Tech-driven REPowerEU needs a boost says McKinsey

Success for the EU’s REPowerEU strategy will make Europe’s buildings more energy efficient and reduce Europe’s reliance on Russian fossil fuels, but McKinsey says tech scale-up is needed to reach targets.

According to an analysis by McKinsey and Company, Europe still lacks the capacity to deliver the technology necessary to reach the RePowerEU targets at the current production and installation rates.

With increased capacity also comes an increase in the workforce needed to build, install, and maintain the technology. By 2030, the EU will need more than 1 million solar workers to meet higher renewable energy targets set by the REPowerEU plan.

The European Commission also estimates that 750,000 more installers will be needed to increase heat pump production and deployment, and at least 50% of existing installers will have to be reskilled to work with heat pumps.

While possible to overcome, each challenge threatens to slow the transition, and will need careful planning by stakeholders to ensure these barriers are overcome.

Twin approach to sustainability

Even before Russia’s invasion of Ukraine exposed Europe’s reliance on Russian energy, the European Union had already embarked on two major strategies towards a more sustainable future.

The first is the European Green Deal which seeks to make Europe the first climate-neutral continent by 2050. The second is the legislative package “Fit for 55,” which sets the EU’s target to decrease greenhouse gas emissions by 55% by 2030.

In February 2022, the European Commission also unveiled its REPowerEU energy plan, which is based on three core elements: reducing the demand for energy by promoting energy efficiency, diversifying Europe’s energy supply away from Russian energy, and accelerating Europe’s transition towards clean energy using a combination of investments and legislative reforms.

In its plan the European Commission identified saving energy as the quickest and cheapest way to address Europe’s energy crisis, and it views the building and construction industry as critical to solving the energy dependency puzzle.

Built environment potential

Buildings in Europe account for 40% of the EU’s energy consumption and 36% of greenhouse gas emissions. According to Eurostat data, 85% of European buildings were built before 2000, and 75% have poor energy performance, making them consume more energy.

Therefore, the REPowerEU plan proposes a significant increase in energy-efficient building renovations and renewable energy technologies such as solar technology and heat pumps.

The REPowerEU plan and the ‘solar rooftop initiative’ introduce a legal obligation, rolled out in phases, to install solar panels on all new public, commercial buildings, and residential buildings by 2029. The goal is to generate over 320 GW of solar photovoltaic energy by 2025 (more than double the power generated in 2020) and almost 600 GW by 2030.

If successful, solar energy will become the largest electricity source in the EU by 2030, with more than half of the share coming from rooftops.

The REPowerEU plan also proposes doubling the current rollout rates of heat pumps in buildings across the European Union, with the specific target of adding 10 million new hydronic heat pumps over the next five years.

In buildings heat pumps are used for heating, hot water, and in some cases cooling. They work by extracting and upgrading ambient energy (heat or cold from outdoor air and surface or sewage waters) or geothermal energy – heat or cold from the ground or groundwaters – rather than producing heat.

Structural challenges

Achieving the ambitious goals for the transition to energy-efficient buildings outlined in the REPowerEU is unlikely to be simple and presents several challenges.

One such challenge is purely structural and results from the vast, old, poorly insulated buildings across the bloc.

Reaching modern insulation standards will require significant work; and millions of property owners must make substantial investments with over 222 million residential and 12 million commercial buildings.

Additionally, Europe’s buildings don’t often get a proper refurbishment. The European Commission estimates that only about 12% of buildings undergo energy-performance renovations yearly, but this primarily concerns light and affordable insulation.

Annually only 0.2% of dwellings undergo significant changes to improve energy efficiency – works that reduce energy consumption by at least 60%. The same can be said about heat pumps, as about two-thirds of dwellings in Europe still use natural gas or other fossil-fuel-based heating systems.

Another challenge identified concerns the difficulties of scaling capabilities to deliver on the Commission’s targets while encouraging citizens to adopt these improvements.

[By Betta DeGaetano I Edited by Brian Maguire | Euractiv’s Advocacy Lab ]

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