The flexibility gap is highlighted in the 2023 Energy Transition Readiness Index (ETRI) produced by the Association for Renewable Energy and Clean Technology (REA) which this year is co-sponsored by Eaton, the global intelligent power management company, and Foresight Group, the sustainability-led infrastructure and private equity investment manager.

The study on which the index is based compares the readiness of 14 national electricity markets to make the transition away from fossil fuels and, amongst other thing, it explores the flexibility gap between each country’s target for variable renewable energy production by 2030, and the amount of associated flexibility the country would need by then.

On this basis, Germany and the UK face the biggest flexibility gap by 2030, with Denmark, Greece, Ireland, the Netherlands, and Spain also challenged. Only Norway, Finland, and Sweden look set to bridge the gap with ease - their gap is smaller, partly because they have access to lots of hydropower but also because they have well-established flexibility markets.

France and Italy face a smaller gap than some neighboring countries but nevertheless must do more to attract the investments in flexibility they will need by 2030. Switzerland faces a relatively small gap thanks to high levels of flexible hydropower, but its regional governance structure means poor coordination of policies to deliver all the flexibility needed. Poland is in the early stages of energy transition, with strong ambitions but facing challenges in funding the necessary investments to improve grid access for flexibility providers.

There is much good news for Europe in this detailed and fascinating survey, with the index also encompassing sub-rankings for the socio-economic and technological factors that support or impede investments in the energy transition. Increasing the level of support for enabling technologies, such as EV charging infrastructure and smart meter rollout is one of the ways that countries can boost flexibility, and therefore help to close the flexibility gap, and there is evidence that some countries are seizing this opportunity.

Both Germany and the UK demonstrate the greatest improvements in ‘investor attractiveness’ since the annual survey started in 2019, showing that with the right policy environments both countries have the potential to attract investment in the energy transition, bridge the flexibility gap, and deliver high-renewable grids.

In the Index, each country is awarded an overall rating between 1 and 5. No country achieved the highest rating of 5 in 2023, and other countries were clustered within each ratings band, so positions within the band are reported for the first time this year.  Norway scored highest, with a 'high 4' closely followed by Denmark, Finland and Sweden with a 'low 4'. France, Ireland, the Netherlands, and the UK scored a 'high 3' followed by Germany, Italy and Spain with a 'low 3'. Greece and Switzerland scored a 'high 2' which was slightly higher than Poland's 'low 2' but all countries are making some progress because no country scored the lowest ranking of 1.

Cyrille Brisson, vice president sales and marketing, EMEA, Eaton, said: “Business enthusiasm for the energy transition is growing, spurred on by concerns about carbon emissions, energy security and price volatility. Governments must respond to this with policies that will deliver the fair, transparent, and easily accessible markets needed to attract private investments in demand-side flexibility and make the energy transition accessible and affordable to all. Stability and predictability will boost investor confidence in projects that can often have quite lengthy payback periods.”

Chris Tanner, partner at Foresight Group and chair of the REA Finance Forum, said: "It is encouraging to see the progress observed across various European countries in both the renewables build out and the associated flexibility requirements. These improvements underscore that, with the right policy environments, the UK, and Europe as a whole, have the potential to attract significant investment in the energy transition. This, in turn, positions them to bridge the flexibility gap and successfully deliver high-renewable grids by 2030, showcasing a promising trajectory for the future of sustainable energy."

Frank Gordon, director of policy at the REA (Association for Renewable Energy and Clean Technology), said: “It is welcome to see all countries assessed in ETRI 2023 have ambitious decarbonization targets. We now need to see significant action to remove the barriers facing our industry across the UK and Europe: proper long-term planning; prioritizing and accelerating market reforms; and urgently addressing current investment barriers - all are desperately needed to help put us on the right path.”

REA’s ETRI 2023 report can be read here in full: eaton-2023-es-emea-renewables-en-energy-transition-readiness-index.pdf

About the REA: The Association for Renewable Energy and Clean Technology (known as the REA) is the UK’s largest trade association for renewable energy and clean technologies with around 550 members operating across heat, transport, power, and the circular economy. The REA is a not-for-profit organization representing fourteen sectors, ranging from composting, biogas and renewable fuels to solar and electric vehicle charging. Membership ranges from major multinationals to sole traders. For more information, visit: www.r-e-a.net

About Foresight: Foresight Group was founded in 1984 and is a leading listed infrastructure and private equity investment manager. With a long-established focus on ESG and sustainability-led strategies, it aims to provide attractive returns to its institutional and private investors from hard-to-access private markets. Foresight manages over 400 infrastructure assets with a focus on solar and onshore wind assets, bioenergy and waste, as well as renewable energy enabling projects, energy efficiency management solutions, social and core infrastructure projects and sustainable forestry assets. Foresight Capital Management manages four strategies across seven investment vehicles. Foresight operates in eight countries across Europe, Australia, and United States with AUM of £12.1 billion*. Foresight Group Holdings Limited listed on the Main Market of the London Stock Exchange in February 2021 and is a constituent of the FTSE 250 index. https://www.foresightgroup.eu/shareholders

*Based on unaudited AUM as of 30 September 2023.

About Eaton: Eaton is an intelligent power management company dedicated to improving the quality of life and protecting the environment for people everywhere. We are guided by our commitment to do business right, to operate sustainably and to help our customers manage power - today and well into the future. By capitalizing on the global growth trends of electrification and digitalization, we’re accelerating the planet’s transition to renewable energy, helping to solve the world’s most urgent power management challenges, and doing what’s best for our stakeholders and all of society. Founded in 1911, Eaton is marking its 100th anniversary of being listed on the New York Stock Exchange. We reported revenues of $20.8 billion in 2022 and serve customers in more than 170 countries. For more information, visit www.eaton.com. Follow us on Twitter and LinkedIn. 

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