Successive energy crises make it clear that Europe must rapidly reduce its reliance on imported fuels and accelerate the deployment of homegrown renewables. Scaling up the next generation of innovative renewable technologies (iRETs), such as geothermal, next-generation solar and wind, as well as ocean energy, is essential to complement established renewables and deliver a future-proof energy system.
The Renewable Energy Directive (RED III) includes a target requiring that 5% of new renewable energy capacity installed by 2030 be of innovative technology, driving a market demand in the range of 45 GW.1 Its revision is an opportunity to strengthen implementation and address key policy and funding bottlenecks slowing the industrial rollout of iRETs in Europe.

• Innovative renewables can deliver on Europe’s top energy priorities
• Energy security with home-grown power manufactured in Europe
• Lower electricity prices by increasing the share of low marginal cost penetration in EU electricity markets
• Drive decarbonisation and system flexibility by producing at different times than established renewables and directly displacing fossil fuels from the grid (both dispatchability and baseload benefits)

Boost the EU’s industrial competitiveness by scaling up technologies where Europe leads globally

Extend the innovation target to 2040 to unlock market visibility beyond 2030The first renewable targets drove the large-scale deployment of established renewables in Europe by providing long-term market visibility and predictable demand. The same success can be achieved with the next generation of renewables. The 5% innovation target created an equivalent market-pull mechanism, driving a market of circa 45 GW2 of innovative renewable deployment between 2024-2030, supporting the large-scale deployment of the next generation of renewables. A continuation of this market-pull mechanism in the 2030-2040 period is essential to achieve this.

Scaling up deployment of iRETs and related supply chains requires scaling up private investment. Clear market signals like the iRETs target are essential to convince private investors, utilities, and original equipment manufacturers (OEMs) to commit the upfront capital needed to drive manufacturing and deployment.

The first iRETs target has already proved to be effective in directing private investment towards the scale-up of European iRETs (successful funding round of CorPower Ocean €32 million raised,3 Siemens Gamesa’s plans to commercialise large-scale wind turbines,4 and Drift Energy’s £4.65 million funding round in 2024 to bolster green hydrogen producing vessels at sea,5 or Climeworks’ USD 162 million equity funding round in 20256).

The 5% target for innovative renewables reinforces Europe’s innovation objectives. Extending the target into the 2040 framework provides both long-term market visibility and the investment signal needed to unlock more investment and accelerate scale-up.

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