The EU Council adopted its general approach to the European Grids Package on June 26, with 22 member states backing legislation aimed at cutting grid connection delays and accelerating renewables integration. Ministers signed Europe's first tripartite energy storage agreement the same day, targeting 30-35 GW of new capacity by 2028. Both decisions landed as a heatwave pushed Belgian electricity to €257/MWh and forced a French nuclear reactor offline: a live test of the grid fragility the legislation is meant to fix.
Energy Transition
The grid buckles under Europe's record June heatwave
A heatwave swept across Europe in the final week of June, exposing a grid designed for a cooler climate. Belgium's electricity market hit €257.55/MWh on June 24, its highest since November 2025. France's RTE forecast demand at around 58 GW for the week. Reactor unit two at the Golfech plant near Toulouse shut down because the Garonne was too warm to cool it, with unit one already offline for planned maintenance.
Bruegel senior fellow Simone Tagliapietra described what he called a "triple squeeze": cooling demand rises sharply, power plants and grids become less efficient in the heat, and nuclear or thermal plants cut output because their cooling water exceeds temperature limits. With air conditioning in only 3% of German homes and 5% of UK homes, demand from cooling is still near its floor as European summers intensify. (MIT Technology Review)
EU Council backs Grids Package, five member states hold out
Twenty-two of 27 EU member states adopted the Council's general approach to the European Grids Package on June 26. The position centralizes cross-border grid planning and accelerates permitting, with new benefit-sharing requirements for communities near new infrastructure. Trilogue negotiations with the European Parliament can now begin, with a final agreement expected before the end of 2026.
Five member states did not back the position, and SolarPower Europe said the text that passed does not go far enough. The trade body pointed to missing provisions on digital permitting, clear grid connection timelines, and explicit support for non-fossil flexibility such as storage and demand response. Without these, it argued, congestion hours will keep setting market-wide electricity prices and gas dependency will persist. The 375 GW of renewable projects currently stuck in European grid queues is the backlog this legislation must clear. (EU Council)
Europe's first storage tripartite pact targets 35 GW by 2028
The same session produced the EU's first tripartite energy storage agreement, bringing together 22 governments, storage developers, renewable energy companies, energy-intensive industries, and banks. The target is 30-35 GW of new storage capacity between 2026 and 2028, building toward 200 GW by 2030 from around 55 GW installed at the start of this year.
Storage-backed PPAs are set to grow from 1.5 GW to 4.5 GW by 2028, and renewables co-located with storage should reach 20% of new installations from 5% today. The EIB Group and EBRD committed to expand financing, including a potential extension of the EIB's €500 million PPA pilot to include storage manufacturers. SolarPower Europe welcomed the agreement but called for a dedicated Battery Storage Action Plan, noting that no clear mechanism yet exists to get from current deployment to 200 GW. (TaiyangNews)
Climate Tech
Stegra closes €1.4 billion for Europe's largest green steel plant
Swedish startup Stegra completed a €1.4 billion financing round on June 24, led by a Wallenberg Investments consortium. The round follows an in-principle agreement from April and funds continued construction of Stegra's hydrogen-direct-reduced-iron plant in Boden, northern Sweden. The facility uses renewable electricity to produce green hydrogen, which then replaces coal in reducing iron ore before it becomes steel.
Iron and steel production accounts for roughly 7-8% of global CO₂ emissions and is among the hardest industrial sectors to decarbonize. The Stegra close is a useful contrast to what's happening in Germany, where rival Salzgitter recently paused its own SALCOS green steel project for three years, citing weak steel markets and high energy costs. Industrial decarbonization at scale needs Stegra-level capital and market conditions Salzgitter doesn't yet have; right now not everywhere has both. (ESG News)
EU Green Taxonomy loses its first court challenge
The EU General Court annulled the Commission's exclusion of business aircraft manufacturing from the Green Taxonomy's transitional activities on June 24. In Dassault Aviation v. European Commission (T-77/24), judges found that the Commission had applied an operational emissions metric to a manufacturing activity and failed to conduct adequate sector-specific analysis on sustainable aviation fuels.
The ruling is the first to strike down a Green Taxonomy delegated act. It establishes that the Commission cannot exclude an activity without analysis consistent with its own methodology, raising the bar for how taxonomy exclusions must be argued and documented. The Commission has two months and ten days to appeal. The case opens potential challenges to other taxonomy exclusions across industrial sectors where the Commission's reasoning may have followed a similar pattern. (GlobeNewswire)
Policy & Regulation
EU Energy Council addresses Hormuz alongside grid votes
At the June 26 Energy Council, ministers took up the ongoing impact of the Strait of Hormuz closure on European gas supply in the same session as the Grids Package vote. European natural gas had fallen to around €40-42/MWh by late June from a March peak above €60/MWh, as US-Iran ceasefire talks progressed and shipping through Hormuz showed signs of normalization.
Ministers also held a first exchange of views on the post-2030 renewable energy framework, the Commission's coming proposal to align energy targets with the 2040 climate law adopted in April. European energy governance rarely separates these two pressures: near-term supply security and long-term decarbonization are funded from the same budgets and decided by the same ministers. (IEU Monitoring)
Science
Attribution science: this heatwave could not have happened in a 1970s climate
A rapid attribution analysis published June 26 by World Weather Attribution found that the current European heatwave is the most severe on record across the study region and that such conditions would have been "virtually impossible" in a pre-warming climate. Daytime maximum temperatures are now warming at roughly triple the rate of global average warming; nighttime temperatures at about double. Even in 2003, the event that reshaped European heat emergency planning, temperatures like those seen this week would have been ten times less likely.
The researchers called the rapid phase-out of fossil fuels "critical" to avoiding further acceleration. For grid planners and utilities, the study quantifies something that European electricity markets have been pricing in real time this week: the design assumptions of existing infrastructure are no longer conservative, they are wrong. (World Weather Attribution)
One to Watch
UK-EU summit, July 22: ETS merger and energy market linkage
The UK-EU summit scheduled for July 22 is expected to include a decision in principle to link the UK and EU Emissions Trading Systems, creating what would be the world's largest carbon market by volume. The UK ETS covers roughly 130 MtCO₂e per year; the EU ETS covers around 1.4 billion tonnes. Linkage would simplify compliance for cross-border businesses and raise competitive pressure on UK industry to match European carbon pricing.
The summit falls one week after the Commission's ETS revision proposal is due on July 15, which will recalibrate the EU cap against the 2040 target and integrate certified carbon removals. Watch whether the revision and the UK merger are designed to be compatible from the start, or whether they produce overlapping timelines and conflicting signals for carbon markets heading into co-decision.