Cleantech for Europe’s Policy Update – May Edition
May 1, 2025
Welcome to the latest edition of Cleantech for Europe’s Policy Update, your one-stop-shop for EU cleantech policy news and analysis.
Our latest Policy Update covers the key developments in Brussels over the past month and what they could mean for EU cleantech. Take a look at what’s shaping the ecosystem:
Last week’s blackout across Spain and Portugal is a stark reminder of the urgency to strengthen Europe’s energy system. While the exact cause is still under investigation, key lessons are already clear. Electricity demand in Europe is projected to rise substantially in the coming years, driven by the rapid growth of data centers and the electrification of transport, heating, and industry.
Spanish electricity generation plunged by 15 GW — more than 50% of the demand at that moment — and Frequency dropped below 49.5 Hz, triggering the collapse of the Iberian grid, and affecting parts of southwest France as well.
A key challenge was the system’s limited stabilizing inertia, traditionally provided by rotating power sources like nuclear or gas — but which can also be compensated for by energy storage. For example, California’s grid, similar in size to Spain’s, has deployed 13 GW of battery storage compared to Spain’s 400 MW.
As more variable renewables enter the grid, Europe must invest in digitalization, flexibility — including storage, cross-border transmission, demand response, and long-duration energy storage — and clean baseload such as geothermal power, to withstand seasonal and weather-driven variability, such as “dunkelflaute” events.
The issue will be on the agenda at the EU energy ministers’ meeting on May 12-13.
🔗 Read more: We explored many of these challenges and solutions in our 2023 paper, An Electricity Market Design Fit for Cleantech Competitiveness. Read the paper.
The European Commission has published its updated REPowerEU Roadmap to phase out Russian gas by 2027, building on sharp progress already made — Russian imports now account for just 19% of EU gas supply, down from 45% in 2021. The roadmap outlines legal measures, including a planned EU ban on all new Russian gas contracts by end-2027, alongside national diversification plans and stronger supply monitoring.
A recent Ember analysis shows that scaling renewables, heat pumps, and electric vehicles could cut fossil fuel imports by up to 70%. Meanwhile, Carlyle’s The New Joule Order report underscores how geopolitical pressures and the drive for energy security can accelerate the clean transition, as governments push for local, resilient energy systems.
Looking ahead, Europe’s challenge will be to align security and climate goals to ensure the energy transition drives resilience, competitiveness, and accelerated decarbonization.
🔗 Read more: The European Commission’s Communication on the Roadmap towards ending Russian energy imports.
This month, Cleantech for Europe, together with regional partners, sent a joint open letter to the European Commission on the draft Clean Industrial State Aid Framework (CISAF).
With EU budgets stretched and the next budget cycle not starting before 2028, national state aid is now Europe’s most powerful public lever to de-risk and scale cleantech manufacturing.
The draft CISAF makes key improvements, including faster approvals for aid schemes that meet clear conditions, the recognition of guarantees and loans as vital de-risking tools, and new support for energy storage — though more emphasis on long-duration energy storage is needed, as underlined by the recent blackout in Iberia and southwest France.
However, big gaps remain:
• Aid amounts and intensities fall short of what’s needed to de-risk cleantech manufacturing — and pale in comparison to what key trading partners, notably the US and China, are offering.
• Project-by-project approvals are too slow and unpredictable — scale-ups and SMEs need simpler, faster access.
• Production-based support — ex-ante, transparent, predictable — should be explicitly enabled to help bring down marginal costs and strengthen international competitiveness.
• Resilience criteria (sustainability, resilience, EU-preference) should be introduced into aid schemes where strategic and appropriate, to reinforce Europe’s clean industrial base.
To ensure Europe’s clean transition drives competitiveness and resilience, CISAF must deliver not just faster, but smarter, more bankable support.
🔗 Read more: Our open letter on a State Aid Framework to deliver on the Clean Industrial Deal
Proposal for changes to EU cohesion policy – On April 1, the Commission proposed extending cohesion policy support to large companies, funding energy infrastructure and decarbonization, and removing the 20% cap on funds for "STEP" projects like solar and wind.
Impact of the trade war on the global economy – Last month saw the global trade war intensify, impacting the entire economy, and the cleantech sector was no exception. In 2025 so far, at least $10.9 billion worth of US clean manufacturing projects have already been cancelled, compared to $1.8 billion in all of 2024. Trump’s plan to reinvigorate US manufacturing is not delivering the expected results. US tariffs on Chinese cleantech imports are inflating project costs, delaying deployments and undermining investor confidence in capital-intensive renewables.
European Parliament’s position on the upcoming EU budget – The European Parliament rejected the Commission’s proposal to merge several funds (LIFE, Innovation, etc.) into a single Competitiveness Fund. The Budget Committee’s report, adopted on April 23, calls for a significant increase in the post-2027 budget, with more direct management funding for climate action and major boosts for energy, transport, and digital infrastructure, prioritizing cross-border links. Negotiators also advocate for increased joint borrowing. The Parliament’s resolution was adopted in plenary on May 7th.
1. On 16 April, the European Commission opened a consultation on the Industrial Decarbonisation Accelerator Act, running until 9 July. The initiative targets energy-intensive industries and aims to speed up permitting, support priority low-carbon projects, and foster lead markets. Proposals include resilience and sustainability criteria, European content rules in procurement, an EU low-carbon product label, and potential trade defence tools. A legislative proposal is expected by late 2025.
2. On 15 April, the Commission launched consultations for the 2026 review of the EU Emission Trading System (specifically, EU ETS1 and the Market Stability Reserve) and the Innovation Fund, both open until 8 July. Additionally, it launched a consultation on the Modernisation Fund. The Commission wants to assess how both funds align with EU policy objectives and other programmes, as the EU revisits its broader funding architecture. The EU may merge various instruments into a single Competitiveness Fund. Results will feed into evaluation reports by late 2025/early 2026.
3. On 2 May, the Commission launched a consultation on the Sustainable Finance Disclosure Regulation (SFDR), open until 30 May. This initiative aims to simplify the sustainable finance disclosure framework, improve its usability, and strengthen safeguards against greenwashing.
KOMPAS VC, a Swedish early-stage VC[RD1] focused on industrial technology, has closed a €150M second fund. Launched in 2021, KOMPAS VC’s second fund - backed by a group of returning and new limited partners - aims to support up to 25 companies across Europe, the US and Israel focusing on three main areas: decarbonisation, productivity and “resilience”. The latter is defined as protecting businesses against global risks from supply chain disruptions to cyberattacks.
First Momentum, a German VC, which invests pre-seed tickets into technical founders, has raised €35M for its second fund. The VC aims to back B2B companies in areas like computing and AI, industrial startups and energy. First Momentum has already backed about 20 companies with this second fund — nearly 10x larger than its first fund of €4M in 2018. It aims to invest in up to 35 companies in total and writes first cheques between €200k-€1M.
Technique Solaire, a French independent producer of renewable energy serving the energy and agricultural transitions, announced that it raised €302M in senior debt financing. This financing will enable Technique Solaire to build a portfolio of solar photovoltaic installations comprising 341 projects with a total capacity of 240 MWp.
Enpal, a German scaleup which supplies green energy tech like solar panels and batteries to households, raised €110M in late-stage private equity to support product rollout and expansion into new markets. The round is the first equity raise for Enpal since 2023. In the meantime, the company had focused on securing debt facilities from banks to finance customers’ purchases.
Hy2gen, a German company which is designing, building, and operating green hydrogen, green ammonia, e-SAF, e-methane and e-methanol production plants using Power-to-X processes to support its clients in decarbonizing energy-intensive and strategic ‘hard-to-abate’ sectors, raised €47M in Growth Equity. It will allow it to accelerate the deployment of its portfolio of projects, to reach Final Investment Decision (FID) and prepare the construction phase.
Fairmat, a French company developing a patented tech called Infinity Recycling, which enables near-infinite recycling by retrieving intact carbon fibres, secured €51.5M in Series B funding combining €26.5M in equity and €25M in venture debt granted by the European Investment Bank (EIB). It will allow it to accelerate the industrialisation of its operations, scale internationally, and develop new products to achieve the first fully circular carbon fibre loop by 2027.
The International Energy Agency released its State of Energy Innovation 2024, offering a global snapshot of progress and challenges in clean technology development. In a nutshell, 2024 saw strong momentum in energy innovation, driven by rising public and private R&D (6% per year in real terms) and surging VC investment ($230 billion injected in energy start-ups since 2015), with China now leading in low-emissions patents (over 95% of its filings). Battery technologies, CCUS, and AI-driven energy solutions were key focus areas across regions. However, the report warns that scaling breakthrough technologies requires sustained policy support, global cooperation, and stronger backing for demonstration projects to ensure these innovations achieve market maturity.
• European Commission’s Quarterly Report on Electricity Markets – In 2024, renewables provided 47% of the EU’s electricity, a record high, up from 44% in 2023. The EU added 59 GW of renewable capacity, mainly from solar (+46 GW) and wind (+13.5 GW).
• IRENA’s Geopolitics of the Energy Transition – While renewables can operate long after being built, the speed of the energy transition depends on secure and resilient supply chains. The International Renewable Energy Agency’s (IRENA) latest report explores the geopolitical risks to supply chains, including export restrictions, resource nationalism, political instability, and market manipulation, and offers strategies to secure critical raw materials.
• Europe’s Climate Goals Require a Green Power Grid – In a new commentary for Project Syndicate, Emily Nixon, ESG and Finance Manager of VC noa, explores the best ways of modernising Europe’s electricity grid to cope with the increase in renewable energy loads, on which the success of its green transition depends.
• The EPP Competitiveness Deal for Europe – On April 30, the European People’s Party, the largest political group in the European Parliament, adopted a resolution supporting European preference in public procurement.
• Watt Matters – Podcast episode with Adèle Naudy-Chambaud (Schneider Electric, VP EU Government Affairs) on Industrial Decarbonisation’s Competitive Edge
• EUVC – Podcast episode with Norrsken’s Sara Kappelmark & Willem Vriesendorp on Embedding Impact at the Heart of EU Policy
• Switched On – BloombergNEF podcast episode on Trump’s First 100 Days: Tariffs, Turmoil and Policy
