What's on the minds of those working on Europe's energy transition?

Last week, director Ksenia Tolstrup gathered with some of the brightest minds in the energy sector at the Enlit Impact Circle to brainstorm the next edition of Enlit Europe. What’s top of mind for industry leaders – and what does it reveal about the current state of Europe’s energy transition? Ksenia shares her key insights:

Competitiveness under pressure

Competitiveness is one. Industrial consumers face mounting international pressure (global competition, rising commodity and carbon costs, and tighter margin dynamics), so any energy transition must preserve or improve their cost position. That raises the core question: where is the money? Meaning: who pays for decarbonization, grid upgrades and new market arrangements, and how are payments structured so that industry remains competitive?

Demand-side flexibility

A large part of the answer lies in mobilising demand-side flexibility. Practically, it won’t happen at scale if the enablers are not in place, from financial incentives, regulation (watch out for the upcoming Network Code on Demand Response!), innovative solution providers, to flexible behind-the-meter solutions and of course awareness and availability of plug-and-play solutions.

Industrial decarbonisation: a dual opportunity

Industrial decarbonisation sits next to flexibility as the lion’s share of system demand growth and a major cost opportunity. Electrification of heat and processes is often the most straightforward pathway for many sectors but it must be delivered competitively. That requires stable regulatory frameworks, predictable taxation and proper off-take structures & instruments. For hard-to-abate processes, CCUS and fuels from electricity (e-fuels, hydrogen) are very much part of the option space. Again financing depends on clear revenue streams (contracts, carbon pricing, public support). Importantly, the electrification pathway must be coordinated with decarbonisation of generation.

Grids: the backbone of the energy transition

Grids are the backbone that ties DSF and industrial decarbonization together. Three priorities stand out: first, TOTEX-based incentives and strategic planning that balances capital and operating spending to maximize system value rather than CAPEX alone. Second is about grid innovation, I.e. adoption of new grid technologies and components to maintain stability as conventional inertia declines. Third is digitalisation, notably digital twins and advanced observability & analytics needed to improve planning accuracy, operation flexibility as well as the ability to procure targeted flexibility. Technological sovereignty (resilient supply chains for critical grid components) is an increasingly important policy objective, especially when strategic security is judged alongside cost and innovation.

The big picture

Fundamentally, achieving the energy transition is not possible through putting together isolated bits and pieces. Competitiveness & decarbonisation are maintained best when policy and markets treat flexibility, industrial decarbonisation and grid built & innovation as a single systemic challenge rather than as isolated policy problems.

More about Europe’s energy transition?

Reach out to Ksenia to discuss key developments and how your organisation can move forward.