It is worth noting that as per the North American energy sector executives, Europe has not yet lost its first-mover advantage when it comes to the renewable energy gamut.
But the US has indeed slingshot its way into the leading position, pushed majorly due to the favourable policies eradicating the red tape from the renewable deployment as well as its integration.
An early mover on the road to renewable power, Europe as well as its Union have long enjoyed being at the forefront when it comes to the energy transition.
But with the advent of the US Inflation Reduction Act- IRA in 2022, the competitive position of the US has begun to come under a lot of scrutiny.
As per the recently published Re-energizing the Transition report, it is estimated that almost 60% of the energy sector professionals go on to believe that the continent has as a matter of fact already gone on to lose its first-mover advantage, or in a way is probably going to lose it in the upcoming half decade.
Re-energizing the transition draws on the results of an extensive survey of energy professionals collected in the second half of 2023, in-depth interviews of experts conducted, as well as insights in addition to the recommendations of the Enlit Europe Think Tank, which happens to be a half-day workshop that took place in Paris at Enlit Europe 2023.
As per Re-energising the Transition, Europe’s early foray into renewables, though giving it a significant edge above competitors, happens to be a core component of why it now fears being overtaken by others.
The fact is that too much focus happens to be on the deployment of the renewables, as per the report, calling it the lowest hanging fruit. The fact is that integration happens to be now proving a harder task.
According to Nico Arcauz, smart grids director at Iberdrola, there are so many renewable projects awaiting connection.
This issue is only going to see the worse happening as the fact is that the regulators are not thinking ahead; rather, their focus happens to be on efficiency, which is itself tantamount so as to achieve the lowest cost. The fact is that one is at war, and the focus has to be on effectiveness.
It is well to be noted that as far as the renewable-to-grid integration is concerned, the report goes on to listthe lengthy permitting procedures as well as the aged market frameworks, that stifle flexibility as well as healthy competition, as certain major obstacles to overcome.
And what’s the solution to it? Rewarding flexibility as well as accelerating renewable integration plans.
A regulatory game changer
Regulatory barriers were also put forth by sector experts at DISTRIBUTECH International, but with an opposite spin. Rather, they go on to remember the strong position Europe’s early moves happened to give them.
Interestingly, Bryan Sacks from IBM says that the regulatory environment of Europe as well as the penetration levels that have been pushed within its communities have gone on to force them to think on how best so as to manage the grid when it comes to this new intricate state.
Due to this, said Sacks, who is a global CTO as well as a solution leader for energy, environment, and utilities, conditions happen to be still very much present when it comes to investment in Europe’s energy sector, but the fact is that the US happens to be in a catch-up mode, enabled by the IRA.
The IRA went on to be a regulation game changer, pushing the investment as well as eradicating the red tape otherwise barring roll-out and becoming a thorn in the side of the European energy business.
As per Re-energising the Transition, 62% of sector experts happened to be concerned pertaining to the fact that the IRA specifically will go ahead as well as divert technology supplier attention away from Europe and hence towards the US.
Opined Joerg Gmeinbauer, who happens to be the Global Senior Vice President of Energy of Bureau Veritas, said within the report that they have to cut red tape as well as shorten the permitting process. If policymakers can get the facts right, the industry is going to get things done.
Renewables paved the way, but now it is going to be neck-and-neck
As per Jeremy Klingel from the consulting company West Monroe, though the renewables clearly happen to be a pain point in need of remedy, one should not take their early adoption, as well as the edge they gave Europe, for granted.
Klingel, who is a senior partner of energy & utilities in the EU as well as the UK, says that they have been ahead of the US, both in terms of renewables adoption and also in thinking about the grid as far as a more connected way is concerned. The market mechanisms have been different, and according to him, they have been able to capitalize on that.
He adds that when he goes on to think about the greater adoption pertaining to wind and battery technologies as well as solar proliferation, he really doesn’t think that they are going to slow down.
Notably, Klingel also, however, references policy as well as investment advantages garnered in the US from the IRA, slingshotting them into the lead position and what will go on to prove to be a neck-and-neck competition. It will indeed be interesting to look at it as a competition about where exactly the capital is going to get spent.
Is it going to be in the US or in the EU? According to him, that kind of competition is going to be healthy for the market and also for themselves across the globe.
It is well to be noted that overall, if one looks at a horizon that happens to be reasonable, such as the 2030 data point, he thinks that Europe as well as the US are going to be neck-and-neck when it comes to energy, trading top spots throughout the board on things that range from investment and decarbonization to better responses when it comes to climate change.