麦肯锡 -公用事业处于转折点：未来四大战略变革方向 Utilities at an inflection point Four strategic evolutions ahead

September2026

Mcsey

&company

ElectricPower&NaturalGasPractice

Europeanutilitiesatan

inflectionpoint:Four

strategicevolutionsahead

Europeanutilitiesfaceaperiodofdiscontinuity:Electrification,renewables,flexibilityneeds,AI,andpolicyshiftsarereshapingeconomics,drivingfourstrategicresponsesasindustrystructureisredefined.

ThisarticleisacollaborativeeffortbyAlexanderWeiss,AnnaGranskog,FridolinPflugmann,LorenzoMoaveroMilanesi,andXavierVeillard,withCeciliadelaMorena,representingviewsfromMcKinsey’sElectricPower&NaturalGasPractice.

Europeanutilitiesataninflectionpoint:Fourstrategicevolutionsahead2

Europeanutilitiescurrentlyfacefourfundamentalshiftsthatarestructurallytransformingtheir

operatingenvironment:theaccelerationofelectrificationandflexibilityneedsatscale;therapidriseofadigitalandAI-driveneconomy;anacutefocusonsovereigntyandaffordability;andsustainedregulatoryintervention.Inturn,theseforcesareshiftingwherevalueiscreated,promptingfourdistinctstrategic

responsesfromutilities.

Astheutilityparadigmofadecadeago—anchoredinmerchantandday-aheadmarkets,developer-

ledrenewablesbuild-out,andcontinuednetworkunbundling—hasbrokendown,itisbeingreplaced

byamarketdefinedbyintermittency,decentralization,andahighershareofpolicy-backedrevenues.

Thefutureutilitywillbeanchoredlessbythescaleofitsphysicalassetsthanbytheflowsitcontrols.

Specifically,itscoreassetswillbeitsgridaccesspoints,systemflexibility,load-firmingcapacity,anditsvolumeofaggregatedsupplyandsalesfromlessthan1megawatt(MW)or1megawatthour(MWh)to

utility-scaleassetsthatitcanorchestrateacrossthegrid.

Here,historyoffersacautionarytale.Whentherenewableswavefirstaccelerated,manyincumbentswereslowtoreact,allowingagileindependentdeveloperstocaptureearlyvalue,erodeincumbents’marketshare,andestablishthemselvesaslarge-scaleindependentpowerproducers(IPPs).

Today,thestoryismorecomplex.Whileasimilarpatternisunfoldingwithanewwaveofdigitaland

AI-enabledentrantstargetingaggregation,retail,andflexibilityservices,thereisalsoamovementtowardmoreintegratedutilitymodels.

Inthisarticle,weexamineindetailtheshiftingforceswithintheEuropeanutilitiesindustrythatare

refocusingwherevalueiscreated,unpackthestrategicresponsesemerginginthenewenergylandscape,andthenconsidertheimplicationsforenergycompanies.

FourshiftsarecausingamigrationofvalueacrosstheEuropeanenergyutilitiessector

Thedissolutionoftheoldutilityframeworkhasnecessitatedatransformationoftheoperating

environment,whichhascausedfoursignificantchangesacrossthesector.Eachcomeswithitsownchallengesandneeds.

1.Electrificationdemandsmorecapacity,buttheharderchallengeisturningrawrenewablesmegawattsintousablepower

Afteryearsofrelativelyflatpowerdemandgrowth,theContinuedMomentumscenarioinMcKinsey’s

GlobalEnergyPerspective2025projectsEuropeanpowerdemandtogrowfromabout3,000terawattsperhour(TWh)in2025toapproximately4,300TWhin2040(Exhibit1).Thisincreaseisprimarilydrivenbytheelectrificationofthetransportsector(anincreaseofabout400TWh,includingabout140millionelectricvehicles[EVs]by2040),buildings(morethan55millionresidentialheatpumpsby2040),data

centers(anincreaseofabout450TWh),andindustry(about200TWhofadditionalconsumptionfrom

electrifiedindustrialprocesses).Asaresult,electricity’sshareoffinalenergyconsumptionisexpectedtorisetoapproximately32percentby2040fromabout20percenttoday.1Inparallel,Europeannaturalgas

1GlobalEnergyPerspective2025,McKinsey,October13,2025(ContinuedMomentumscenario).

Europeanutilitiesataninflectionpoint:Fourstrategicevolutionsahead3

demandisestimatedtoshrink,onaverage,by2percentayearupto2030,furtherhighlightingtheneedforhistoricalgasandpowerutilitiestoexpandintopowervaluechainactivities(Exhibit2).

Meetingthisdemandwillrequireasignificantaccelerationinsupply,withrenewables(solar,onshoreandoffshorewind,hydro,andbiomass)andnuclearestimatedtoaccountforabout95percentofEurope’s

powergenerationby2040.2Withinthis,solarandonshorewindareprojectedtogrowatabout7percentayearupto2040,andoffshorewindatabout11percent.3

2Shareoftotalpowergenerationfromsolar,onshoreandoffshorewind,hydro,biomass,andnuclearintheContinuedMomentumscenarioinGlobalEnergyPerspective2025,McKinsey,October13,2025.

3

BasedoninstalledcapacityprojectionsintheContinuedMomentumscenarioinGlobalEnergyPerspective2025,McKinsey,October13,2025.

Exhibit1

Europeanpowerdemandisprojectedtoshiftfromdeclinetorobustgrowththrough2040.

Netelectricityconsumption,¹thousandterawatt-hours

5

4

3

2

1

0

4.3

3.8

3.3

3.13.1

3.03.02.93.03.0

ElectrolyzerTransport

Datacenters

Industry

Buildings

201920242025203020352040

HistoricalContinuedMomentumscenario

¹EU-27plusNorway,Switzerland,andtheUnitedKingdom.Excludestransmissionanddistribution(T&D)loadandstoragelosses.Source:GlobalEnergyPerspective2025,McKinsey,October13,2025

McKinsey&Company

Europeanutilitiesataninflectionpoint:Fourstrategicevolutionsahead4

Exhibit2

Europeannaturalgasdemandisprojectedtodeclinethrough2040.Naturalgasdemand,¹thousandterawatt-hours

4.24.2

3.8

3.1

2.7

20242025203020352040

ContinuedMomentumscenario

5.35.0

4.6

4.3

Historical

6

5.2

5

4

3

2

1

0

2019

Hydrogenproduction

TransportPower

Industry

Buildings

¹EU-27plusNorway,Switzerland,andtheUnitedKingdom.Convertedfrombillioncubicmeterstoterawatt-hours.

Source:GlobalEnergyPerspective2025,McKinsey,October13,2025

McKinsey&Company

Butthisnewsupplyisfarmoredecentralizedandintermittentthanthecentralizedfleetofthepast,

makingpowersystemsincreasinglycomplexasthenumberofgridconnectionpointsmultiplies.There

arealready250millionconnectedhouseholdsandbusinessesinEuropeandistributiongrids.4InFrance,grid-connectedgenerationassetsrosefrom61,000in2010tomorethanonemillionin2024,5andin

Germany,deliverypointsforfinalcustomersreached52.9millionin2024,6upfrom51.6millionin2020.7Thisiswideningthedistancebetweengenerationanddemandandenlargingthetemporalmismatchesbetweensupplyanddemand.

Thefundamentalchallengeisshiftingfrommerelyexpandinggenerationcapacitytodeliveringmore

usable,connected,andflexiblecleanpower.Europedoesnotjustneedmorerenewablemegawatts;

itneedspowertobecommerciallyviableandavailableattherighttimeandplace.Theprimarybottleneck

4

Distributiongridshandbook,Eurelectric,November21,2024.

5AdrienPécout,“Avecplusde1milliondesitesdeproduction,lesystèmeélectriquefrançaischanged’échelle”[Withmorethan1millionproductionsites,theFrenchelectricitysystemchangesscale],LeMonde,October29,2024.

6

7

Monitoringbericht2025[Monitoringreport2025],WorkingGrouponEnergyMonitoring,January26,2026.

AnzahlderMarktlokationenvonLetztverbrauchernimdeutschenStromnetzindenJahren2014bis2024[NumberofmeteringpointsoffinalconsumersintheGermanelectricitygrid,2014to2024],Statista,November2024.

Europeanutilitiesataninflectionpoint:Fourstrategicevolutionsahead5

hereisthesystem’sabilitytoabsorb,move,store,andpriceelectricity.InEurope,thistrendisreflectedinrecordvolumesofvoluntarilycurtailedrenewablepowerandincreasinglyfrequenthoursofnegativepricing(Exhibit3).

Exhibit3

InEurope,negative-pricehoursandrelatedcurtailmenthaverisensharply.Hoursofnegativeday-aheadprice,number

GermanyFranceNetherlands

298

10297

139

6985

6470

4

301315

147

2021

2022

2020

2023

450457

350

2024

584

539

509

2025

Totalcommercialcurtailmentperyear,terawatt-hours

20202021202202320242025

1.4

1.1

0.6

0.2<0.1<0.10.3

2

1.8

1.2

0.60.7

1.6

<0.1

0.2<0.1

0.1<0.1

1.4

Source:Europeanpricesensitivecurtailmentreport2025,Montel

McKinsey&Company

In2025,curtailment(theintentionalreductionordisconnectionofgeneration)reachedabout1.8TWh

inGermany,1.4TWhinFrance,and0.7TWhintheNetherlands.8Thiscombinedtotalofnearly4TWh

representsan18percentcompoundannualgrowthratesince2020,whencurtailmentstoodat1.7TWh.RegionalweatherpatternsfrequentlycausesimultaneousrenewablegenerationpeaksacrossEurope,

neutralizingcross-borderexportsasareliefvalve.Forinstance,peakwindorsolarconditionsinFrance

andGermanyoftensynchronizewithneighboringmarkets,closingoffexportoptions.9Similarly,the

highlyinterconnectedNetherlandsstrugglestoexportpeaksolaroutputwhenBelgiumandGermanyarealsooversupplied.Thisregionalsynchronizationlimitsexportdemand,depressesday-aheadprices,anddirectlydrivesupcommercialcurtailment(inwhichanoversupplyofrenewablesduringpeakproductionperiodspushesmarketpricestozeroorbelow).

8

France,Germany,andtheNetherlandsseethehighestvolumesofcommercialcurtailment,makingupover80percentofthecurtailmentvolumesacrossthetencountriesmonitored(Austria,Belgium,France,Finland,Germany,Hungary,theNetherlands,Poland,Switzerland,andtheUnitedKingdom).Europeanpricesensitivecurtailmentreport2025,Montel,2025.

9

Europeanpricesensitivecurtailmentreport2025,Montel,2025.

Europeanutilitiesataninflectionpoint:Fourstrategicevolutionsahead6

Europethusneedsgreatergridcapacity,storage,andflexibilitytomakecleanpowerusablewhere

andwhenitisneeded.Thebuild-outofintermittentrenewablescreatesgridcongestionandtemporal

mismatchesbetweenwhenpowerisgeneratedandwhenitisneeded.This,inturn,leadstocurtailment

andpricecannibalization,resultinginarisingpremiumonsolutionsthatcanresolvethesebottlenecks—flexibility,storage,demandresponse,andprioritygridaccess.Maintaininggridstabilitywillrequire

substantialinvestmentinenablinginfrastructureandflexibilitysolutions,includingbatteryenergystoragesystems(BESS),demand-sideresponse(DSR),spatialoptimization(forexample,displacingtheload

acrossanetworkofassetssuchasdatacenters),flexibleassets(thermalandhydro),andgridexpansion.

Alongsidethisshift,generationisbecomingmorefragmentedacrossincumbentutilities,IPPs,and

decentralizedassetowners,includinghybridconsumersor“prosumers.”InGermany,incumbentutilitiesaccountedforapproximately82percentofinstalledgenerationcapacityin2000,IPPsforabout15

percent,andprosumersfor3percent(Exhibit4).

10

Sincethen,theownershipstructurehasdiversified

significantly:Asofyear-to-date2026,utilitiesaccountforabout26percentofinstalledcapacity,IPPs

forabout41percent,andprosumersforabout33percent.Reflectingtherapidexpansionofdistributed

residentialandindustrialself-generationbyprosumers,theaveragesizeofnewinstallationshasfallen

frommorethan50MWinthe1970sand1980stoabout400kWin2000andabout30kWtoday.The

averagesizeoftotalinstallations(stockcapacity)hasdecreasedfromapproximately1,800kWin2000toabout50kWtoday.11Traditionalutilitiesareincreasinglyretreatingfromdirectinvestmentingeneration

capacity.

Thispartlyreflectsachangingmarket.Whiletheearly2000sweredefinedbyliberalization,generation

investmenttodayhasbecomemorefragmented,competitive,andpolicy-dependent,withreturnsshapedbyauctions,supportschemes,gridconstraints,andwholesalepricevolatility.Bycontrast,regulatedgridinfrastructureoffersmorepredictableeconomics,givingincumbentsanincentivetodeploycapitalinto

networksratherthancompeteinanincreasinglycomplexgenerationmarket.Ifincumbentsprioritize

verticalintegrationandnetworkacquisitionoverdirectinvestmentingeneration,theresultingcapacitygapislikelytobefilledbynewentrantsandothernontraditionalactors,potentiallyincludinglarge

offtakers,suchasdatacenters,seekingdedicatedgenerationtosecurefirmsupply.

10Owner-typesharesandaverageinstallationsizearebasedonhistoricaldataforGermany.Cumulativeinstalledcapacityasofyear-

end2000andyear-to-date2026;allin-operationelectricitygenerationunitsacrossphotovoltaic(PV),wind,hydropower,biomass,

combustion,nuclear,andgeothermal(batteryandotherstorageexcluded).Eachassetisassignedtooneoffourownertypesusing:(i)a

curatedutilityorindependentpowerproducer(IPP)mappingcoveringabout400namedoperators,appliedregardlessofassetsizeandsnapshotyear;(ii)name-basedoverrides—LEAG,RWE,STEAG,Uniper(includingDatteln4),andVattenfall—alwaysclassifyingthese

operatorsandtheirsubsidiariesasincumbentutilities;(iii)windunitsdefaulttoIPPsunlesstheoperatornamesignalsautility(utility

groupormunicipalutilitykeyword),regardlessofoperatortype;(iv)nonwindassetsarethenclassifiedasfollows:operatorsflaggedas

naturalpersons(MarktakteurPersonenart=518)withassetcapacityof5MWorlessareB2Cprosumers,andallothernonwindoperatorsareclassifiedusingthesamekeywordrulesatallsizes(utilitygroupandmunicipalutilitykeywordsmarkincumbentutilities;renewable

projectcompanykeywordsmarkIPPs);and(v)theresidualdefaultstoB2Bprosumer(forexample,largeindustrialplayers)at5MWor

less,andtoalarge-scaleunresolvedbucketabove5MWthatisallocatedproratabetweenutilitiesandIPPsbasedonthosealready

classifiedasmorethana5MWmixinthesamesnapshotyear.Rule-basedproxy,notalegalownershipaudit.Marktstammdatenregister,“Gesamtdatenexport”[CoreEnergyMarketDataRegister,“Completedataexport”],Bundesnetzagentur,accessedMay28,2026;

McKinseyanalysis.

11

Marktstammdatenregister,“Gesamtdatenexport”[CoreEnergyMarketDataRegister,"Completedataexport"],Bundesnetzagentur,accessedMay28,2026;McKinseyanalysis.

Europeanutilitiesataninflectionpoint:Fourstrategicevolutionsahead7

Exhibit4

InGermany,generationownershiphasshiftedfromincumbentstoindependentpowerproducersandprosumers.

Shareofinstalled

generationcapacity,ownertype,%

Averagesizeof

installations,MW

15ProsumersB2C

18ProsumersB2B

26Incumbentutilities

41IPPs¹

2026yeartodate

~0.05

3

82

15

2000

~1.8

Share,GW

44

55

77

122

Note:Owner-typesharesandaverageinstallationsizearebasedonhistoricaldataforGermany.Cumulativeinstalledcapacityasofend-of-year2000andyear-to-date2026;allin-operationelectricitygenerationunitsacrossphotovoltaic(PV),wind,hydropower,biomass,combustion,nuclear,andgeothermal(batteryand

otherstorageexcluded).Eachassetisassignedtooneoffourownertypesusing(i)acuratedutilityorindependentpowerproducer(IPP)mappingcoveringabout400namedoperators,appliedregardlessofassetsizeandsnapshotyear;(ii)name-basedoverrides—LEAG,RWE,STEAG,Uniper(includingDatteln4),and

Vattenfall—alwaysclassifyingtheseoperatorsandtheirsubsidiariesasincumbentutilities;(iii)windunitsdefaulttoIPPsunlesstheoperatornamesignalsautility(utilitygroupormunicipalutilitykeyword),regardlessofoperatortype;(iv)nonwindassetsarethenclassifiedasfollows:operatorsfiaggedasnatural

persons(MarktakteurPersonenart=518)withassetcapacityof5MWorlessareB2Cprosumers,andallothernonwindoperatorsareclassifiedusingthesamekeywordrulesatallsizes(utilitygroupandmunicipalutilitykeywordsmarkincumbentutilities;renewableproject-companykeywordsmarkIPPs);and(v)the

residualdefaultstoB2Bprosumer(forexample,largeindustrialplayers)at5MWorless,andtoalarge-scaleunresolvedbucketabove5MWthatisallocatedproratabetweenutilitiesandIPPsbasedonthosealreadyclassifiedasmorethana5MWmixinthesamesnapshotyear.Rule-basedproxy,notalegalownership

audit.

¹Independentpowerproducers.

Source:Marktstammdatenregister,“Gesamtdatenexport”[CoreEnergyMarketDataRegister,“Completedataexport”],Bundesnetzagentur,accessedMay28,2026;McKinseyanalysis

McKinsey&Company

2.AIadoptionisacceleratingdatacenterbuild-outandcreatingnewdemandsandflexibilityvaluepools

Datacentersareexpandingrapidlyacrosstheworld,becomingadefiningglobaltrend.Europe’sdata

centercapacityisexpectedtoroughlydoublefromabout20GWofITcapacity12in2025toalmost40GWby2030,providingthecomputationalbackboneforanincreasinglydigital,AI-driveneconomy.

13

Thisgrowthisspurringnewproductsandservicestailoredtodatacenteroperators’needs.Utilitiesandotherenergyprovidersareexpandingfourofferingsinparticular:

—orchestratedflexibility(spatial,network,andtemporal)builtonAIworkloadmanagement,withleadingoperatorsalreadydemonstratinga5to10percenttemporarypeakloadreduction14

12

Referstototaluninterruptiblepowersupply(UPS)power—powerconsumedexclusivelybytheservers,includingnetwork.

13CamillaNaschertandSusanDlin,“Europeandatacenterpowerdemandtodoubleby2030,straininggrids,”S&PGlobal,July30,2025,S&PGlobalEnergy©2026byS&PGlobalInc.;GlobalEnergyPerspective2025,McKinsey,October13,2025(ContinuedMomentum

scenario).

14

TylerNorris,TimProfeta,DaliaPatino-Echeverri,andAdamCowie-Haskell,Rethinkingloadgrowth:Assessingthepotentialfor

integrationoflargeflexibleloadsinUSpowersystems,NicholasInstituteforEnergy,Environment&Sustainability,DukeUniversity,2025.

Europeanutilitiesataninflectionpoint:Fourstrategicevolutionsahead8

—on-sitestoragethatextendsthelegacyuninterruptiblepowersupply(UPS)model.Forexample,

AlignedDataCentersandCalibrantEnergyjointlydeployeda31MW/62MWhbatteryenergystoragesystem(BESS)tospeedupinterconnectionandsecurepoweraheadoftraditionalgridupgrades

15

—bridgeandbackuppowerfordatacentersconnectedaheadofschedule.Forexample,Googlehasintegratedabout1GWofflexibledemandcapacityacrossitsdatacenterfleet,enablingutilitiestoaccelerategridaccessandunlockcapacityinpower-constrainedlocations

16

—microgridservicesfordatacentersthatoperateindependentlyofthegridandround-the-clockcleanpowersolutionsseeninpreviousyears

Demandforgasturbinesandbackupgenerationsystemssuchasgasengines,transformers,andrelated

infrastructurehasincreasedsharply,withturbineorderbooksextendingbeyond2029.SiemensEnergy

reportedinAugust2025thatabout60percentofits14GWofgas-turbineyear-to-dateorderswerelinkedtodatacenterprojects,17underscoringthegrowingcompetitionforcriticalequipmentacrosstheenergy

sectorandtheneedforutilitiestoreshapetheirsupplychainstrategies.

3.Sovereigntyandaffordabilityconcernsaredrivingregionalizationacrossgeneration,supplychains,criticalmaterials,andgrids

Effortstodiversifyenergysupplyhaveacceleratedsincethe2021–22energycrisiswhenEurope’s

vulnerabilitywasstarklyexposed,becauseitimported63percentofthetotalenergyitconsumed.

18

Sincethen,althoughtheEuropeanUnion’soverallenergyimportdependencyhasstabilized,itremains

structurallyhighat57percentasof2024,withnetimportsstillcoveringnearly60percentoftheEuropeanUnion’stotalenergyneeds.19In2023,theEuropeanUnionraiseditsbindingrenewableenergysources

(RES)targettoatleast42.5percentoffinalenergyconsumptionby2030from32percent;setatargetof

60GWofinstalledoffshorewindcapacityby2030;andestablishedanelectricityinterconnectiontargetof15percentforallmemberstates.20

Thesemeasuresaimtoreducedependenceonimportedfuels,suchasnaturalgas,andtoimprovesystemresiliencewithabroader,moregeographicallydiversifiedpoolofgenerationresources.Butintentioned

measuresareincreasinglyclashingwithmarketrealities,asacombinationofsurgingcapitalcosts,supplychainbottlenecks,andunfavorableauctiondesignshascooleddeveloperappetite.Thisfrictionshowsinrecentbiddingrounds.Germany’sAugust2025offshoreauctionfor2.5GWofcapacityacrossitsN-10.1andN-10.2NorthSeasitesclosedwithoutasinglebid;

21

afailureechoedintheNetherlands’late-2025

auctionforthe1-GWNederwiekI-Asite.

22

Asprojecteconomicsdeteriorateandexpectedreturnsnolongerjustifythedevelopmentrisks,evenwell-capitalizedoilmajorsandtraditionaldevelopersarescalingbacktheiroffshorewindplans.ThechallengeisparticularlyacuteinGermany,wherethenuclearphase-outhasremoveddomesticcarbon-freecapacity

15“AlignedandCalibranttodeployfirst-of-its-kindon-sitebatterystorageprojecttounlockutilitypowerfordatacenters,”Alignedpressrelease,October22,2025.

16GoogleBlog,“Anewmilestoneforsmart,affordableelectricitygrowth,”blogentrybyMichaelTerrell,March19,2026.

17

RachelMillard,“SiemensEnergyordershitrecordon‘enormous’datacentredemand,”FinancialTimes,August6,2025.

18SheddinglightonenergyinEurope—2024edition,Eurostat,March2024.

19

20

EnergyinEurope—2026edition:Importdependency,Eurostat,March2026.

Underthe2024revisedgoals,memberstatesupdatedtheirnonbindingregionaltargetsunderthetrans-Europeannetworksforenergy (TEN-E)regulation,settingcumulativeregionaloffshorerenewabletargetsof86–89gigawatts(GW)by2030and355–366GWby2050.“BoostingoffshorerenewableenergyforaclimateneutralEurope,”EuropeanCommissionpressrelease,November19,2020;Offshore

renewableenergy,EuropeanCommission,2024;“Regulation(EU)2018/1999onthegovernanceoftheEnergyUnionandClimateAction,”EUR-Lex,EuropeanUnion,December11,2018.

21“Germany’s2.5GWoffshorewindauctionfailstoattractbidders,”Enerdata,August7,2025.

22“Europe'soffshorewindauctionscomeunderfire,”IIREnergypoweredbyIndustrialInfoResources,December2,2025.

Europeanutilitiesataninflectionpoint:Fourstrategicevolutionsahead9

fromthesystem,increasingtheburdenonrenewables,grids,flexibility,andimportedfuelstomaintainsecurityofsupply.TheEuropeanUnion’senergytargetsmaynotbemetwithoutsignificantregulatoryandfinancialrestructuring.

Energysovereigntyeffortsarealsoextendingtotheheatingandcoolingsector,whichaccountsfor

nearlyhalfoftheEuropeanUnion’senergyconsumptionandremainsabout70percentreliantonfossilfuels,mostlynaturalgas.

23

Underthe2025AffordableEnergyActionPlanandCleanIndustrialDeal,theEuropeanCommissionannouncedanewHeatingandCoolingStrategyfor2026,intendedtosupport

moreintegratedlocalheatplanning,includingdistrictheatingmodernization,industrialwasteheat

recovery,geothermalenergy,andotherrenewableheatsources.Theselocalheatnetworkscanbecomecircularenergysystemsbyintegratingwaste-to-energy,biomasscogeneration,residualindustrialheat,andthermalstorage—turninglocalwastestreamsandbyproductsintodispatchableheatandpower.

Theseeffortscollectivelystrengthenenergysovereignty.

Atthesametime,concernsoverstrategicdependenciesonnon-Europeansupplychainsarepromptingashifttowardgreatersupplychainresilienceanddiversification.ThisisreflectedinEuropeanUnion

industrialpolicies,suchastheNet-ZeroIndustryAct(NZIA),whichtargetsdomesticmanufacturing

capacityequivalentto40percentofannualdeploymentneedsforcleantechnologiesby2030.

24

The

CriticalRawMaterialsAct(CRMA)seekstoreduceimportdependencebyrequiring10percentdomesticextraction,40percentdomesticprocessing,and25percentstrategicrawmaterialsrecyclingby2030,whilelimitingrelianceonanysinglenon-EuropeanUnioncountryto65percentofsupply.

25

Inthefirst

halfof2026,theEuropeanUnionhasalsoincreasedscrutinyofChineseparticipationincriticalenergyinfrastructure—includingrestrictingEuropeanUnionfundingforrenewableenergyprojectsthatuse

invertersfromhigh-risksuppliers—reflectingabroadershiftfromcostoptimizationtowardsupplychainresilienceandstrategicautonomy.

4.Moreproactiveregulatoryactioniscausingthepuremerchanteratoendandcappingbothupsideanddownside

Inresponsetothesenewmarketdynamics,Europeanpolicymakersareincreasinglyrelyingonlong-termsupportmechanismstoencourageinvestmentincapital-intensiveenergyinfrastructure,whilelimiting

exposuretopowerpricevolatility.ThisshiftwasformalizedintheEUElectricityMarketDesignReform

of2024,whichestablishedtwo-waycontractsfordifference(CfDs)asthedefaultformofdirectprice

supportfornew,publiclysupportedrenewableandnuclearprojects.

26

Theapproachiswidelyusedin

offshorewind.Forexample,inMarch2026,theEuropeanCommissionapproveda€5billionDanish