Greg Arrowsmith, Secretary General of EUREC, stresses why innovative renewable technologies are key to achieving a more sustainable and secure energy system within Europe.
This year is pivotal for Europe’s climate goals and strategies. The upcoming review of the EU Governance Regulation provides a unique opportunity to bolster EU energy and climate governance, but could also – under the guise of ‘simplification’ – be the year that the energy and climate law unravels.
In the public consultation open on the Governance Regulation, we detect a flirtation with the idea of removing secondary targets in related EU legislation. One target which must be maintained concerns “innovative renewable energy technologies” (IRETs). Today’s innovative technology could be tomorrow’s widespread technology, so offering specific support to IRETs creates the potential to drive down the cost of renewable energy, and, if such technologies are made in Europe, to keep European manufacturers competitive with their peers abroad. The revised Renewable Energy Directive (RED III), adopted in late 2023, laid down the indicative target that 5% of all new renewable energy capacity installed by 2030 should be of innovative technology. This target is not only achievable, but also necessary, as we showed in two reports. However, as the European Commission acknowledges, Member States have insufficiently addressed IRETs in their National Energy and Climate Plans (NECPs). Only 11 make a reference to them, of which only five set a target at 5% or more for their deployment in line with the legislation.
Innovation is vital to Europe’s energy future
Whatever ‘simplification’ may come the way of the EU’s energy and climate policy, the IRETs target needs to stay. With EU technology producers asking for protection from Chinese imports (e.g. the appeal from some in the PV sector for European content rules), attention to innovation is necessary if EU producers are not to lose ground against their competitors abroad. The Commission references it often, most recently in the 2025 Grids Package. Efforts to ensure it is used by Member States to serve their industrial policy must be redoubled, not abandoned. Protecting investment into IRETs ensures stability and security of the energy supply in the medium term, industrial strength and competitiveness in the long term, alongside increasing system flexibility and lowering cost overall.
The definition of ‘innovative’ technologies could be improved
A simplification drive could deliver one benefit: it could clean up inconsistencies in the definition of ‘innovative’ when applied to renewable energy technologies or net-zero technologies more broadly. Currently, two definitions appear in the Net Zero Industry Act (NZIA), which are neither wholly consistent with each other nor with the definition in RED III. How about one definition across both texts, defining in each case the relevant innovative technology to be “entirely new technology or not fully commercial technology that improves comparable state-of-the-art technology”?
Illustrations of qualifying IRETs should be provided, building on the initial list from ‘Guidance on innovative technologies and forms of renewable energy deployment’ from July as well as expert input. These experts, conveniently, are already to be found in European Technology and Innovation Platforms, which have existed for many years to advise on Europe’s energy innovation policy, are open, and operate transparently. Periodically, the lists would be updated to reflect technological progress across the EU. Both the single, clear definition across EU legislation and a list of pre-approved technologies would help Member States understand better how to satisfy the law, which is a key purpose of simplification.
How to meet the target
Member States would need to intervene in the market to reach the many GW implied by the 5% goal. The implied volumes are too big for R&I budgets to fund. We propose two methods of intervention – one is well known, the other would be novel:
Market creation via the Net Zero Industry Act (NZIA)
2026 is the first year that Member States must design their support for renewable energy sources (RES) via public auctions around Article 26 of NZIA, which says that non-price criteria should be used for some of those auctions. The criterion most likely to be chosen is ‘resilience’, requiring Member States to diversify their supply chains. There may also be moves under the imminent Industrial Accelerator Act to require that some net-zero technologies or their sub-components be made in Europe. Alongside these, ‘innovation’ can be used as a non-price criterion, i.e. Member States can choose to make innovative technologies specifically the object of some of their auctions. Because, by innovating, companies give themselves a good chance of staying competitive, Member States should be encouraged to use this criterion as much as possible. The goal should be that one day the innovation and environmental profile criteria take precedence over more overtly protectionist criteria.
Member States should be taking the Net Zero Industry Act (NZIA) “into consideration” when writing NECPs, particularly with regard to the dimensions of “research, innovation and competitiveness”. We will advocate in our submission to the public consultation for this to happen more.
New mission for the Renewable Energy Finance Facility
The Renewable Energy Finance Facility (REFF) is descended from the Governance Regulation. It presents another opportunity to support innovative renewables. It is a mechanism that ensures enough renewable energy capacity is built across the EU to meet the 2030 RES target of 42.5%, which is binding on the EU but not on Member States on their individual contribution. The Commission’s 2025 analysis of NECPs reveals that, while most Member States are in line with the 42.5% binding target for renewables, a “limited ambition gap of 1.5 percentage points remains.” The REFF is likely to be called upon to fill that 1.5% gap, but it should also fill any foreseen gap in the achievement of the 5% IRETs target by requiring that the missing capacity also be “innovative”.
Achieving a more sustainable Europe
In the face of a turn toward simplified processes and a potential fatigue surrounding subtargets, focus must be maintained on long-term goals and the needs of the future energy system. The future European energy system should be stable, secure, flexible, competitive, and sustainable, and innovative renewable energy technologies are an absolutely necessary aspect to this future system. By maintaining – even increasing – ambitions for IRETs, including the 5% target set by the RED, as well as enacting practical support measures to aid implementation efforts, we are one step closer to achieving Europe’s future sustainable energy system.
Please note, this article will also appear in the 25th edition of our quarterly publication.
