externalities 
Develop appropriate network tariffs 
Remove barriers for users connecting to DHC networks 
Promote  partnerships  between 
providers and energy suppliers 
Make  mandatory 
comprehensive  heating  and  cooling  assessment 
municipalities above 45 000 citizens 

local  authorities,  WH 

recommendations 

the 
for 

the 

of 

EU 

EU 
EU 

1 

1 
1 

EU/national  1 

EU 

1 

6.2.5.  Stakeholder views on transversal aspects of energy system 

integration 

This section presents the stakeholder views on transversal aspects of energy system 
integration based on the responses to the survey implemented in May-July 2023. The 
figure below presents the number of responses received for the aspect, according to the 
stakeholder category. 56 Responses were received in total for this aspect, 72% of it coming 
from business associations and industry: 

Figure 6-11 Number of responses per user category for the energy infrastructure 
aspect 

Figure 6-12 presents that both EU institutions and national governments are identified as 
the main actors to overcome the barriers for four key aspects, although National Regulatory 
Authorities seem to have an import role here as well. It is noticeable that the differences 
between  the  actors  to  take  action  are  small.  This  is  most  likely  due  to  the  fact  that 
respondents could select multiple actors to take action. When a respondent selects multiple 
actors to take action, the differences between the groups attenuates. 

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Figure 6-12 Responses on who should take action to overcome the barriers on 
integration of energy infrastructure 

Figure  6-13  presents  the  survey  replies  on  qualifying  the  barriers  for  developing  energy 
storage projects. 

Figure 6-13 Number of responses on qualifying the barriers for developing energy 
storage projects  

192 

051015202530354045Lack of consideration of the double role(generator-consumer) of storageLack of an assessment of flexibility needsFinancing difficultiesInsufficient or lack of remuneration for certainsystem servicesInadequate design of capacity mechanismsInadequate design of renewable supportschemesLong and/or complex permitting proceduresInsufficient real-time data and forecasts onsystem status (congestions, RES generation,emissions intensity, other data)Insufficient R&I funding, including de-riskinginstruments for high TRL technologiesEnergy storagenon existingminorimportantfundamentalno opinion 
 
 
 
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Figure 6-14 presents the number of responses received for the aspect of digitalisation and 
innovation in the energy sector, according to the stakeholder category. In total 41 responses 
were received. 

Figure 6-14 Number of responses per user category for the digitalisation and 
innovation aspect 

Figure 6-15 presents the survey replies on who should take action to overcome the barriers 
on digitalisation and innovation. 

Figure 6-15 Responses on who should take action to overcome the barriers on 
digitalisation and innovation 

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6.3.  Stakeholders interviewed 

The following organisations were interviewed for the analysis of this study: 

•  Cross-topic 

o  ENTSOG 
o  CEER  (Regulatory  Gas  Strategy,  Future  Policy,  Infrastructure  and 

Distribution Systems Working Groups/Work Streams) 

•  Hydrogen Uptake 

o  Transport & Environment 
o  Hydrogen Europe 
o  Reiner Lemoine Institute 
o  Fluxys 
o  Air Liquide 

•  Waste Heat Utilisation 

o  Amsterdam Metropolitan Studies Institute 
o  CO2OLHEAT project coordinator 
o  EMB3Rs project members 
o  European Data Centre Association 
o  Euroheat & Power 
o  European Heat Pump Association 
o  StEB Koeln 

6.4.  Stakeholder workshop poll results 

6.4.1.  Electrification and decentralised RES polls 

6.4.1.1. E.1 – 56 responses 

194 

05101520253035SocietalTechnicalLegislative and regulatoryEconomic & financialSocietalTechnicalLegislative and regulatoryEconomic & financialTotal281729E.1: Warm-up question: What do you think is the most important category of barriers towards electrification and decentralised RES integration? 
 
 
 
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Figure 5-5 Number of responses per user category for the ‘other’ aspect 

6.4.1.2. E.2 – 53 responses 

6.4.1.3. E.3 – 47 responses 

195 

05101520253035Don't knowYesNoDon't knowYesNoTotal111230E.2: Do you think that network planning and investments, that are currently considered, are adequate to satisfy increased and diversified demand for electricity? 
 
 
 
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6.4.1.4. E.4 – 44 responses 

196 

0%10%20%30%40%50%60%70%80%90%100%Delayed rollout of smart metersDelays in connection to the networkHigh upfront cost for equipmentLow space availability and construction hassleLow availability of installation and maintenance servicesDelayed rollout of smartmetersDelays in connection tothe networkHigh upfront cost forequipmentLow space availabilityand construction hassleLow availability ofinstallation andmaintenance services1st2516102nd265653rd651664th742565th74067E.3: What do you consider the biggest barriers towards electrification in the buildings sector (rank)?1st2nd3rd4th5th0%10%20%30%40%50%60%70%80%90%100%Delays in the development of charging infrastructurenetworkHigh electricity and network tariffs supporting furtherelectrificationRange anxiety & uncertainty about charging point availabilityInsufficient regulatory framework for installation/operationof charging stationsLack of Interoperability and compatibility in terms ofhardware and softwareDelays in thedevelopment of charginginfrastructure networkHigh electricity andnetwork tariffssupporting furtherelectrificationRange anxiety &uncertainty aboutcharging pointavailabilityInsufficient regulatoryframework forinstallation/operation ofcharging stationsLack of Interoperabilityand compatibility interms of hardware andsoftware1st1355142nd937723rd464774th275865th07759E.4: What do you consider the biggest barriers towards electrification in the transport sector?1st2nd3rd4th5th 
 
 
 
 
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6.4.1.5. E.5 – 40 responses 

6.4.1.6. E.6 – 39 responses 

197 

0%10%20%30%40%50%60%70%80%90%100%Electric driven technology for high-temperature heatprocesses is not mature and competitive compared toexisting processes (low TRL)High upfront cost for equipmentSignificant redesign of industrial facilities discourageinvestorsLack of attractive and stable electricity tariffs supportingfurther electrificationLosing existing know-how and highly specialized staff maydiscourage investorsElectric driventechnology for high-temperature heatprocesses is not matureand competitivecompared to existingprocesses (low TRL)High upfront cost forequipmentSignificant redesign ofindustrial facilitiesdiscourage investorsLack of attractive andstable electricity tariffssupporting furtherelectrificationLosing existing know-how and highlyspecialized staff maydiscourage investors1st9121202nd884323rd7411124th228855th23497E.5: What do you consider the biggest barriers towards electrification in the industrial sector?1st2nd3rd4th5th051015202530Other ideasNo, positive incentives will be enoughYes, penalizing fossil fuels will eventually be necessaryOther ideasNo, positive incentives will be enoughYes, penalizing fossil fuels willeventually be necessaryTotal3828E.6: Do you think result-oriented measures, like obligations to ban fossil fuels will be eventually needed to promote electrification in the long run? 
 
 
 
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Full answers list: 

1.  "banning" and "penalising" are very different things. 
2.  Balanced approach is required, while banning fossil fuels may be required at 

some point it is important to ensure that no one is left behind 

3.  both carrots and sticks are needed 
4.  Diversification in all primary energy sources is key.  
5.  Endfossilsubsidies 

6.4.1.7. E.7 – 46 responses 

198 

0%10%20%30%40%50%60%70%80%90%100%Adapt financial signals (network tariffs, taxes and levies)Improve consumer awarenessImprove planning across sectors and energy carriersPromote storageMake grids fit for RES and system integrationImprove professional skillsAdapt financialsignals (networktariffs, taxes andlevies)Improve consumerawarenessImprove planningacross sectors andenergy carriersPromote storageMake grids fit forRES and systemintegrationImproveprofessional skills1st102521522nd10487523rd8497444th55612445th01463766th3725118Ε.7 What are the most relevant actions to incentivize electrification and flexibility?1st2nd3rd4th5th6th 
 
 
 
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6.4.1.8. E.8 – 39 responses 

6.4.1.9. E.9 – 46 responses 

Full answers list: 

1.  Bi-directional charging capability e.g. via AFIR/EPBD 
2.  demand target 
3.  electricity demand 

199 

0%10%20%30%40%50%60%70%80%90%100%Insufficient deployment of smart metersLack of electricity products/tariffs supporting furtherelectrificationLack of installation and maintenance servicesLimited space availability and construction hassleLack of Information/awareness of end consumersInsufficient deploymentof smart metersLack of electricityproducts/tariffssupporting furtherelectrificationLack of installation andmaintenance servicesLimited space availabilityand construction hassleLack ofInformation/awarenessof end consumers1st292672nd156683rd449454th657535th133253E.8:  Buildings: Which aspect you think of is the most important barrier and may need more policy guidance?1st2nd3rd4th5th 
 
 
 
 
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4.  Electrification 
5.  electrification by sectors 
6.  electrification uptake 
7.  emission reductions 
8.  EU Strategy 
9.  EU Strategy on Electrification needed 
10. excess heat 
11. harmonisation of purchase process of vehicle chargers 
12. heat 
13. heat pump roll-out (all HPs) 
14. heat strategy 
15. infrastructure of networks  
16. Low prices 
17. mandatory plan to use excess heat 
18. more financing 
19. observatory of the electrification 
20. Quick support 
21. Quick support EU industry 
22. set a final electricity demand target for 2030/40 
23. speed in the regulation 
24. speed in the regulation and implementations  
25. Strategy on Electrification 
26. support network as enablers 
27. Technology neutrality 
28. Technology neutrality (focus on emission reductions not technologies) 
29. the decarbonisation of heat plan 
30. the decarbonisation of heat strategy 
31. Use NECPs to monitor electrification uptake 
32. We  need  an  observatory  of  the  electrification  by  sectors  to  see  progress, 
official Eurostat data show that electrification has been decreasing since 2014 
about. 

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6.4.2.  Hydrogen uptake polls 

6.4.2.1. H2.1 – 33 responses 

201 

024681012141618Cost gap: e.g. Hydrogen Bank needs higher budgetAdditional markets for stacking revenue streamsBankability (e.g. through demand targets)Level-playing field with electrificationH2 infrastructure build-outRenewable energy expansionLack of or insecurity on electrolyser manufacturing capacityCost gap: e.g.Hydrogen Bankneeds higherbudgetAdditionalmarkets forstacking revenuestreamsBankability (e.g.through demandtargets)Level-playing fieldwithelectrificationH2 infrastructurebuild-outRenewableenergy expansionLack of orinsecurity onelectrolysermanufacturingcapacity1st176101016118H2.1: Which barriers for renewable H2 are not yet, or not sufficiently, addressed by EU action? [Please choose the 3 most relevant]1st 
 
 
 
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6.4.2.2. H2.2 – 32 responses 

6.4.2.3. H2.3 – 33 responses 

202 

05101520Reducing CAPEX of requiredequipment (direct subsidies)Carbon Contracts for Difference(CCfDs) with enough fundingIncreasing the carbon price underETSEliminating fossil fuel subsidiesReducing CAPEXof requiredequipment(directsubsidies)CarbonContracts forDifference(CCfDs) withenough fundingIncreasing thecarbon priceunder ETSEliminating fossilfuel subsidiesTotal55517H2.2: The cost gap is a complex interplay of many factors, what is the measure of highest impact? 024681012141618Located at nodal points (e.g.,indicated in TYNDP) (enhanceselectricity grid-serving capability)Co-located with renewable energies(reduces cost gap)Co-located at demand centres(reduces need for H2 infrastructure)Located at nodal points(e.g., indicated inTYNDP) (enhanceselectricity grid-servingcapability)Co-located withrenewable energies(reduces cost gap)Co-located at demandcentres (reduces needfor H2 infrastructure)Total31317H2.3: Infrastructure planning priorities: Where should electrolysers be located preferably?  
 
 
 
 
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6.4.2.4. H2.4 – 19 responses 

203 

0123456789Level-playing field with electrificationBankabilityLack or insecurity on certificationLack or insecurity on certificationCO2 infrastructure build-outCO2 storageSocial acceptanceCost gapCO2 captureLevel-playingfield withelectrificationBankabilityLack orinsecurity oncertificationLack orinsecurity oncertificationCO2infrastructurebuild-outCO2 storageSocialacceptanceCost gapCO2 capture1st235555788H2.4: Which barriers for low carbon hydrogen are not yet, or not sufficiently, addressed by EU action? [Please choose the 3 most relevant]1st 
 
 
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6.4.2.5. H2.5 – 25 responses 

6.4.3.  Waste heat utilisation polls 

6.4.3.1. WH.1 – 30 responses 

204 

02468101214NoUnaffectedYesYes, if ambitious enoughNoUnaffectedYesYes, if ambitiousenoughTotal13813H2.5: Would a high-level climate target for 2040, including H2 targets, support the uptake of H2?024681012141618Waste heat will be a marginal resource, withbarriers severely limiting the economic potentialWaste heat could be a major resource fordecarbonising the EU energy system, with asignificant economic potentialWaste heat could be a relevant but secondarysource, with barriers limiting the economicpotentialWaste heat will be a marginalresource, with barriers severelylimiting the economic potentialWaste heat could be a majorresource for decarbonising the EUenergy system, with a significanteconomic potentialWaste heat could be a relevantbut secondary source, withbarriers limiting the economicpotentialTotal21216WH.1: What is your perception of the economic potential for waste heat utilisation in the EU?  
 
 
 
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6.4.3.2. WH.2 – 22 responses 

Full answer list: 

1.  back-up capacities or funds for industrial waste heat 
2.  cooling 
3.  data center growth 
4.  Developing more the concept of positive energy district  
5.  district heating 
6.  fuel cells 
7.  heat recovery in industry 
8.  Heat waste high-temperature fuel cells 
9.  HT storage 
10. Incentives for DH network operators to offtake WH 
11. more cooling required 
12. Movable high-temperature solid thermal storage 
13. on-site 
14. sector integration 
15. storage 
16. thermal storage 
17. Utilisation  of  waste  heat  from  waste  water  treatment  plants  can  be  very 

important source for district heating systems in 2040. 

18. waste incineration 

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6.4.3.3. WH.3 – 25 responses 

6.4.3.4. WH.4 – 7 responses 

Full answer list: 

1.  Awareness 
2.  incentives to industrial processes 
3.  long term thermal storage 
4.  policy forbidding heat dumping 
5.  public ownership of heat infra 
6.  Seasonal Thermal Storage 
7.  Social Awareness 

206 

0510152025Important technical barriers existthat still require targeted R&DeffortsTechnical barriers significantly limitthe economic potential and cannotbe overcome to a large extentTechnical challenges exist, but canbe addressed with existingcommercial technologies and…Important technicalbarriers exist that stillrequire targeted R&DeffortsTechnical barrierssignificantly limit theeconomic potentialand cannot beovercome to a largeextentTechnical challengesexist, but can beaddressed withexisting commercialtechnologies andappropriate policiesTotal2320WH.3: What are your views on technical barriers to WH/C utilisation? 
 
 
 
 
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6.4.3.5. WH.5 – 10 responses 

Full answer list: 

1.  As A Service prevented from subsidies design (asset ownership) 
2.  GHG accounting 
3.  heat from waste incineration plus mandatory CCS 
4.  mandatory policies 
5.  Proper risk mitigation framework is needed. This will enable utilisation of waste 

heat sources for instance further away from the network 

6.  risk  mitigation  schemes  are  central.  However,  for  DH  we  need  additional 
physical back-up capacities due to uncertainty of industrial waste heat. What 
happens if a company/ data centre moves abroad? DHC providers still must 
cover their contracts and deliver heat to customers. Risk schemes + physical 
back-up are needed. Who covers the costs for that? 

7.  Valleys of heat 
8.  volumetric valuation of energy 

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6.4.3.6. WH.6 – 14 responses 

6.5.  Status of actions in the EU Energy System Integration 

Strategy 

Measure 

Deadline  
in ESI Strategy 

Status 

3.1   A more circular energy system, with ‘energy-efficiency-first’ at its core 

1. Issue guidance to Member States on how to make the 
energy-efficiency-first principle operational. 

2021 

Implemented 

2. Further promote the energy-efficiency-first principle in 
all upcoming relevant methodologies (e.g. in the context 
of  the  European  resource  adequacy  assessment)  and 
legislative revisions (e.g. of the TEN-E Regulation). 

3.  Review  the  Primary  Energy  Factor,  in  order  to  fully 
recognise  energy  efficiency  savings  via  renewable 
electricity and heat, as part of the review of the Energy 
Efficiency Directive. 

n/a 

Implemented 

June 2021 

Implemented 

208 

0%10%20%30%40%50%60%70%80%90%100%Support national and local authorities in coordinating efforts on nationalcomprehensive assessments and local H/C plansMandatory requirements regarding geographical, temporal and WH qualitygranularity aligned between H&C comprehensive assessments and local plansDedicate further attention to waste heat as part of an update of the 2016 heatingand cooling strategy, or a dedicated strategyIntroduce procurement requirements for public building heating including wasteheatFund a project on developing standardised contract templatesImprove representation of WHU in main EU modelling toolsKnowledge and (re)skilling initiativesSupport national andlocal authorities incoordinating efforts onnational comprehensiveassessments and localH/C plansMandatoryrequirements regardinggeographical, temporaland WH qualitygranularity alignedbetween H&Ccomprehensiveassessments and localplansDedicate furtherattention to waste heatas part of an update ofthe 2016 heating andcooling strategy, or adedicated strategyIntroduce procurementrequirements for publicbuilding heatingincluding waste heatFund a project ondeveloping standardisedcontract templatesImprove representationof WHU in main EUmodelling toolsKnowledge and(re)skilling initiatives1st42301402nd41312213rd35220204th14150125th12014246th10435107th0012227WH.6: Which proposed actions at the EU level are most important?1st2nd3rd4th5th6th7th 
 
 
 
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Measure 

Deadline  
in ESI Strategy 

Status 

4. Facilitate the reuse of waste heat from industrial sites 
and  data  centres,  through  strengthened  requirements 
for  connection  to  district  heating  networks,  energy 
performance  accounting  and  contractual  frameworks, 
as  part  of  the  revision  of  the  Renewable  Energy 
Directive and of the Energy Efficiency Directive. 

5.  Incentivise  the  mobilisation  of  biological  waste  and 
residues from agriculture, food and forestry sectors and 
support  capacity-building 
for  rural  circular  energy 
communities  through  the  new  Common  Agriculture 
Policy, Structural Funds and the new LIFE programme. 

June 2021 

Implemented 

From 2021 
onwards 

(Continuous 
action) 

3.2   Accelerating the electrification of energy demand, building on a largely 
renewables-based power system 

6.  Through  the  Offshore  Renewable  Strategy  and 
follow-up  regulatory  and  financing  actions,  ensure  the 
cost-effective  planning  and  deployment  of  offshore 
renewable  electricity,  taking  into  account  the  potential 
for  on-site  or  nearby  hydrogen  production,  and 
strengthen  EU's 
in  offshore 
technologies. 
7.  Explore  establishing  minimum  mandatory  green 
public procurement (GPP) criteria and targets in relation 
to renewable electricity, possibly as part of the revision 
of the Renewable Energy Directive … 

leadership 

industrial 

2020 

Implemented 

June 2021 

Dropped 

8. … supported by capacity building financing under the 
LIFE programme. 

n/a 

(Continuous 
action) 

9. Tackle remaining barriers to a high level of renewable 
electricity  supply  that  matches  the  expected  growth  in 
demand  in  end-use  sectors,  including  through  the 
review of the Renewable Energy Directive. 

June 2021 

Implemented 

10. As part of the Renovation Wave initiative, promote 
the  further  electrification  of  buildings’  heating  (in 
particular through heat pumps), the deployment of on-
buildings renewable energy, and the roll-out of electric 
vehicle charging points, using all available EU funding, 
including the Cohesion Fund and InvestEU. 
11. Support the roll-out of 1 million charging points by 
2025,  using  available  EU 
the 
Cohesion  Fund,  InvestEU  and  Connecting  Europe 
Facility  funding,  and  communicate  regularly  on  the 
funding opportunities and regulatory environment to roll 
out a charging infrastructure network. 

including 

funding, 

From 2020 
onwards 

Implemented 

From 2020 
onwards 

(Continuous 
action) 

12.  Develop  more  specific  measures  for  the  use  of 
renewable electricity in transport, as well as for heating 
and  cooling  in  buildings  and  industry,  in  particular 

June 2021 

Implemented 

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Measure 

Deadline  
in ESI Strategy 

Status 

through the revision of the Renewable Energy Directive, 
and building on its sectoral targets. 

13.  Finance  pilot  projects  for  the  electrification  of  low-
temperature process heat in industrial sectors through 
Horizon Europe and the Innovation Fund. 

From 2021 
onwards 

(Continuous 
action) 

to 

the 

support 

funding, 

including 

industrial  processes, 

further 
14.  Assess  options 
decarbonisation  of 
including 
through  electrification  and  energy  efficiency,  in  the 
revision of the Industrial Emissions Directive. 
15. Propose to revise CO2 emission standards for cars 
and vans to ensure a clear pathway from 2025 onwards 
towards zero-emission mobility. 
16. Support the roll-out of 1 million charging points by 
2025,  using  available  EU 
the 
Cohesion  Fund,  InvestEU  and  Connecting  Europe 
Facility  funding,  and  communicate  regularly  on  the 
funding opportunities and regulatory environment to roll 
out a charging infrastructure network. 
17. Use the upcoming revision of the Alternative Fuels 
Infrastructure Directive to accelerate the roll-out of the 
alternative  fuels  infrastructure,  including  for  electric 
vehicles,  strengthen 
requirements, 
ensure  adequate  customer  information,  cross-border 
usability  of  charging  infrastructure,  and  the  efficient 
integration of electric vehicles in the electricity system. 
18.  Take  up  corresponding  requirements  for  charging 
and  refuelling  infrastructure  in  the  revision  of  the 
Regulation  for  the  Trans-European  Transport  network 
(TEN-T). 
19. Explore greater synergies through the revision of the 
TEN-E  Regulation  in  view  of  possible  energy  network 
for  cross  border  high  capacity 
related  support 
recharging  as  well  as  possibly  hydrogen  refuelling 
infrastructure. 
20. Develop a Network Code on Demand Side Flexibility 
to unlock the potential of electric vehicles, heat pumps 
and  other  electricity  consumption  to  contribute  to  the 
flexibility of the energy system. 

interoperability 

From 2021 
onwards 

Implemented 

June 2021 

Implemented 

From 2020 
onwards 

(Continuous 
action) 

2021 

Implemented 

2021 

Implemented 

2020 

Implemented 

Starting end-
2021 

On track 

3.3   Promote renewable and low-carbon fuels, including hydrogen, for hard-to-
decarbonise sector 

21.  Propose  a  comprehensive  terminology  for  all 
renewable  and  low-carbon  fuels  and  a  European 
system of certification of such fuels, based notably on 
full  life  cycle  greenhouse  gas  emission  savings  and 
sustainability  criteria,  building  on  existing  provisions 
including in the Renewable Energy Directive. 
22. Consider additional measures to support renewable 
and low-carbon fuels, possibly through minimum shares 
or quotas in specific end-use sectors (including aviation 
and  maritime),  through  the  revision  of  the  Renewable 
Energy  Directive  and  building  on  its  sectoral  targets, 
complemented,  where  appropriate,  by  additional 
measures  assessed  under  the  REFUEL  Aviation  and 
FUEL Maritime initiatives (2020). The support regime for 

210 

June 2021 

Implemented 

June 2021 

Partly 
Implemented 

 
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Measure 

Deadline  
in ESI Strategy 

Status 

hydrogen  will  be  more  targeted,  allowing  shares  or 
quota only for renewable hydrogen. 

23.  Promote  the  financing  of  flagship  projects  of 
integrated, carbon-neutral industrial clusters producing 
fuels, 
and  consuming  renewable  and 
through  Horizon  Europe, 
InvestEU  and  LIFE 
programmes and the European Regional Development 
Fund. 

low-carbon 

From 2021 

(Continuous 
action) 

24. Stimulate first-of-a-kind production of fertilisers from 
renewable hydrogen through Horizon Europe. 

From 2021 

25. Demonstrate and scale-up the capture of carbon for 
its  use  in  the  production  of  synthetic  fuels,  possibly 
through the Innovation Fund. 

26. Develop a regulatory framework for the certification 
of  carbon  removals  based  on  robust  and  transparent 
carbon accounting to monitor and verify the authenticity 
of carbon removals. 

(Continuous 
action) 

(Continuous 
action) 

From 2021 

by 2023 

On track 

3.4   Making energy markets fit for decarbonisation and distributed resources 

the 

27.  Issue  guidance  to  Member  States  to  address  the 
high  charges  and  levies  borne  by  electricity  and  to 
ensure 
consistency  of  non-energy  price 
components across energy carriers. 
28. Align the taxation of energy products and electricity 
with EU environment and climate policies, and ensure a 
harmonised  taxation  of  both  storage  and  hydrogen 
production,  avoiding  double 
the 
taxation, 
revision of the Energy Taxation Directive. 
29. Provide more consistent carbon price signals across 
energy sectors and Member States, including through a 
possible proposal for the extension of the ETS to new 
sectors. 

through 

30. Further work towards the phasing out of direct fossil 
fuel subsidies, including in the context of review of the 
State  aid  framework  and  the  revision  of  the  Energy 
Taxation Directive. 

31. Ensure that the revision of the State aid framework 
supports cost-effective decarbonisation of the economy 
where public support remains necessary. 
32.  Review  the  legislative  framework  to  design  a 
competitive decarbonised gas market, fit for renewable 
gases,  including  to  empower  gas  customers  with 
enhanced information and rights. 
33.  In  the  context  of  the  Climate  Pact,  launch  a 
consumer  information  campaign  on  energy  customer 
rights. 

211 

2021 

Implemented 

June 2021 

On track 

June 2021 

Implemented 

From 2021 
onwards 

Implemented 

2021 

Implemented 

Q4 2021 

Implemented 

2021 

Implemented 

 
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Measure 

Deadline  
in ESI Strategy 

Status 

Improve 

information 

to  customers  on 

34. 
the 
sustainability  of  industrial  products  (in  particular  steel, 
cement  and  chemicals)  as  part  of  the  sustainable 
product  policy  initiative,  and,  as  appropriate,  through 
complementary legislative proposals (by 2022). 

2022 

Implemented 
(provisionally 
agreed in Dec 
2023) 

3.5   A more integrated energy infrastructure 

35. Ensure that the revisions of the TEN-E and TEN-T 
regulations  fully  support  a  more  integrated  energy 
system,  including  through  greater  synergies  between 
the  energy and  transport infrastructure, as well  as the 
need  to  achieve  the  15%  electricity  interconnection 
target for 2030. 

2020 (TEN-E 
Regulation) and 
2021 (other 
relevant 
legislation) 

Implemented 

36. Review the scope and governance of the TYNDP to 
ensure  full  consistency  with  the  EU’s  decarbonisation 
objectives and cross-sectoral infrastructure planning as 
part of the revision of the TEN-E Regulation (2020) and 
other relevant legislation (2021). 

2020 (TEN-E 
Regulation) and 
2021 (other 
relevant 
legislation) 

Implemented 

37.  Accelerate  investment  in  smart,  highly-efficient, 
renewables-based  district  heating  and 
cooling 
networks, 
if  appropriate  by  proposing  stronger 
obligations  through  the  revision  of  the  Renewable 
Energy  Directive  and  the  Energy  Efficiency  Directive, 
and the financing of flagship projects. 

June 2021 

Implemented 

3.6   A digitalised energy system and a supportive innovation framework 

38.  Adopt  a  Digitalisation  of  Energy  Action  plan  to 
develop a competitive market for digital energy services 
that ensures data privacy and sovereignty and supports 
investment in digital energy infrastructure. 
39.  Develop  a  Network  Code  on  cybersecurity  in 
electricity  with  sector-specific  rules  to  increase  the 
resilience  and  cybersecurity  aspects  of  cross-border 
electricity 
flows,  common  minimum  requirements, 
planning, monitoring, reporting and crisis management. 

40.  Adopt  the  implementing  acts  on  interoperability 
requirements and transparent procedures for access to 
data within the EU. 

41.  Publish  a  new 
impact-oriented  clean  energy 
research  and  innovation  outlook  for  the  EU  to  ensure 
research  and 
innovation  supports  energy  system 
integration. 

Conclusion 

Q4 2021 or Q1 
2022 

Implemented 

End 2021 

On track 

First one in 2021 

Implemented 

Q3 2021 

Implemented 

42.  Organisation  of  a  large  dedicated  public  event  on 
Energy System Integration. 

Q2 2021 

Dropped 

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6.6.  Uptake  of  hydrogen  -  Details  on  environmental 

impacts of hydrogen imports 

For the transition to a carbon-neutral economy, the greenhouse gas intensity of hydrogen 
production and delivery is important. In addition to implementing the local production scale-
up,487  the  European  Union  plans  on  importing  hydrogen  and  its  derivatives  from  other 
countries to minimise overall costs.488 The environmental impacts of these imports need to 
be considered in order to also achieve the environmental goals that the Union has set for 
itself. This part of the report analyses the factors that determine the environmental aspects 
of  hydrogen  import  and  the  different  import  pathways,  focusing  on  greenhouse  gas 
emissions measured in CO2 equivalents. 

In  this  section,  different  hydrogen  production  pathways  are  analysed  with  a  focus  on 
renewable  and  low-carbon  hydrogen  as  well  as  different  transport  methods,  including 
pipeline transport and marine transport in the form of different hydrogen derivatives such as 
liquid hydrogen (LH2), ammonia (NH3) and Liquid Organic Hydrogen Carriers (LOHC). The 
emissions of these pathways are in the end also compared to the alternative of emissions 
from a fossil fuel-based energy supply (based on the fossil fuel comparator in REDII and 
the Delegated Acts related to it). 

In order to understand the GHG footprint of hydrogen, it is crucial to take a closer look at its 
production chain. The production method of the hydrogen and the electricity mix that is used 
in the production steps are two of the most important drivers of GHG emissions and major 
factors  in  the  overall  lifecycle  emissions  of  hydrogen  and  its  derivatives.489,490  In  the 
following, the factors which have an impact on the footprint during the production process 
are examined. 

To  produce  renewable  hydrogen,  renewable  electricity  is  needed  for  electrolysis. 
Renewable hydrogen is considered to be the production pathway with the lowest emissions, 
together with hydrogen from nuclear sources, as analysed in case studies comparing the 
emissions of different hydrogen production pathways.491,492,493 The GHG emissions per kg 
of renewable hydrogen (world average, best practice assumed), including emissions related 
to  the  manufacturing  of  installations  (so-called  CAPEX  emissions)  are  calculated  to  be 
around  0.3 kg  of  CO2-equivalent  emission  for  hydrogen  from  hydro  power,  0.6  kg  from 
onshore  wind  power,  and  1  kg  from  solar  power  in  2030,  according  to  a  study  from  the 
Hydrogen Council.494  

For hydrogen from nuclear energy, greenhouse gas emissions are projected to be very low 
in 2030 compared to other technologies, contributing only around 0.6 kg GHG emissions 
per kg hydrogen.495 However, other risks associated with nuclear power generation should 
not be neglected, including safety and security aspects and radioactive waste.  

Low-carbon  hydrogen  can  also  be  produced  from  natural  gas  using  steam  methane 
reforming processes and carbon capture and storage (CCS) technologies. The footprint is 
highly dependent on three aspects: the methane emission rate of the natural gas supply, 
the  global  warming  potential  (GWP) metric  used  in the analysis,  and  the  carbon  capture 

487 European Commission (2020) A hydrogen strategy for a climate-neutral Europe 
488 Nunez-Jimenez, A., & De Blasio, N. (2022) Competitive and secure renewable hydrogen markets: Three strategic 
scenarios for the European Union - ScienceDirect  
489 Hydrogen Council (2021), by LBST Hydrogen Council Report Decarbonization Pathways Part-1 Lifecycle-Assessment  
490 Delpierre, M., Quist, J., Mertens, J., Prieur-Vernat, A., & Cucurachi, S. (2021) Assessing the environmental impacts of 
wind-based hydrogen production in the Netherlands using ex-ante LCA and scenarios analysis - ScienceDirect  
491 World Economic Forum (WEF) (2023) How to understand the carbon footprint of green hydrogen | World Economic 
Forum (weforum.org)  
492 Timmerberg, S. (2020) Hydrogen supply from North Africa to the EU – Potentials, costs and GHG emissions  
493 IPCC (2014) AR5 Climate Change 2014: Mitigation of Climate Change, Page 1335 
494 Hydrogen Council (2021), by LBST Hydrogen Council Report Decarbonization Pathways Part-1 Lifecycle-Assessment  
495 Hydrogen Council (2021), by LBST Hydrogen Council Report Decarbonization Pathways Part-1 Lifecycle-Assessment   
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rate.496 Additionally, it is important to recognise that a stated 90% carbon capture rate does 
not  result  in  a  reduction of GHG  emissions  per kgH2  of  90%,  as  further  greenhouse  gas 
emissions are generated earlier in the natural gas supply chain and additional energy (with 
according emissions) is required to operate the capture and sequestration process.497   

Due to these differences, the GHG emissions for the production of hydrogen from natural 
gas  with CCS  can vary strongly  between  the  producing  countries,  with the  production  of 
low-carbon hydrogen using CCS from Norway creating far lower emissions than the same 
type of hydrogen based on natural gas from Russia, China, and Australia.498 With a high 
carbon capture rate, hydrogen production using natural gas can be among the production 
methods  with  the  lowest  GHG  emissions  in  some  cases,  but  in  other  cases  with  lower 
capture rates and less strict regulations of the emissions in the fossil fuel production chain, 
imports of such hydrogen can be related to high GHG emissions.499,500  

According  to  CertifHy  hydrogen  certification,  hydrogen  production  via  steam  methane 
reforming (SMR) of natural gas without CCS produces 10.9 kgCO2eq/kgH2, and a review 
paper by Bhandari et al. gives a range of 8.9-12.9 kgCO2-eq/kgH2 for the same production 
method.501,502 The Hydrogen Council projects for 2030 GHG emissions of about 9 kg CO2eq 
per kg H2 for hydrogen production using SMR or autothermal reforming (ATR), both without 
CCS, while no significant reduction of the footprint is expected by 2050. Therefore, literature 
shows that production of renewable (0.3-1.0 kgCO2eq/kgH2) or low-carbon hydrogen can 
have by far lower environmental impacts than for example hydrogen from Russian natural 
gas (transported over 5,000 km) that is produced via SMR (11 kgCO2eq/kgH2). 

Figure 6-16: GHG emissions of various H2 production pathways Source: LBST, 
based on Hydrogen Council (2021), by LBST Hydrogen Council Report 
Decarbonisation Pathways Part-1 Lifecycle-Assessment  

496 Bauer, C., Treyer, K., Antonini, C., Bergerson, J., Gazzani, M., Gencer, E., ... & Van der Spek, M. (2022) On the climate 
impacts of blue hydrogen production - Sustainable Energy & Fuels (RSC Publishing)  
497 Hydrogen Council (2021), by LBST Hydrogen Council Report Decarbonization Pathways Part-1 Lifecycle-Assessment   
498 Hydrogen Council (2021), by LBST Hydrogen Council Report Decarbonization Pathways Part-1 Lifecycle-Assessment   
499 Richard Taylor, Ellie Raphael, Chester Lewis, Ross Berridge, Jo Howes (2022). Expansion of hydrogen production 
pathways analysis – import chains (publishing.service.gov.uk)  
500 Hydrogen Council (2021), by LBST Hydrogen Council Report Decarbonization Pathways Part-1 Lifecycle-Assessment  
501 Kanz, O., Brüggemann, F., Ding, K., Bittkau, K., Rau, U., & Reinders, A. (2023 Life-cycle global warming impact of 
hydrogen transport through pipelines from Africa to Germany - Sustainable Energy & Fuels (RSC Publishing) 
502 R. Bhandari, C. A. Trudewind and P. Zapp (2014). Life cycle assessment of hydrogen production via electrolysis – a 
review - ScienceDirect  

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Another component of the GHG emissions of imports of hydrogen and its derivatives are 
the emissions from transportation. Hydrogen can be transported by pipeline or by ship.  

Using modified existing pipelines is generally preferable from a carbon and resource point 
of  view,  if  possible,  rather  than  building  new  pipelines,  because  higher  greenhouse  gas 
emissions are generated, and environmental impacts are caused during the manufacturing 
and  construction  process.  To  transport  hydrogen  via  pipelines,  the  gas  must  be 
compressed. Electricity is needed for this compression step, and therefore, again, the local 
electricity used is the main source of emissions. Pipeline transport of compressed hydrogen 
is, however, the most energy efficient transportation method at distances up to 10,000 km, 
due to higher conversion energies needed in the pathways “LNG + SMR”, “LH2”, “NH3 + 
cracking” and “LOHC”.503 During pipeline transport, the emission factor of the grid electricity 
is a factor for GHG emissions. Under the assumptions of the study by Taylor et al. (2022), 
the  emissions  for  pipeline  transport  from  Spain  to  the  UK  are  higher  than  for  pipeline 
transport from Norway to the UK, which is due to the grid emissions being higher in Spain.504 
However, due to the expected decarbonisation of the Spanish grid, the transport emissions 
are expected to fall over time. Also, in a study by Wulf et al. (2018) that calculated emissions 
for a transporting distance of 100 km, the pipeline solution has far lower emissions (0.16 kg 
CO2eq per kg H2) compared to transportation of LOHC via truck (3.39 kg CO2eq per kg H2) 
and the transportation of gaseous hydrogen via truck (1.23 kg CO2eq per kg H2).505  

There  are  several  options  for  transporting  hydrogen  by  ship,  all  of  which  have  different 
environmental impacts.  

One option is to use liquid hydrogen (LH2) as a hydrogen carrier. According to Zhou et al. 
(2021),  all  other  parameters  being  equal,  liquid  hydrogen  generally  has  a  higher  GHG 
intensity  than  gaseous  hydrogen  due  to  the  higher  electricity  consumption  during 
liquefaction  compared  to  compression.506  Again,  the  energy  mix  used  to  generate  the 
electricity for liquefaction is the main factor influencing GHG intensity.  

503 DVGW (2023) Kurzstudie zu Transportoptionen von Wasserstoff  
504 Richard Taylor, Ellie Raphael, Chester Lewis, Ross Berridge, Jo Howes (2022) Expansion of hydrogen production 
pathways analysis – import chains (publishing.service.gov.uk) 
505 Wulf, C., Reuß, M., Grube, T., Zapp, P., Robinius, M., Hake, J. F., & Stolten, D. (2018) Life Cycle Assessment of 
hydrogen transport and distribution options - JuSER (fz-juelich.de) 
506 Zhou, Y., Swidler, D., Searle, S., & Baldino, C. (2021) LCA-gas-EU-white-paper-A4-v5.pdf (theicct.org)  

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In a study by Kim et al. (2021), a carbon footprint analysis of overall hydrogen supply from 
overseas for several hydrogen carriers, including liquid hydrogen, were conducted.507 The 
results indicate that the footprint for hydrogen transported as LH2 is lower than for LOHC 
and NH3 as hydrogen carriers. These results are consistent with a study by Wulf & Zapp 
(2018)  where  they  come  to  similar  conclusions  of  a  lower  footprint  of  LH2  compared  to 
LOHC.508 When using grid electricity for conversion steps, the footprint of LH2 amounts to 
2.5 kgCO2eq per kg H2, when using only wind energy for liquefaction, this amount decreases 
to 2 kgCO2eq per kg H2. In contrast, LOHC has a higher footprint (3.5 kgCO2eq per kg H2) 
even  when the  natural  gas  for  the  heat  production  for  dehydrogenation  is  substituted  by 
hydrogen. The main reason they cite for the lower emissions from LH2 is that LH2 transports 
have  a  higher  transport  capacity  and  therefore  emit  fewer  greenhouse  gases  during 
transport per unit of hydrogen, compared to LOHC. 

For  a case  study  for  hydrogen  imports  of  the  United  Kingdom  (UK),  Taylor  et  al.  (2022) 
calculates the emissions of overseas hydrogen production and import via different realistic 
pathways  consisting  of  the  hydrogen  production  pathway,  the  export  country,  and  the 
hydrogen or hydrogen derivative used.509 

The emissions from shipping in the values below are based on the baseline trajectory of the 
average shipping fuel GHG intensities until 2050, given in the IEA Net Zero 2050 report, 
which predicts an 85% drop by 2050 (compared to 2008 levels; resulting from the increased 
use  of  renewable  H2  and  ammonia).510  The  following  pathways  and  emissions  (in 
gCO2eq/MJ H2) were calculated for 2030 and 2050: 

•  Renewable hydrogen, Australia, in the form of ammonia 

(2030: 

25g; 2050: 9 g) 

•  NG + CCS hydrogen, UAE, in the form of LOHC 

70g; 2050: 50 g) 

•  NG + CCS hydrogen, USA, in the form of LH2  

80g; 2050: 40 g) 

(2030: 

(2030: 

•  NG + CCS hydrogen, Norway, compressed hydrogen via pipeline 

(2030: 

18g; 2050: 17 g) 

•  Renewable hydrogen, Spain, compressed hydrogen via pipeline 

  (2030: 3g; 2050: 1 g) 

In  the  above  shown  results,  ammonia  (NH3),  in  terms  of  GHG  emissions  and  under  the 
applied assumptions, would become a low-emission transportation pathway for hydrogen 
(the  direct  use  of  ammonia  was  not  considered)  by  ship,  even  for  long  distance 
transportation  like  from  Australia  by  2050.  It  is  assumed  that  the  ammonia  conversion 
process is fuelled by renewable electricity only. Consequently, the transportation emissions 
emerge  as  the  primary  contributor  in  the  short-term  within  the  ammonia  supply  chain, 
closely followed by the emissions from ammonia cracking. The above-mentioned gradual 
decarbonisation of shipping (toward an average reduction of GHG intensity in shipping of 
88%  by  2050)  and  trucking  leads  to  a  consistent  reduction  in  GHG  emissions  for  the 
ammonia production chain over time (decreasing the emissions from 25g CO2eq per MJ H2 
in  2020  to  9g  CO2eq  per  MJ  H2  in  2050).  In  the  short  term,  import  chains  that  include 
shipping (LH2, ammonia, LOHC) have much greater GHG impacts compared to pipeline-

507 Kim, A., Lee, H., Brigljević, B., Yoo, Y., Kim, S., & Lim, H. (2021). Thorough economic and carbon footprint analysis of 
overall hydrogen supply for different hydrogen carriers from overseas production to inland distribution - ScienceDirect 
508 Wulf, C., & Zapp, P. (2018). Assessment of system variations for hydrogen transport by liquid organic hydrogen carriers | 
Request PDF (researchgate.net) 
509 Richard Taylor, Ellie Raphael, Chester Lewis, Ross Berridge, Jo Howes (2022) Expansion of hydrogen production 
pathways analysis – import chains (publishing.service.gov.uk) 
510 IEA (2021) Net Zero by 2050. Figure 03.25 

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based supply chains.511 By 2050, with decarbonised shipping, transportation emissions will 
be almost negligible. The remaining emissions mainly stem from the gas grid inputs utilised 
for ammonia cracking in the UK. For a complete picture of the environmental impacts that 
large-scale imports of ammonia can have, the toxicity of ammonia should be mentioned. 
While it is a commonly traded commodity, ammonia spills could have strong negative effects 
on local population and wildlife.512 Chinese regulations, for example, are heavily concerned 
with  the  impact  that  ammonia  can  have  in  bodies  of  water.  This  is  regulated  by  the  GB 
13458-2013 standard issued by the China’s Ministry of Ecology and Environment (MEE).513 

The above listed results of the study by Taylor et al. further show that especially imports of 
low-carbon  hydrogen  from  SMR  using  CCS  from  countries  such  as  the  United  States  of 
America (USA) and United Arab Emirates (UAE) are connected to high GHG emissions. In 
these countries, regulations concerning low-carbon hydrogen production are not as strict. 
For the case of the USA, the high emission level is also attributed to the significant electricity 
consumption  during  liquefaction  and  the  carbon  intensity  of  the  grid  electricity  in  Texas, 
USA. Because of this, emissions are expected to decrease over time to about 40 g CO2eq 
per  MJ H2  in  2050  due  to  enhanced  liquefaction  efficiency,  decarbonisation  of  the  USA 
electricity  grid  mix,  and  assumed  decarbonisation  measures  for  shipping  and  trucking. 
However, the carbon intensity of imports of low-emission hydrogen (in the forms of LOHC 
from the UAE or LH2 from the USA) is not expected to decrease the emission level of imports 
of  renewable  hydrogen  or  even  decrease  below  the  UK  production  threshold  of  20g 
CO2eq/MJ H2.  

The  study  by  LBST  for  Concawe  on  decarbonisation  pathways514  analyses  the  GHG 
emissions of the import of hydrogen and its derivatives in 2050 (Figure 6-17). It compares 
hydrogen with the derivatives, and for each of the products the emissions of importing it to 
the rest of the EU from Southern Europe (Spain) or the Middle East. The reforming/cracking 
steps of the hydrogen carriers in order to reconvert them into hydrogen and their according 
emissions  are  included  in  this  study.  In  this  analysis,  only  production  using  renewable 
electricity  (which  we  have  seen  is  the  environmentally  preferred  import  option)  is 
considered.  The  breakdown  of  emissions  differs  slightly  between  pathways,  with  higher 
emissions  during  distribution  needed  for  pipeline  transportation  of  pressurised hydrogen, 
some synthesis and conversion emissions for ammonia and methanol and the sourcing of 
CO2 (which is required to come from Direct Air Capture from 2041 onwards) playing a role 
for synthetic methane and methanol.  

Sourcing  the  energy  carriers  from  the  Middle  East  instead  of  the  South  of  Europe  adds 
additional steps to the supply chain (shipping over a distance of 5.000 km and unloading). 
However,  due  to  ships  assumed  to  be  fuelled  in  2050  by  e-diesel,  their  GHG  impact  is 
marginal  and  contributes  only  a  maximum  of  0.2  gCO2eq/MJ.  These  emissions  will  be 
overcompensated by the lower carbon intensity of the renewable electricity used, making 
the electricity mix for the synthesis process the dominant factor, even when long distance 
transportation is involved.  

511 Richard Taylor, Ellie Raphael, Chester Lewis, Ross Berridge, Jo Howes (2022) Expansion of hydrogen production 
pathways analysis – import chains (publishing.service.gov.uk) 
512 Duong, P.A.; Ryu, B.R.; Song, M.K.; Nguyen, H.V.; Nam, D.; Kang, H. (2023) Safety Assessment of the Ammonia 
Bunkering Process in the Maritime Sector: A Review. 
513 China’s Ministry of Ecology and Environment (2013) Discharge standard of water pollutants for ammonia industry 
514 Concawe (2022), by LBST E-Fuels: A techno-economic assessment of European domestic production and imports 
towards 2050 (Concawe Report 17/22)   

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Figure 6-17 Comparison of GHG emissions of hydrogen and derivatives’ imports 
produced in Southern Europe and Middle East in 2050 

Source: LBST, based on Concawe (2022) 515 

The overall size of emissions of imports of renewable hydrogen and its derivatives do not 
drastically change in 2050 between hydrogen carriers (between 6.5 and 8.8 gCO2eq/MJ H2) 
or between import countries,516 making neither the choice of hydrogen carrier nor the choice 
of the exporting country a crucial decision for reducing the GHG emissions of renewable 
hydrogen imports.  

This is made especially clear, when comparing the emissions of the above pathways to the 
emissions  of  a  continued  use  of  fossil  fuels.  The  emissions  of  the  pathways  can  be 
compared  to  the  red  line  at  the  top  of  the  graph.  This  red  line  shows  the  fossil  fuel 
comparator defined in the REDII (and the related Delegated Acts). This represents the GHG 
intensity  of  the  average  liquid  and  gaseous  fossil  fuel  mix  in the  EU  for  the  purposes  of 
calculating compliance towards the GHG target and represents gasoline, diesel and natural 

515 Concawe (2022), by LBST E-Fuels: A techno-economic assessment of European domestic production and imports 
towards 2050 (Concawe Report 17/22)   
516 Concawe (2022), by LBST E-Fuels: A techno-economic assessment of European domestic production and imports 
towards 2050 (Concawe Report 17/22)   

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gas.517 The emissions value of this comparator is 94 g gCO2eq/MJ H2, which would be 10.7 
to 14.5 times the amount of emissions of the renewable hydrogen products via these import 
pathways.  This  demonstrates  the  improvement  by  using  renewable  hydrogen  instead  of 
fossil fuels. 

Much  more  important  in  terms  of  environmental  impacts  are  therefore  the  decisions  to 
quickly  replace  current  fossil  fuels  and  to  do  so  by  preferably  importing  renewable 
hydrogen-based  products  rather  than  those  based  on  natural  gas  and  CCS.  Transport 
distance is a factor in the short- to medium-term, while in the long-term it is anticipated that 
ship transport is decarbonised reducing transport emissions to very low levels. Nonetheless, 
renewable  hydrogen  transported  by  pipeline  has  the  lowest  emissions.  Europe  has  a 
number of options for imports or transports within Europe by pipeline including the Norther 
Africa-Italy corridor, the North Sea corridor (off-shore wind and Norway), the Nordic & Baltic 
corridor, as well as the Eastern and South-eastern European routes. 

Instead  of  the  limited  differences  in GHG  emissions  between  different renewable energy 
carriers and between exporting countries of renewable hydrogen, other factors will play a 
more crucial role in determining the future of European energy imports, such as production 
and import costs as well as safety considerations related to ammonia. 

6.7.  Waste heat utilisation case studies 

6.7.1.  EMB3Rs project 

6.7.1.1. Description 

The  EMB3Rs  project  (User-driven  Energy-Matching  &  Business  Prospection  Tool  for 
Industrial  Excess  Heat/Cold  Reduction,  Recovery  and  Redistribution)  aims  to  advance 
waste heat utilisation by developing an open-source matching platform between waste heat 
and  cold  providers  and  end  users,  and  demonstrating  this  platform  in  7  case  studies  in 
different European countries, as listed below. EMBERs is composed of 16 project partners 
from across Europe. 

Table 6-8 EMB3Rs case studies  

Case study 

Country 

Process 
industries (REII) – Cement production 

resource  and  energy 

intensive 

Process REII – Metal casting 

Heat-exchange within an industrial park 

REII  Waste  heat  supply  to  residential  and 
commercial DHC network 
Analysing  excess  heat  potentials  in  different 
DHC network expansion scenarios 
Innovative  Business  Models:  DH  network  with 
P2P market structure 
Overall  Platform  Functionalities  in  Super-User 
Mode 

PT 

UK 

GR 

PT 

SE 

DK 

PT 

517 ICCT (2021) Alternative transport fuels elements of the European Union’s “Fit for 55” package 

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The  EMB3Rs  matching  platform  went 
is  available  at 
https://platform.emb3rs.eu. The platform allows users to input details about potential waste 
heat sources and well as heat demand, including in a collaborative manner. The platform 
calculates  the  most  cost-efficient  solution  to  match  waste  heat  supply  and  demand,  by 
considering detailed generation and demand schedules, prices as well as calculate the NPV 
and return on investment of the business case. 

in  June  2023  and 

live 

6.7.1.2. Technical characteristics and benefits 

The EMB3Rs platform comprises a knowledge base providing default data for the modules 
(where case-specific information is not available), and 5 modules (Core functionalities, GIS, 
Techno-economic,  Markets  and  Business  models  modules)  .518  The  platform  code  for 
installation is available on https://github.com/Emb3rs-Project. 

The EMB3Rs platform for matching waste heat and cold providers and end-users should 
allow  for  the  high-level  planning  of  district  heating  and  cooling  systems  and  conduct  a 
preliminary viability assessment for utilisation of waste heat and cold sources.519 As such, 
the main expected project benefits are not only those arising from the waste heat utilisation 
in the case studies, but rather the larger deployment of waste heat utilisation in Europe, by 
considering not only sources and sinks from mature technologies and existing processes 
but also allowing future users to investigate potential process integration opportunities from 
emerging technologies aiming at decarbonising our industries (e.g., H2, CCU/S chain, etc.) 
that could have a match in a certain region, create synergies and improve the feasibility of 
some future investments 

One  of  the  industrial  case  study  participants  highlighted  that  the  waste  heat  utilisation 
project was pursued due to the reduced reliance on an external energy supply, but that the 
profitability of the project would on itself do not justify the investment. Project partners have 
also  highlighted  that  waste  heat  utilisation  could  reduce  the  need  for  electricity  network 
expansion,  in    context  where  electricity  networks  in  several  Member  States  are  already 
facing significant congestion. 

6.7.1.3. Barriers, lessons learned and recommendations 

The final report of the Work Package 5 “Platform Scalability and Deployment”520 identifies 
a number of challenges for waste heat and cold utilisation rated as medium or high: 

•  Competition with other heating energy sources, particularly natural gas, which 

can have cost-related and operational advantages; 
•  Risk of heat capacity production or connection outage; 
•  Data availability on RHC potentials; 
•  Large capital expenditure associated with waste heat utilisation projects; 
•  Capital markets risk; 
•  Long payback periods; 
•  Counterparty risk; 
•  Absence  of  effective  emissions  prices  for  large  parts  of  the  heating  sector 

(before EU ETS 2 implementation); 

•  Misaligned  incentives  between  stakeholders  (e.g.  district  heating  system 

operator, municipality and/or waste heat provider). 

518 https://www.emb3rs.eu/platform/ 
519 Cardoso and Remédios (2023) D 4.7 Overall Platform Functionalities in Super-User Mode. EMB3Rs (User-driven 
Energy-Matching & Business Prospection Tool for Industrial Excess Heat / Cold Reduction, Recovery and Redistribution) 
520 Jensterle and Montella (2023) D5.1 – WP5 Final Report. EMB3Rs (User-driven Energy-Matching & Business Prospection 
Tool for Industrial Excess Heat / Cold Reduction, Recovery and Redistribution) 

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Moreover, the report highlights two challenges for the utilisation of the EMB3Rs platform in 
particular, which can be summarised as follows: 

•  Complexity of district heating and cold systems employing waste heat: 
larger  district  heating  systems  can  have  complex  topologies,  multiple  heat 
sources,  a  high  number  of  end-users  and  can  combined  centralised  with 
individual (back-up) heating solutions. As such, different tools are necessary 
for  developing  waste  heat  and  cold  utilisation  projects  –  from  simpler  ones 
able  to  identify  synergies  for  matching  waste  heat  and  cold  sources  with 
potential demand, with more advanced modelling tools to design and operate 
the system; 

•  Data requirements for users employing the EMB3Rs platform, which will 
have  to  apply  a  systematic  approach  to  collect  the  necessary  input  data  – 
although the tool was designed with this challenge in mind, providing users 
with guidance on data needs, some flexibility for data inputs as well as default 
values for various parameters. 

The report also conducts an analysis of financing mechanisms for 5 EU Member States, 
identifying a significant difference in funding opportunities between Northern and Southern 
Member States. Southern Member States typically lack funding mechanisms specifically for 
district heat or waste heat utilisation (which have a long payback period), meaning these 
project have to compete with others with a shorter payback. 

While the challenges are multiple, EMB3Rs partners have highlighted that the main barriers 
for waste heat utilisation comprise availability of data on waste heat and cold potentials and 
needs  (including  confidentiality  issues  and  data  owners  not  necessarily  trusting  other 
project actors), the costs of the projects, and the associated risks. This areas are aligned 
with  the  policy  recommendations  of  the  Work  Package  5  “Platform  Scalability  and 
Deployment”521 final report. Particular recommendations which could have an involvement 
of EU actors include: 

•  Establish a comprehensive and reliable data basis specifically for RHC 
use with actions at the EU and national level, with systematic bottom-up data 
collection,  sharing  through  trusted  actors  and  aligning  the  bottom-up  data 
collection with planning processes at the national and local level; 
Implement  de-risking  measures  in  support  mechanisms  either  through 
increased support or provision of insurances, addressing various risk types (of 
outages of heat sources or connections, counterparty, excessive opportunity 
costs or capital market risks). 

• 

Furthermore, discussions with the project partners have highlighted the following additional 
recommendations: 

•  Further  consideration  could  be  given  to  binding  legislation on  companies  to 
identify synergies and where waste heat can be shared and on implementation 
of the actions listed in local heating and cooling plans; 

521 Jensterle and Montella (2023) D5.1 – WP5 Final Report. EMB3Rs (User-driven Energy-Matching & Business Prospection 
Tool for Industrial Excess Heat / Cold Reduction, Recovery and Redistribution) 

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•  EU legislation could be implemented ensuring municipalities have the right to 
make connection to district heating and cooling networks mandatory for newly 
built  buildings,  as  currently  this  is  not  the  case  for  all  municipalities  in  e.g. 
Germany; 

•  Need  for  greater  involvement  of  authorities,  businesses  and  citizens  at  the 

local level. 

6.7.2.  StEB Köln  / Celsius project 

6.7.2.1. Description 

The  CELSIUS  project  was  implemented  between  2013  and  2017,  aiming  to  help  cities 
across Europe to advance low-carbon heating and cooling solutions, particularly waste heat 
solutions.522 The project has led to the on-going Celsius initiative.523 

The Cologne site was one of the demonstrators of the original CELSIUS project, with three 
sites providing  waste  heat to  schools  in  the  districts  of  Wahn,  Mulheim  and  Nippes.  The 
demonstrated sites were operational between 2013 and 2015.524 Regarding applications, 
the demonstrator focused on 1) the recovery of sewage heat and 2) the provision of hot 
water  to  certain  household  appliances.525  The  focus  of  this  case  study  is  on  the  first 
application, given the overall Energy System Integration study focus on off-site waste heat 
utilisation. 

The demonstrator counted with several stakeholders, including the municipal wastewater 
company StEB Köln, the city of Cologne, the utility Rheinenergie AG, technology suppliers, 
technology  providers,  and the  administration  of  the  schools  utilising  the waste  heat.  The 
financial modelled for the project was called energy supply contracting, with Rheinenergie 
contracting external technology and service providers, and charging the schools for supply 
of the (waste) heat,526 with StEB Köln receiving a small financial compensation for the waste 
heat extracted. 

Figure 6-18 CELSIUS City Cologne demonstrator sites527 

Furthermore, StEB Köln has published detailed wastewater heat potential maps, with the 
map for the city centre shown below. The company is in discussion with a number of clients 

522 https://smart-cities-marketplace.ec.europa.eu/projects-and-sites/projects/celsius 
523 https://celsiuscity.eu/about-us/celsius-project/ 
524 https://celsiuscity.eu/waste-heat-recovery-from-sewage-water-in-cologne-germany/ 
525 https://smart-cities-marketplace.ec.europa.eu/projects-and-sites/projects/celsius/celsius-site-cologne 
526 https://celsiuscity.eu/waste-heat-recovery-from-sewage-water-in-cologne-germany/ 
527 https://celsiuscity.eu/waste-heat-recovery-from-sewage-water-in-cologne-germany/ 

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for  implementing further wastewater  heat  utilisation projects  –  with a  number  of  different 
user categories (commercial, residential, public) although most use cases consist of newly 
built buildings which are better insulated and can employ low-temperature heating. 

Figure 6-19 StEB Köln wastewater heat potential map for the Cologne city centre528 

6.7.2.2. Technical characteristics and benefits 

The  table  below  summarises  the  technical  characteristics  of  the  two  main  sites  of  the 
Cologne  demonstrator  sites.  The  project  demonstrated  two  technologies  for  extracting 
waste heat (temperature of at least 12 ºC): direct heat extraction, where the sewage water 
is  bypassed  to  a  heat  pump  evaporator  in  the  Nippes  site,  and  the  novel  indirect  heat 
extraction, where a heat exchanger is installed in the sewage pipes and then the heat is 
upgraded through heat pumps and transmitted to the Wahn and Mulheim sites. 

Table 6-9 Technical characteristics of the CELSIUS City Cologne demonstrator529,530 

Area served 
Baseline technology 
Capacity 
Baseline gas boiler power 
Yearly production 
District 
temperature 
Investment 
Payback period 

heating 

set 

Wahn 
20 650 m2 
Gas boilers 
200 kW 
1370 kW 
1000 MWh 

60 ºC 

€ 530 000 
19 years 

Mulheim 
11 199 m2 
Gas Boilers 
158 kW 
940 kW 
700 MWh 

60 ºC 

€ 530 000 
35 years 

528 https://steb-koeln.de/Redaktionell/ABLAGE/Downloads/Brosch%C3%BCren-
Ver%C3%B6ffentlichungen/Abwasser/Abwasserw%C3%A4rmepotentiale/waermekarte_internet_innenstadt.pdf 
529 https://smart-cities-marketplace.ec.europa.eu/sites/default/files/2021-04/the_making_of_a_smart_city_-
_best_practices_across_europe.pdf 
530 https://celsiuscity.eu/waste-heat-recovery-from-sewage-water-in-cologne-germany/ 

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The project brings a number of benefits, as illustrated in the figure below for the Wahn and 
Mulheim  sites.  In  addition,  the  project  has  an  impact  on  reducing  the  wastewater 
temperature levels. As the wastewater heat is recovered in the sewers, this could potentially 
be  negative  as  a  minimum  temperature  is  necessary  for  biological  processes  at  the 
wastewater treatment plant. Hence, too much waste heat recovery could contradictorily lead 
to the need to heat the wastewater at the treatment plant. However, the scale of waste heat 
recovery in Cologne at the moment is not significant enough to have negative impacts. StEB 
Koeln is also developing a project for waste heat recovery at the plant after treatment, where 
the reduction of the water temperature before discharging in water bodies would actually be 
a positive impact.  

Table 6-10 Benefits of the CELSIUS City Cologne demonstrator in the 2014/2016 
period531,532 

Benefit 

Energy savings 

Cost savings 

Reduced  air  pollution 
(compared to baseline) 

Wahn 

120-410 MWh/y 

10 – 35 c€/kWh 

SO2: -5 to -10% 
NOx: -65 to -147% 
PM: -3 to -6% 

GHG emission reduction  214 tCO2/y 

Mulheim 

166-216 MWh/y 

16 – 21 c€/kWh 

SO2: -6% 
NOx: -85.5 to -87% 
PM: -3 to -4% 

150 t CO2/y 

6.7.2.3. Barriers, lessons learned and recommendations 

Overall,  the  project  was  considered  successful,  with  the  Wahn  and  Mulheim  sites  still 
operating as of October 2023 – 8 years after commissioning. Nonetheless, the project faced 
a number of difficulties: 

•  Technical  difficulties:  The  Nippes  site  has  faced  difficulties  related  to  the 
direct transmission of wastewater and has been discontinued. For example, 
the  wastewater  grinder  used  broke  down  and  the  manufacturing  company 
went  bankrupt,  impeding  the  servicing of  the  machine,  while the  other  sites 
faced corrosion of the heat exchanger; 

•  High cost of the waste heat recovery and upgrade system compared to the 
standard solution (gas boiler), which is complicated further by the electricity 
cost  for  operation  of  the  heat  pump.  Financing  mechanisms  can  exist  for 
larger-scale wastewater heat recovery projects e.g. servicing a whole district, 
but  there  are  no  funding  mechanisms  for  projects  servicing  individual 
buildings; 

•  Resource assessment and project  siting:  the wastewater  availability  and 
other factors must be considered for siting the project, such as accessibility to 
the sewer system, distance to the end-user and ability to lay pipes, and end-
user acceptance for low-temperature heat (i.e. energy efficiency level of the 
building stock). One site faced challenges with wastewater availability, which 
is  subject  to  changes  and  difficult  to  predict.  There  was  also  no  previous 

531 https://smart-cities-marketplace.ec.europa.eu/sites/default/files/2021-04/the_making_of_a_smart_city_-
_best_practices_across_europe.pdf 
532 https://celsiuscity.eu/waste-heat-recovery-from-sewage-water-in-cologne-germany/ 

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measurement of the wastewater flows. Since then, StEB Köln has developed 
the wastewater heat potential map indicated above, and flow measurements 
are conducted but which can cost up to 3-5 k€; 

•  Governance  challenges:  wastewater  heat  utilisation requires the  definition 
of clear governance rules regarding the ownership of the heat exchangers and 
pipes, maintenance of the equipment and conduction of heat supply activities. 
While  ideally  the  heat  supplier  would  own  the  assets  and  service  them 
(possibly through a third-party), this is complicated by sewers constituting a 
hazardous environment requiring qualified technicians and by city regulations 
limiting who can lay pipes (now the city of Cologne is planning to allow private 
operators to lay renewable energy infrastructure). 

•  Project planning complexity: the barriers above make the planning of such 
a  project  a  complex  endeavour,  which  can  result  in  a  long  lead  time  for 
assessing  the  resource,  parties  reaching  an  agreement,  designing  the 
installations  and  the  project  commissioning.  Moreover,  solutions  cannot  be 
fully replicated with each project being tailored to some extent and requiring 
significant human resources, although subsequent experience of StEB Köln 
means it is already able to reap some replicability benefits regarding e.g. the 
set-up of contracts. 

Based on these barriers, A number of recommendations could be considered to advance 
wastewater heat utilisation: 

•  Financial support for the assessment of wastewater heat potentials and for 
the development of projects, including those supplying waste heat to a limited 
number of buildings; 

•  Awareness raising and advertising of wastewater heat utilisation solutions; 
•  Addressing  ownership  problems  with  private  pipes/networks  in  public 
property/ground, with municipalities allowing it in certain cases (e.g. when to 
transmit  exclusively  waste  or  renewable  energy)  and  providing  sufficient 
human resources for permitting; 
•  Addressing  competitiveness 

issues  vis-à-vis  competing  heating 
alternatives, for example by addressing the high electricity costs for operating 
heat pumps (driven by high taxes and levies) and comparatively low taxation 
of natural gas. 

6.7.3.  CO2OLHEAT 

6.7.3.1. Description 

The project CO2OLHEAT aimed to advance the use of supercritical CO2 in order to employ 
recovered  industrial  waste  heat  to  produce  electricity  (waste  heat-to-power,  WH2P).  It 
should do so by addressing several current barriers, including the small size of installations, 
limited competitiveness and flammability of the fluids utilised.533 More specifically, the stated 
key goals of the project were:534 

533 CO2OLHEAT webpage 
534 CO2OLHEAT leaflet 

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• 

• 

• 

“Untapping industrial waste heat potential: Design of a novel waste-heat-
to-power  (WH2P)  plant  layout  for  WH  valorisation  at  temperatures  above 
400°C 
Innovations, economic viability and easy replicability: Development of the 
state-of-the-art  CO2  power  block  offering  numerous financial  benefits  and  a 
vast replicability potential, which will be tested already during the project 
Increase  of  energy  efficiency:  CO2OLHEAT  will  enable  industries  to 
improve  their  resource  utilisation  and  will  contribute  towards  a  reduction  of 
energy costs” 

The project had a demonstration site in the CEMEX cement plant Prachovice (Czechia), 
aiming  to  apply  the  technology  in  a  real  operating  environment  for  at  least  2  500  hours, 
reaching a technology readiness level of 7. It also comprised 6 replications sites (in Turkey, 
Greece, Spain, Belgium, France and Spain), for analysing through simulations the potential 
to replicate the technology. The project was a cooperation between the lead ETN global 
and 20 other organisations, starting in June 2021. 535 The project was suspended in 2022 
due to a number of challenges detailed below. 

6.7.3.2. Technical characteristics and benefits 

The  Czechia  demonstration  site  has  two  mills  for  grinding  the  material  for  cement 
production. Total waste heat availability depends on how many are in operation (with most 
often one single mill operating)536. The maximum waste heat potential of around 16 MW, 
concentrated in three hot spots: 537 

•  Kiln/preheater, with a temperature range of 300-500˚C 
•  Bypass, with a temperature range of over 1 100˚C 
•  Cooling towers, with a temperature range of 100-400˚C 

The supercritical CO2 power plant would have a calculated efficiency of 11-17% depending 
on  the  waste  heat  availability  in  the  flue  gas,  meaning  1.26  to  2.17  MWe  could  be 
generated.538 The consortium partners estimated that the solution would be quite attractive 
– the avoided costs of electricity purchase could lead to a payback of 4.3 to 7.8 years. A 
number of benefits were estimated from the project, including:539 

•  Energy savings of >40.000 MWh/year; 
•  Avoided costs of electricity purchases of 750 k€/year; 
•  Reduced greenhouse gas emissions of 6.5 tCO2/year; 
•  Reduction of water consumption by 100%; 
•  Reduction of raw materials in equipment by 30-40%. 

535 CO2OLHEAT webpage 
536 Alfani et al. (2023) Part Load Analysis of a Constant Inventory Supercritical Co2 Power Plant for Waste Heat Recovery in 
Cement Industry. 5th European sCO2 Conference for Energy Systems. DOI: 10.17185/duepublico/77288 
537 Ibid. 
538 Alfani et al. (2023) Part Load Analysis of a Constant Inventory Supercritical Co2 Power Plant for Waste Heat Recovery in 
Cement Industry. 5th European sCO2 Conference for Energy Systems. DOI: 10.17185/duepublico/77288 
539 https://co2olheat-h2020.eu/wp-content/uploads/2022/02/CO2OLHEAT-public-presentation_Feb-2022.pdf 

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6.7.3.3. Barriers, lessons learned and recommendations 

The project has encountered several hurdles, including: 

✓  High initial ambition: the project involves implementing a new technology in 
the challenging environment of a cement plant. This environment is known for 
operational difficulties, including issues such as dust in the exhaust systems; 
✓  High upfront costs: a feasibility study was conducted at the start of the project, 
which  indicated  the  initial  investment  of  the  demo  would  be  higher  than 
anticipated; 

✓  Benefit uncertainty: identifying end-users who could benefit from the system 
was a challenge. Financial viability of the investment is critical given the main 
customers  would  be  industries,  and  there  is  still  uncertainty  regarding  the 
overall financial viability of the technology. 

A  number  of  measures  are  recommended  by  the  project  coordinator  to  address  the 
challenges faced in the project: 

•  Consider  a  two-step  approach  for  future  European  Framework 
Programme  calls:  The  experience  has  highlighted 
for  a 
comprehensive  feasibility  study  before  issuing  calls  for  the  deployment  of 
similar projects under Horizon Europe, which, it is argued, does not allow for 
extensive upfront analysis; 

the  need 

•  System integration knowledge: recognise that system integration issues go 
beyond  policy  and  require  specialised  knowledge  and  expertise  that  is  not 
taught  currently.  Cover  the  skills  gap  in  waste  heat  recovery,  particularly  in 
industries  like  cement  production.  Larger  companies  have  built  knowledge 
not; 
smaller 
over 
Companies should be made more aware of the costs and complexities 
involved  in  waste  heat  recovery  projects.  Such  endeavours  may  appear 
simple at first but often require substantial expertise and investments; 

have 

time, 

ones 

but 

•  Emphasise the importance of realising commercial benefits from waste 
heat  recovery  projects.  Address  barriers  to  commercialisation,  including 
return  on  investment,  lengthy  payback  periods,  and  competition  with 
alternative investments like renewable energy. If necessary, explore subsidies 
to shorten payback periods but do so with well-structured arguments to drive 
cost  reduction.  More  demonstration  projects  within  the  EU  could  also  help 
address this issue; 

•  Regulation and labelling: Consider regulating waste heat power generation 

as a clean energy source to incentivise its adoption; 

•  Explore the technology in targeted applications: supercritical CO2 power 
plants could have important benefits in certain applications, such as in offshore 
oil & gas platforms, saving space and reduce overall emissions.540 

540 Persico et al. (2023) Supercritical Carbon Dioxide Bottoming Cycle for Off-Shore Applications – an Optimization Study.  
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6.7.4.  Digital Heat in the Amsterdam Metropolitan Area 

6.7.4.1. Description 

The  project  Digital  Heat  in  the  Amsterdam  Metropolitan  Area  aimed  to  study  the 
development of a 5th generation low-temperature heat-cold network employing waste heat 
from data centres in the Amstel III district of the Amsterdam Metropolitan Area (AMA). The 
project was a collaboration of the district heating operator Firan, the Amsterdam Institute 
for Advanced Metropolitan Solutions (AMS), the Amsterdam municipality and TU Delft. The 
project  looked  at  technical,  governance,  financial  and  other  barriers  to  enable  the 
acceleration of the decarbonisation of heat networks in the broader AMA. 

6.7.4.2. Technical characteristics and benefits 

The project studies the potential utilisation of the data centre AM5 of Equinix. This waste 
heat would be delivered by Fira through a low-temperature heat-cold network (5C°– 15C°) 
to  mixed  use  and  residential  areas,  where  the  heat  could  be  upgraded  and  used  in 
combination with renewable sources or heat provided by the current supplier. A significant 
part of the building blocks to be supplied with the waste heat should be disconnected from 
the gas grid in the future, in line with Dutch energy & climate policies.541 Currently, another 
heat network is in place in the area, with a different operator managing the network and 
supplying the heat. 

Figure 6-20 Design for the connection and transport of data centre waste heat in the 
Digital Heat in AMA project542 

Utilisation of waste heat from the data centre should lead to a 70% CO2 saving compared 
to if natural gas was employed, totalling 39 kton CO2 in savings. This would be sufficient to 
heat 50 000 new-build homes, or 25 000 existing ones. The project would equate but not 
exceed  the  climate  performance  (i.e.  equivalent  GHG  emission)  of  individual  heat  pump 
solutions. The project would create jobs for companies supplying and transporting the heat, 
as  well  as  companies  installing  and  operating  end-use  heating  equipment.  The  project 

541 Van Berkel (2022) Energy Justice in Holendrecht 
542 https://openresearch.amsterdam/nl/page/71800/lab-3-lage-temperatuur-warmtenetten 

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should  also  contribute  to  reducing  electricity  network  congestion  compared  to  all-electric 
heating solutions.543 Moreover, the extensive use of aquifer thermal energy storage in the 
Netherlands would represent a feasible solution to address the temporal mismatch of the 
heat supply and demand. 

6.7.4.3. Barriers, lessons learned and recommendations 

Despite the  significant  benefits  of  waste  heat  utilisation from the  data centre, the  project 
faced a number of uncertainties. Hence, in 2023 the district heating operator participating 
in  the  project  decided  not  to  proceed  with  the  investment  for  the  moment.  The  main 
difficulties affecting the project were: 

•  There  was  insufficient  firm  heat  demand  for  the  project.  The  main 
potential heat offtakers, real estate project developers, were unable to sign a 
firm  commitment  to  purchase  the  waste heat  in line  with the timeline  of  the 
project (the heat network would be operational sooner than when the offtakers 
would  require  the  heat).  Only  two  real  estate  developers  were  more 
commitment as offtakers. 

•  The low-temperature heat provided would be unsuitable for the existing 
building stock in the absence of significant renovation efforts. Housing 
corporations  responsible  for  such  renovation  for  their  properties  were  not 
ready to commit to any offtake. The data centre was built before regulations 
where in place requiring it to anticipate the technical space and capabilities to 
recover the waste heat, increasing costs for the project and impeding liquid 
cooling solutions (which would increase the recovered heat temperature); 
•  The  subsidies  for  the  project  had  a  strict  execution  time,  meaning  the 
project could not be postponed to better fit the timeline of the heat offtakers as 
this would lead to the loss of the awarded subsidies; 

•  The Amsterdam municipality heating transition plan544 was perceived as 
providing  insufficient  guidance.  Several  parties  were  critical  of  the 
assumptions  and modelling  of  the  plan,  which  indicated  that  the most  cost-
efficient options for decarbonising heating in the Holendrecht Oost and Zuid 
neighbourhoods  was  district  heating.  They  also  argued  the  plan  defined 
district heating as the best source without creating a mandate for an operator 
to develop the  network. Currently, there  is  not  yet  an obligation  for  building 
owners to connect to a district heating network or other solution defined in the 
heat  transition  plan.  The  Amsterdam  municipality  is  furthermore  exploring 
several approaches for developing heating and cooling networks, for example 
with direct participation in projects in other neighbourhoods; 

•  The proposed heat network faced competition from the existing (higher-
temperature) network already servicing the area. The capital intensity and 
network effects which characterise heat networks represent an entry barrier 
for a second network; 

•  The  project  required  an  additional  actor  to  undertake  the  supply 
activities (heat sales to the final customers). The project network operator 
does  not  currently  conduct  supply  activities  nor  is  allowed  according  to  the 

543 Kansen voor West 
544 https://overmorgen.nl/wp-content/uploads/2020/09/tvw-amsterdam.pdf 

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current Heat Law.545 Although a partner was identified to take up the supply 
activities, this added complexity to the project governance. District heating and 
cooling operators are expected to be allowed to undertake supply activities in 
the upcoming Collective Heating Law. The possibility that the network would 
be  required  to  provide  third-party  access  for  other  sources  also  negatively 
affected the business case; 

The Amsterdam municipality has decided that new data centres (or significant expansions 
of  existing  one)  should  be  obliged  to  provide  the  waste  heat  for  free  for  district  heating 
networks, or to make the necessary preparations in case no nearby network exist, with the 
district heating company bearing the costs. Similarly, the proposed Collective Heating Law 
indicates that waste heat producers should make it available to district heating networks, at 
a  compensation  covering  the  costs  for  providing  the  waste  heat  (including  ensuring  the 
security of supply).546 

Considering this context, a number of lessons learned can be derived from the case study 
to advance waste heat utilisation in the EU: 

•  Further  investigate  approaches  to  increasing  community  acceptance 
and  on-boarding  of  offtakers.  The  city  of  Amsterdam  is  currently 
investigating if co-ownership rules could be implemented in the future, giving 
some  ownership  to  inhabitants  to  guarantee  participation  and  interest  from 
their side; 

•  Ensure flexibility of funding mechanisms while incorporate monitoring 
mechanisms  to  incentivise  project  completion.  Waste  heat  and  district 
heating/cooling  projects  are  complex  and  can  take  several  years  for 
completion – funding mechanisms should take this into account, although a 
balance must be struck with avoiding delays as much as possible; 

•  Ensure the policy process does not increase uncertainty for heating and 
cooling sector stakeholders, which can act as an important disincentive for 
investments; 

•  Requirements for  data  centre (and other)  operators  can strongly drive 
waste  heat  utilisation,  for  example  for  the  operators  to  make  waste  heat 
available when requested and/or to make anticipatory investments. This must 
be  balanced  however  with  an  appropriate  distribution  of  risks  and 
compensating the operators for the incurred additional costs. 

545 https://wetten.overheid.nl/BWBR0033729 
546 Article 6.1 of the legislative proposal. https://www.internetconsultatie.nl/warmtewet2 

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6.8.  Selected 

energy 

system 

integration 

studies 

considered 

The  following  (non-exhaustive)  list  presents  recent  energy  system  integration-related 
studies considered in the analysis: 

•  ACER (2023) Report on monitoring the barriers to electricity demand response  
•  ACER (2023) Demand response and other distributed energy resources: what barriers 

are holding them back? 

•  Austrian Institute of Technology and Euroheat & Power (2020) Discussion Paper - The 

barriers to waste heat recovery and how to overcome them? 

•  Consentec et al (2023) Potentials and Levels for the Electrification of Space Heating 

in Buildings"  

•  Clean Hydrogen Observatory (2023) The European hydrogen market landscape 
•  CRE  (2023)  Recommandations  pour  accompagner  le  déploiement  de  la  mobilité 

électrique 

•  DNV (2023) Bidirectional charging of Electric Vehicles: enablers & barriers in Europe 
•  DNV (2023) Demand-side flexibility: Quantification of benefits in the EU 
•  EEA (2022) Decarbonising road transport — the role of vehicles, fuels and transport 

demand 

•  EEA and ACER (2023) Flexibility solutions to support a decarbonised and secure EU 

electricity system 

•  Energy Cities (2023) EU Tracker - Local Heating and Cooling Planning in EU Member 

States 

•  ENTSO-E (2023) Study on Power and Heat Sectors: Interactions and Synergies 
•  Eurelectric  (2021)  Connecting  the  dots:  Distribution  grid  investment  to  power  the 

energy transition 

•  Eurelectric  (2023)  Power  System  of  the  Future:  Keys  to  delivering  capacity  on  the 

distribution grid 

•  European  Clean  Hydrogen  Alliance  (2021)  Alliance  Roundtables  on  Barriers  and 

Mitigation Measures 

•  Green Hydrogen Hub (2023) Accelerate the integration of renewables 
•  Heatleap (2023) Waste Heat Recovery - Potentials, applications and recommendations 

• 

• 

for better policies 
IEA  (2021)  Distributed  energy  resources  for  net  zero:  An  asset  or  a  hassle  to  the 
electricity grid? 
IEA  (2021)  Distributed  energy  resources  for  net  zero:  An  asset  or  a  hassle  to  the 
electricity grid?  
IEA (2022) Global Hydrogen Review 
IEA (2022) The Future of Heat Pumps 
IEA (2023) Electricity Grids and Secure Energy Transitions 
IISD (2022) Industrial Electrification 
IRENA (2023) Innovation Landscape for Smart Electrification 

• 
• 
• 
• 
• 
•  JRC (2021) Assessment of heating and cooling related chapters of the national energy 

and climate plans (NECPs) 

•  JRC (2021) Defining and accounting for waste heat and cold 
•  JRC (2023) The Heat Pump Wave: Opportunities and Challenges 

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•  Lygnerud  (2023)  Urban  waste  heat  recovery  as  an  enabler  of  the  energy  transition 

policy implications and barriers 

•  Milieu, Trinomics and Panteia (2022) Promotion of e-mobility through buildings policy 
•  smartEn (2022) The smartEn Map 2022 – Ancillary Services 
•  smartEn (2022) The implementation of the Electricity Market Design to drive demand-

side flexibility 

•  Tilia (2021) Integrating renewable and waste heat and cold sources into district heating 
and  cooling  systems  -  Case  studies  analysis,  replicable  key  success  factors  and 
potential policy implications 

•  TNO  et  al.  (2021)  Best  practices  for  planning  and  construction  of  thermal  networks 

identified in the EU 

•  University  of  Aberdeen  et  al.  (2023)  Overview  of  Heating  and  Cooling:  Perceptions, 

Markets and Regulatory Frameworks for Decarbonisation 

232 

 
 
 
GETTING IN TOUCH WITH THE EU 

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Data can be downloaded and reused for free, for both commercial and non-commercial purposes. 

 
 
 
 
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