Electrification, flexibility or both? Emerging trends in European energy policy

In Europe, low-carbon electrification is emerging as an overarching policy strategy to reduce greenhouse gas emissions. However, increasing shares of variable renewables and the rising electricity demand from sector coupling technologies such as electric vehicles or heat pumps make balancing electricity supply and demand more difficult. Demand-side flexibility could address this challenge, but several regulatory barriers and policy shortcomings remain. As technologies diffuse, open questions remain about whether and how policy support for low-carbon electrification addresses these technologies’ flexible operation in addition to their deployment. In this context, we examine policies that support the diffusion of novel technologies and those that, separately or in combination, support demand-side flexibility. Over a timespan of 9 years (2016–2024), our analysis covers four technologies across six jurisdictions: electric vehicles, heat pumps, hydrogen, and new industrial loads in Austria, France, Germany, Italy, Switzerland, and the European Union. We find that technology diffusion policies are increasingly combined with flexibility policies. At the same time, policy objectives and the number and types of policies vary significantly across countries. This points to different transition pathways depending, for example, on national electricity system characteristics and flexibility needs, and to different challenges in coordinating policies across sectors and technologies.