Eurelectric, the association representing the European electricity industry, has urged the European Commission to include the creation of an Electrification Bank within its upcoming Electrification Action Plan, which will be coordinated with the Clean Industrial Deal.
The proposed Electrification Bank would centralize expertise, funding options, and de-risking instruments, offering a one-stop shop managed by the Commission, supported by the European Investment Bank (EIB) and EU member states. Eurelectric argues that this approach would streamline the transition to electrification for industries across Europe.
According to Eurelectric’s position paper, the bank would not be a new investment firm but rather a comprehensive financing instrument aimed at consolidating existing EU and member state funding opportunities into a single access point. It should provide compensation for critical capital expenditures (Capex) and conditional support for operational expenditures (Opex) during the industries’ transition period.
The paper outlines that an Electrification Forum of industry experts would support the bank by analyzing sectors in need of assistance and identifying market barriers. Additionally, Eurelectric suggests that the allocation of funds should consider the different heat processes used by industries to ensure fair competition among projects. It proposes two separate auction calls: one for industries with low-to-medium heat processes (such as chemicals, food, and beverage) that can use mature technologies like heat pumps, and another for industries with high-temperature heat processes (such as cement, steel, and glass) that may require more innovative electrification solutions.
“Eurelectric believes the Electrification Bank would be the key to accelerating the transition to industrial decarbonization,” the paper stated. “By centralizing funding mechanisms and providing targeted support, the bank would facilitate the energy transition across various industrial sectors in Europe.”
The position paper also highlights the importance of EU-level auctions and the allocation of funds based on these processes. It suggests that funding should be drawn from several existing EU funding mechanisms, including the Innovation Fund, Horizon Europe, and the Recovery and Resilience Facility, as well as unspent funds under the Multiannual Financial Framework and Recovery and Resilience Facility.
Eurelectric also calls for the EIB’s involvement in the implementation of electrification projects, emphasizing its ability to reduce risk through budget guarantees, equity investments, and loans. The EIB could help de-risk long-term Power Purchase Agreements (PPAs) by providing guarantees to improve the creditworthiness of industrial buyers, which would address market barriers and maintain effective price signals on the electricity market.
In conclusion, Eurelectric asserts that the creation of an Electrification Bank would help drive the industrial transition to electrification, improving energy efficiency, reducing costs, and enhancing energy security in Europe. The proposed bank would serve as a vital tool in responding to the growing demand for clean energy solutions.
