Europe’s energy reckoning is turning into its biggest opportunity
There is an old saying that the best time to plant a tree was twenty years ago. The second best time is today. European energy has its own version of that story. The first real opportunity came roughly a decade ago, when the cost of solar power and batteries began to fall sharply and clean-energy technologies finally became investable at scale.
Europe had helped develop many of those technologies. Yet instead of turning that advantage into industrial leadership, it allowed much of the value chain to move elsewhere.
Northvolt has become the clearest symbol of that missed moment. But another window is opening now – and it looks very different from the first. This time, the momentum is not driven primarily by subsidies or climate targets. It is being created by something far more durable.
The numbers behind the first window were extraordinary. Between 2010 and 2023, the levelised cost of solar power fell by around 90%, while lithium-ion battery pack prices dropped by roughly 93%. It should have been Europe’s moment to build. Instead, it became Europe’s moment to buy.
China’s share of every stage of solar-panel manufacturing now exceeds 80% and more than 95% of the panels installed in the EU are imported. Europe, despite helping to develop the modern solar industry, has largely lost the ability to manufacture at scale.
Northvolt was supposed to be the exception. Once valued at $12 billion, it raised over $15 billion from the likes of Volkswagen, Goldman Sachs and Microsoft. Yet in 2023, Northvolt delivered less than 1% of its planned 16 GWh capacity and by March 2025, it had filed for bankruptcy. According to Bruegel, Northvolt’s struggles was a major early warning sign for Europe’s CleanTech industrial strategy.
The lesson is uncomfortable, but important – venture capital alone does not build factories. Europe had ambition, skills, technology and significant capital. What it lacked was the industrial scale-up infrastructure needed to take hard technology from a compelling deck to a functioning plant.
The cost of that missed opportunity is no longer theoretical. It is visible in the supply chains Europe no longer controls.
Technology has never been cheaper. Energy has never been more expensive.
This is the paradox that defines the decade. Just as the technologies needed to decarbonise became cheaper and more accessible than ever, energy itself turned into one of Europe’s biggest competitive disadvantages. According to reports, power on the continent now costs roughly two to three times more than in the United States.
Most people see that gap as a problem to be managed. I see it as one of the largest under-served markets in Europe. Every percentage point of additional cost creates demand for someone who can reduce it, through efficiency, storage, smarter grids or cleaner industrial processes. The pain of the buyer is the opportunity.
AI just rewrote the equation
For most of the past decade, energy was seen as a mature sector, essential and heavily regulated. AI changed that almost overnight. Compute needs power, and a lot of it: data-centre electricity demand in Europe is on track to grow by more than 70% before the end of this decade, putting even greater pressure on grids that are already aging and increasingly constrained.
The Commission itself now puts the bill for modernising Europe’s grids at close to €600 billion. You cannot software your way out of that. AI does not run on prompts. It runs on megawatts and copper. That single fact turns energy from a cost line back into one of the defining investment categories of the next ten years.
There is another force reshaping the market and it’s called geopolitics. Since 2022, energy has stopped being only an environmental issue. It has become a question of sovereignty, security of supply and control over the physical infrastructure of the economy.
These are exactly the areas classical VC once tended to avoid – too capital-intensive, regulated, and slow to scale. But a less predictable world has changed that logic. Resilience is no longer simply a cost of doing business. Increasingly, it is the business itself.
The second best time to act is now
I run a fund at the intersection of industry, energy and AI, so I will admit my bias. But I have rarely seen a configuration like this one: the technology at its cheapest, demand rising for reasons that have nothing to do with fashion, competition is still relatively limited, and public capital is prepared to take some of the first risk.
The first window rewarded whoever moved first, and Europe hesitated. The second will reward conviction – founders with real engineering and the patience to build where the map is still being drawn, and investors willing to back them before it is obvious.
Europe spent a decade financing software because it was easy. It is now being pulled back toward the things it is genuinely good at: industry, engineering, complex systems that matter. We did not plant the tree ten years ago. The second best time is now – and this time, Europe should hold on to what it grows.
