Two years ago, industrial decarbonization was evolving in a highly dynamic and optimistic context. Numerous offerings around renewable heat had been structured to accelerate their development with the support of major investment funds (creation of EffiWat, Sofiac’s entry into the French market and fundraising, creation of Powesco and fundraising, DWS acquiring a stake in Perfesco, Kyotherm’s fundraising, etc.). In contrast, 2025 can be described as the “year of doubts” for industrial decarbonization, particularly regarding its main challenge: industrial heat.
This situation is understandable, as several contextual factors collide for industrial players, greatly complicating their ability to plan strategically and blurring the approach to follow to deliver the decarbonization imperative.
As we move into 2026, we are only a short step away from 2030, which is the first major milestone to assess the success or failure of public decarbonization commitments. Success now depends on the proactive deployment of projects tackling thermal uses on a much larger scale, whereas “quick wins” (greening electricity via Guarantees of Origin, energy efficiency with short payback periods, pilot low-carbon heat projects benefiting from subsidies, etc.) were previously sufficient to demonstrate progress.
However, just as companies need to accelerate on this “final stretch” through long-term commitments (contracts, investment decisions), the political and macroeconomic context is struggling more than ever to provide a clear direction:
- The wavering of European decarbonization ambitions has cast doubt on the firmness of future rules and penalties for non-action. The European Commission’s decision to roll back the flagship measure banning internal combustion engines for new vehicles by 2035 is a highly symbolic example at the end of this year.
- The persistently low gas prices, even in long-term projections, have raised doubts about the economic relevance of low-carbon solutions, despite ongoing geopolitical tensions and the not-so-distant memory of the energy crisis.
- The context of deindustrialization is weighing on project financing capacities.
Nevertheless, many positive signals exist, and 2026 must mark the return to a positive dynamic for low-carbon industrial heat:
- Numerous industrial electric boiler projects are under development, along with a few electrothermal storage projects (Kyoto’s HeatCube solution under construction at KALL Ingredients in Hungary, Epyr’s project at a WEPA site in France). We anticipate a strong acceleration in the electrification of industrial heat in France and Europe, notably through gas/electricity hybridization, which enables profitable business models for (partial) decarbonization by leveraging flexibility services for the power grid and market arbitrage opportunities in a context of persistent volatility.
- Low-carbon heat solutions such as geothermal energy, whose potential remains unevenly exploited depending on geography, should also gain traction, either directly on industrial sites or via delivery through urban heating networks (which play an important role for industrial consumers in certain countries, notably in Eastern Europe, where Veolia Group has announced strengthened ambitions).
Beyond technologies, 2026 will also be critical for identifying and promoting solutions to still-complex bottlenecks, both through public authorities and the investor/financier ecosystem: speed and capacity of grid connections for electrification, support for project business models, adaptation of investment and financing players to the “IRR/risk” profile of these new and complex projects, risk pooling or diversification of counterparty risk, etc. The outcome in the first half of 2026 of the first European auction session for decarbonized industrial heat projects will be a milestone to watch closely.
E-CUBE has developed strong expertise on the topic of industrial heat through its recent projects and the experience of its consultants. We would be delighted to discuss these market perspectives and opportunities with you. Please feel free to contact the experts below to schedule a conversation on the topic.
