July 2026 was a month of complementary developments in energy and climate policy. On July 17, 2026, the European Commission jointly announced a revision of the Emissions Trading System and the Electrification Action Plan. On the same day, Germany began collecting stakeholder feedback on a new EEG draft aimed at making its renewable energy support system more market- and grid-oriented. In Turkey, capacity data published by TEİAŞ once again showed how critical grid connection has become for unlicensed generation investments. Meetings held under the Montreal Protocol in Bangkok from July 13–17, 2026 also pushed the transition to climate-friendly cooling technologies further up the international agenda.
These developments show that energy transition no longer simply means building more renewable power plants. Managing carbon costs, expanding electricity use across industry and transport, increasing grid capacity, making production and consumption more flexible, and renewing technologies with high climate impact have all become parts of the same transformation.
Europe’s New Era of Competitiveness in the Carbon Market
On July 17, 2026, the European Commission presented a targeted revision proposal for the EU Emissions Trading System. The regulation aims to align the system with the EU’s 2040 climate targets while also supporting the international competitiveness of European industry.
The new approach positions the carbon market not merely as a regulation that puts a cost on emissions, but as an investment tool that will help finance the transformation of industry. Through the Industrial Decarbonisation Bank, new investment incentive mechanisms, the Innovation Fund, and the Modernisation Fund, more resources are planned to be channeled into clean industrial projects.
The revision also revisits free emission allocations, the Carbon Border Adjustment Mechanism, rules for aviation and maritime transport, and the Market Stability Reserve. Emissions from municipal waste incineration are expected to be gradually brought within the scope of the system over time.
A larger share of the revenue generated from the carbon market is expected to be directed toward energy efficiency, renewable energy, industrial electrification, low-carbon hydrogen, and carbon capture technologies. In this way, the pressure that carbon costs place on industry is intended to be transformed into a financing cycle that supports clean production investments.
These changes also matter for Turkish companies that export to Europe. Firms operating in energy-intensive sectors such as iron and steel, aluminum, cement, and fertilizer will, in the coming period, compete not only on product price and quality but also on the carbon intensity of their production.
The use of renewable electricity, energy efficiency, emissions measurement, and low-carbon production technologies are becoming, for Turkish industry, not just an environmental preference but a fundamental requirement for export sustainability.
Europe’s 2040 Electrification Drive
The Electrification Action Plan, also published by the European Commission on July 17, 2026, envisages raising electricity’s share of the EU’s final energy consumption to an indicative 46 percent by 2040.
Although roughly 70 percent of electricity generation in the EU comes from clean, domestic sources, electricity’s share of total final energy demand has remained at around 23 percent in recent years. This gap shows that the transformation in electricity generation has not been reflected at the same pace in industry, buildings, and transport.
The Electrification Action Plan aims to close this gap. Widespread adoption of heat pumps, increased use of electric vehicles, replacing fossil fuels with electricity in industrial processes, rapid rollout of smart meters, and expanding energy storage capacity are the plan’s key priorities.
The Commission projects that reaching a 46 percent electrification level could reduce the EU’s fossil fuel import bill by roughly 260 billion euros annually by 2040. This target shows that electrification is not only a climate policy but also a policy for energy security and economic competitiveness.
However, greater electricity use will not be achieved simply by bringing new electric devices to market. Electricity needs to become more economically attractive relative to natural gas, oil, and other fossil fuels. For this reason, a review of taxes and grid costs on electricity, reducing consumers’ upfront investment costs, and developing suitable financing tools are planned.
Growing electrification will also place new pressure on power grids. Electric vehicles, heat pumps, and industrial electrification will increase consumption, while the variable nature of solar and wind generation will create a greater need for flexibility in the system.
Energy storage, demand-side participation, digital grid management, and smart meters therefore stand out as complementary elements of electrification policy.
From Turkey’s perspective, this transformation in Europe could create significant export opportunities for companies producing transformers, cables, switchgear, electrical panels, power electronics, smart meters, batteries, and electric vehicle charging systems.
Germany’s Shift from Subsidies to a Market- and Grid-Oriented Model
Germany’s Federal Ministry for Economic Affairs and Energy shared a draft amendment to the EEG, restructuring the renewable energy support system, in July 2026. The Ministry began a consultation process with the federal states and industry organizations on July 17, 2026. It was specifically noted that the draft has not yet been finalized within the federal government.
The regulation’s core approach is to better align the growth of renewable capacity with grid expansion and to make the support system more cost-efficient.
The significant drop in electricity prices during periods of high solar and wind generation in Germany, including negative prices in some hours, along with curtailment of production due to grid bottlenecks, is driving a reassessment of the current incentive model.
Under the new framework, small-scale solar systems would be more exposed to market prices, and support durations and direct marketing mechanisms would be redesigned. At the same time, new solar investments developed together with storage systems would be encouraged.
The Ministry’s statement particularly emphasizes that solar generation and storage need to be designed together in a way that delivers system benefits. This approach shows that renewable generation will no longer be evaluated solely on annual output, but also on the flexibility it provides to the grid.
A market-oriented model could increase the economic value of energy storage systems. Rather than selling electricity directly during low-price hours, solar producers could store it and sell when demand and prices are higher.
Smart inverters, energy management software, aggregators, and virtual power plants could also help small and medium-sized producers participate more effectively in the market.
Germany’s example shows that, in this new phase of renewables, incentives are not disappearing entirely, rather, support is being redesigned around the needs of the system. Capacity growth, grid expansion, energy storage, and market participation are increasingly needing to be planned together.
TEİAŞ Data Shows the Grid Limit in Unlicensed Generation
Unlicensed electricity generation in Turkey continues to grow, driven in particular by industrial facilities’ self-consumption needs and efforts to reduce energy costs.
According to data published by TEİAŞ in July 2026, a total of 833.59 MW of capacity remains available for unlicensed generation projects that can connect at the distribution level. Of the 1,192 transformer points assessed, 598 had no available capacity, while 594 had connection space of varying sizes.
TEİAŞ had launched the distribution-level allocation process with its first capacity table published on March 2, 2026. In its announcement dated May 26, 2026, the institution shared the evaluation results for applications made at the transmission voltage level, along with the remaining regional capacities.
The fact that the remaining capacity is spread across many transformer substations, mostly in small amounts, shows that investors cannot develop projects simply by looking at the nationwide total figure. Strong solar potential in a region does not mean that sufficient connection capacity is also available there.
The load status of transformer substations, existing generation facilities, the technical limits of distribution and transmission lines, and regional consumption profiles are becoming decisive factors in new connection decisions.
This picture shows that the core issue facing renewable energy investments in Turkey is increasingly shifting from resource potential to grid capacity. Investments in new transformer substations, transmission lines, and distribution infrastructure need to be accelerated alongside new generation facilities.
Energy storage systems can help make better use of connection capacity. Storing part of the electricity during hours of high solar output can reduce the instantaneous power fed into the grid and strengthen the balance between production and consumption.
However, storage alone cannot solve the grid problem. Connection criteria, grid services, digital control systems, and market participation mechanisms need to be developed together.
The approach to project development is also changing for investors. Alongside land, financing, and production forecasts, connection capacity, consumption profile, storage needs, and energy management solutions must now be evaluated together from the earliest stage of a project.
Transformation Is Not Happening in the Electricity System Alone
While carbon markets, electrification, and grid capacity sit at the center of energy transition, climate policy is not limited to electricity generation and consumption systems alone. The climate impact of gases used in cooling, air conditioning, health, and cold chain sectors also forms an important part of the global transition agenda.
The HFC Transition After the Montreal Protocol
The 48th meeting of the Montreal Protocol’s Open-Ended Working Group was held in Bangkok from July 13–17, 2026. The meeting addressed the gradual reduction of hydrofluorocarbons, the life-cycle management of refrigerants, atmospheric monitoring, and financing for developing countries.
One of the meeting’s most significant items was the replenishment of the Montreal Protocol’s Multilateral Fund for the 2027–2029 period. Technical assessments estimated that developing countries may need roughly 1.2 to 1.7 billion dollars in financing over this three-year period to meet their obligations.
While HFCs are not among the substances that directly deplete the ozone layer, they have a significant impact on climate change due to their high global warming potential. Under the Kigali Amendment, these gases are targeted for gradual reduction on a global scale.
The transition directly affects the cooling, air conditioning, heat pump, cold chain, automotive, food, retail, and health sectors. Moving to next-generation refrigerants requires more than simply changing the gas used; it also requires renewing compressors, heat exchangers, safety systems, maintenance procedures, and technical staff training.
Recovering refrigerants at the end of their service life, purifying substances that can be reused, and safely disposing of gases that cannot be recovered are among the critical elements of this transition.
Turkey needs to develop its recovery, registration, traceability, and licensed disposal infrastructure as part of this process. Low-global-warming-potential refrigerants, high-efficiency cooling systems, leak detection technologies, and gas recovery equipment could represent significant investment areas.
The transition of metered-dose inhalers used in the health sector to alternatives with lower climate impact was also one of the meeting’s notable topics. It was emphasized that drug prices, supply security, and patients’ access to treatment need to be protected as this technological transition takes place.
This shows that climate policy needs to be evaluated not only through technical emissions-reduction targets, but also through the social and economic consequences of the transition.
New Priorities in Energy Transition
The developments announced in July 2026 show that energy transition is moving from capacity growth toward a more holistic system transformation.
As the European Union restructures its carbon market to support industrial investment, its electrification target signals that electricity demand and grid needs will rise rapidly. Germany is preparing to redesign its renewable energy support around market, storage, and grid integration. Meanwhile, the connection data announced in Turkey shows that renewable energy growth needs to be backed by grid investment.
The transition of refrigerants is also increasing the importance of energy efficiency, climate technologies, and circular resource management within the energy sector.
Going forward, successful energy projects will be those that bring together production capacity with storage, grid flexibility, digital energy management, carbon measurement, and efficiency solutions.
The Transformation of the Energy Sector Comes Together at ICCI
The shift underway — from carbon markets to electrification, from renewable energy incentives to grid capacity, and from energy storage to low-carbon cooling Technologies is reshaping the sector’s investment priorities.
For energy producers, industrial companies, investors, technology providers, financial institutions, and public agencies, the core need of this new period will be solutions that adapt to changing regulations, reduce energy costs, and add flexibility to the system.
ICCI, the International Energy and Environment Fair and Conference, continues to bring industry professionals together around the latest developments in renewable energy systems, energy storage, electrical equipment, smart grids, digital energy solutions, hydrogen, e-mobility, energy efficiency, and environmental technologies.
Join us at ICCI on January 20–22, 2027 to explore the new investment areas of energy transition, meet the sector’s decision-makers, and build the collaborations of the future.