Electrification supports existing businesses rather than stimulating new innovations, industries and export opportunities.
The electrification of sectors currently dominated by fossil fuels will entail the creation of entirely new business models, innovation and the development of large, new industrial sectors in which Europe can take a global lead.
Electrification is transforming key parts of European society such as transport, buildings and industry and this wave of change is stimulating innovation and new business models in both the electricity and the affected sectors.
For example, innovation is taking place in the sphere of the electric heating and cooling of buildings and industry. Next-generation heat pump technology is being developed to provide ever more energy-efficient and comfortable solutions for regulating building temperature. Synergies between electrical heating and cooling of buildings and the variable nature of power production from renewable sources such as wind and solar power can be exploited to enable decarbonisation of the building sector . The flexibility of residential heat pumps could stimulate new retail business models in which heat pump activity is made to respond to fluctuations in the power market, to the benefit of the electricity system and the homeowner. Indeed, new ideas and business models can be seen in every segment of the value chain.
Electrification, and the changes it brings, provides an enormous potential for new industrial growth in Europe. An important example is the electrification of transport, which brings a completely new set of opportunities related to distributing, charging and storing electrical energy. This potential is clearly recognised by the EU, which has already identified the manufacture of batteries for EVs as a strategic opportunity to build up new industry in Europe, secure “high value jobs and increase economic output”. Indeed, it cites estimates of the European market potential of € 250 billion annually from 2025.
Nexant, “So Hot Right Now: Innovations in Heat Pump Technology | Nexant,” 2019, https://www.nexant.com/resources/so-hot-right-now-innovations-heat-pump-technology.
Innovation Origins, “Electric Heating Could Save CO2 Emissions - Innovation Origins,” 2019, https://innovationorigins.com/electric-heating-could-save-co2-emissions/.
David Fischer et al., “Business Models Using the Flexibility of Heat Pumps - A Discourse,” 12th IEA Heat Pump Conference, 2017.
European Commission, “Report from the Commission on on the Implementation of the Strategic Action Plan on Batteries: Building a Strategic Battery Value Chain in Europe,” European Commission, 2019, 17, https://ec.europa.eu/transparency/regdoc/rep/1/2019/EN/COM-2019-176-F1-EN-MAIN-PART-1.PDF.