The European Union has adopted a strategic course aimed at building its own production capacity in key technology sectors, including energy technologies. This policy is embodied in the Net-Zero Industry Act (NZIA), which redefines the rules of competitiveness, inter alia, in the renewable energy sector.
In tenders, auctions and public support schemes, price is no longer the sole criterion for selecting a supplier. The NZIA imposes on contracting authorities and entities administering support schemes an obligation to evaluate bids also on the basis of the origin of the technology and other criteria specified in the Regulation.
This change is systemic in nature and will affect all market participants – both producers and purchasers of energy technologies. In this article, I analyse how the new EU regulations will translate into business practice for companies operating in the European market.
What is the NZIA?
The NZIA[1] establishes an EU framework for scaling up the production of net-zero technologies, accelerating permitting, stimulating demand and fostering innovation.
The objective is both highly specific and highly ambitious: by 2030, at least 40% of the EU’s deployment needs are to be met by production carried out within Member States.
The Regulation covers a broad range of technologies, including, inter alia: photovoltaic panels, wind turbines, batteries and energy storage systems, heat pumps, hydrogen technologies, biomethane, CCS, grid technologies (including EV chargers and components enabling grid digitalisation), nuclear technologies and alternative fuels.
Anyone buying or selling any of these solutions should be aware that the NZIA may influence procurement and tendering decisions – and to a genuinely far-reaching extent.
The NZIA changes the rules of competitiveness
The most far-reaching changes introduced by the NZIA concern public procurement and renewable energy auctions. It is here that their impact will be felt most acutely.
New mandatory criteria in public tenders
The NZIA introduces mandatory environmental requirements in public procurement for technologies within the catalogue, along with a “resilience” mechanism designed to limit excessive concentration of supply from third countries.
What does this mean in practice? It means that a contracting authority must take into account:
- Component origin – knowing who is who in the supply chain
- Supplier resilience – verifying that procurement is not overly concentrated outside the EU
- Environmental requirements – including the carbon footprint of the product and the production process
- Cybersecurity and data security – of particular importance for grid infrastructure
Non-price criteria in renewable energy auctions
In the case of renewable energy auctions, Member States are required to apply pre-qualification criteria (including, inter alia, cybersecurity criteria) as well as resilience and balance criteria with minimum weightings in the evaluation of bids.
This means that the lowest-priced bid may not win an auction if it fails to meet the relevant quality thresholds and origin requirements.
In the case of support schemes for companies and households – such as grants, tax reliefs or state incentives – Member States are required to design mechanisms in such a manner as to promote products with a high contribution to sustainability and energy resilience.
When do the new provisions take effect?
The Regulation entered into force on 29 June 2024; however, the provisions concerning renewable energy auctions (Article 26) and other public interventions (Article 28) do not apply until 30 December 2025.
The provisions concerning environmental requirements (Article 25(1) of the NZIA) apply until 30 June 2026 only to central purchasing bodies in respect of procurement with a value of at least EUR 25 million. After that date, the scope of application of these provisions will be extended to all contracting authorities. This means that non-price criteria – such as supply chain resilience, cybersecurity, environmental requirements and social clauses – will gain in prominence in virtually every procurement procedure concerning net-zero technologies.
What does this mean for companies purchasing technologies?
Companies procuring energy technologies through public procurement procedures or renewable energy auctions face the necessity of reviewing their procurement models. The key questions concern suppliers’ capacity to meet the new qualification criteria, the compliance of contract structures with the requirements of the NZIA, and the organisation’s readiness for supply chain audits.
What does this mean for companies selling technologies in the EU?
The Regulation is structured in a manner that systematically restricts access for non-EU producers to public procurement markets and renewable energy auctions, with particular emphasis on strategic segments.
Although the NZIA does not establish an absolute prohibition on non-EU entities, in practice it may lead to the exclusion of bids where prospective suppliers are unable to demonstrate compliance with resilience, origin and non-price criteria.
Technology suppliers, regardless of their place of production, should therefore take action now to:
- Map their supply chain against NZIA requirements
- Assess the risk of exclusion from their most commercially significant market segments
- Consider relocating production or establishing strategic partnerships with EU-based entities
How can we help?
The NZIA is a regulation that is set to have a fundamental and lasting impact on the conditions of competition in the EU market, particularly in segments linked to public support schemes. It is, without doubt, already changing the rules of the game.
We advise companies on both sides of the market – buyers and sellers of energy technologies alike – assisting them with:
- Assessing the legal and regulatory risks arising from the NZIA
- Adapting contract structures to the new requirements
- Preparing for tenders and renewable energy auctions in compliance with the new criteria
- Planning supplier and supply chain strategy
Have questions? Contact us
[1] Regulation (EU) 2024/1735
