Electrification and digitalization: Europe’s superpower
- Laurent Bataille
- 19 Jun 2026
- 7 min read
“Electrification and digitalization are not just technical tools, they are strategic levers that transform operations, unlock value, and secure Europe’s leadership in innovation and industrial efficiency. Execution now is the only path to a competitive, resilient, and sustainable industrial future.”
- Laurent Bataille, executive vice president, Europe Operations, Schneider Electric
- 99%of Europe’s businesses are SMEs
- 20%-30%of energy reduction for SMEs in adopting electrification and digitalization
- 32%aimed electrification rate in Europe by 2030
Small and medium-sized enterprises (SMEs) play a pivotal role in Europe’s economic landscape, accounting for 99% of businesses, employing over 70% of the workforce, generating over half of the region’s GDP. These enterprises drive innovation, create jobs, and act as key anchors for local economies.
At the same time, they are the first to suffer during an energy crisis due to tighter budgets, high energy dependency and a lack of financial capacity to hedge against energy price volatility.
The joint report, Electrification & Digitalization: Unlocking SMEs & Mid-Caps Competitiveness in Europe, by Solar Impulse Foundation, Schneider Electric, and the Schneider Electric Foundation, shows that electrification and digitalization offer SMEs the opportunity to cut energy consumption by 20-30%, reduce CO₂ emissions by up to 40%, and unlock billions in untapped value by 2030.
Together, these solutions allow businesses to optimize operations, lower costs, and strengthen resilience against energy price volatility and geopolitical uncertainties. They are not mere upgrades; they are strategic levers for transformation.
As Europe aims to increase its electrification rate from 21.3% to 32% by 2030, unlocking SMEs’ potential in the twin transitions of electrification and digitalization is critical for driving competitiveness, resilience, and energy sovereignty.
However, only 11% of SMEs have made significant investments in sustainability, and many face barriers preventing them from adopting solutions that could transform their operations. They are disproportionately exposed to challenges that limit their participation in the energy transition. Many lack access to affordable financing, face fragmented regulatory landscapes, and grapple with technical and workforce barriers.
Addressing these obstacles is essential to empower SMEs to play a greater role in Europe’s electrification and digitalization efforts.
“By combining finance with innovation, we can remove the barriers holding SMEs back from the energy transition. Service models supported by institutional guarantees enable small businesses to decarbonize without the burden of heavy upfront costs.”
- Bertrand Piccard, Founder of the Solar Impulse Foundation
High upfront costs and limited financingElectrification and digitalization often require significant upfront investments. SMEs, with smaller balance sheets and uncertain returns, perceive these costs as risky, limiting their ability to act. Moreover, many financing models are complex, making them difficult for SMEs to access without specialized teams.
Fragmented regulations and permittingRegulatory complexity across EU member states poses another challenge. The lack of harmonized standards for permitting, grid connections, and taxation creates uncertainty and delays deployment. This fragmentation makes it difficult for SMEs to scale solutions across borders.
Market exclusionSMEs typically buy electricity at retail prices, leaving them vulnerable to price volatility. Unlike larger enterprises, they often lack access to flexibility markets or aggregated purchasing agreements that could help mitigate these risks.
Skills gapsThe adoption of electrified and digital solutions requires skilled workers. SMEs often lack the technical knowledge and expertise needed to integrate and maintain these systems efficiently, slowing the pace of adoption.
Energy demand is rising faster than infrastructure can adapt. AI, climate pressure, and geopolitical uncertainty are intensifying this gap. As an energy technology partner, we strengthen resilience, accelerate deployment, and raise performance by unifying electrification, automation, and digital intelligence, driving a more efficient, resilient and sustainable future.
Our technology links devices, operations, and enterprise decisions to create dependable capacity, higher efficiency, and faster progress. And we are working with our partners, and the whole value chain, to implement solutions leveraging technology in the service of the energy transition. Energy technology can help turn the challenges faced by SMEs into opportunities.
Service-Based and Cooperative Business Models
Innovative business models can address cost barriers by shifting investments from capital expenditure (CAPEX) to operational expenditure (OPEX). Energy-as-a-Service and Digitalization-as-a-Service solutions allow SMEs to access advanced technologies through subscription models, removing the need for large upfront investments. Providers ensure professional operation and maintenance, guaranteeing efficiency gains and emissions reductions.
Cooperative purchasing agreements, such as aggregated power purchase agreements (PPAs), enable SMEs to pool demand and negotiate renewable energy contracts typically reserved for larger companies. These approaches lower costs, reduce risks, and provide SMEs with access to predictable energy pricing.
Making Electricity Competitive and Providing Strategic Public Funding
Policymakers are instrumental in building a framework to facilitate SMEs future-readyness and unlock their full potential in Europe’s energy transition. Making electricity competitive and cheaper than fossil fuels, by lowering electricity taxation, can create a more integrated market for electrification and digitalization. Streamlined permitting processes, standardized technical requirements, and tax reforms that make electricity more competitive would encourage SMEs to invest confidently.
Strategic deployment of public funds can further de-risk high-capital projects, enabling SMEs to adopt clean technologies without prohibitive costs. Instruments like public-private partnerships (PPPs) provide additional pathways to scale adoption by combining government resources with private sector expertise, accelerating modernization while aligning policy goals with SME needs.
Workforce Development
Training and upskilling programs are essential to address skills gaps. Governments should invest in technical training programs to address these skills, ensuring SMEs have the expertise to integrate and operate electrified and digital systems efficiently.
Collaborative partnerships between SMEs, vocational schools, and regional governments, such as those developed by the Schneider Electric Foundation, can help build technical capacity, turning workforce challenges into a source of local competitiveness.
Digital solutions amplify the gains of electrification by providing real-time insights, predictive control, and operational flexibility. IoT-enabled devices, AI-driven analytics, and remote energy management systems allow SMEs to monitor energy consumption, optimize operations, and participate in demand response markets.
Microgrids and smart charging solutions enhance resilience by enabling SMEs to manage energy independently during grid disruptions.
Case Study
Achieving zero-CO2 plant at Schneider Electric Molins de Rei factory, Spain
At the core of the facility’s transformation is a microgrid powered by 1,000 rooftop solar panels generating 670 MWh annually, coupled with a 216 kWh battery storage system. EcoStruxure Microgrid Operation and Advisor platforms dynamically manage energy production, consumption, and storage. These digital tools analyze real-time data, such as weather forecasts and energy prices, to optimize the plant’s energy usage and minimize grid reliance.
The microgrid covers 10% of the factory’s energy demand, reducing annual CO₂ emissions by 2,250 tons. Beyond environmental benefits, the factory saves approximately €127,300 annually on energy costs through a 20-year Power Purchase Agreement (PPA). This innovative “as-a-service” model has allowed Schneider Electric to spread costs over time, ensuring financial stability while achieving sustainability targets.
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The factory has also integrated electric vehicle (EV) charging stations into its microgrid. By leveraging dynamic load management software, the system balances EV charging demands with renewable energy generation, further enhancing cost savings and emissions reductions. Thanks to these advanced solutions, the facility achieved ‘Zero-CO₂ Factory’ status, demonstrating how industries can align sustainability goals with operational efficiency and create scalable, replicable solutions for SMEs across sectors
Source: Solar Impulse Foundation
Europe’s SMEs stand at a critical juncture. Electrification and digitalization present a unique opportunity to modernize operations, strengthen competitiveness, and reduce reliance on imported fuels.
Energy technology is an imperative for Europe’s industrial future. Looking ahead, scaling these solutions among SMEs will also enhance resilience against global shocks, strengthen the region’s energy sovereignty, and contribute to the continent’s energy transition.
Now is the time to act – a shared responsibility among industry leaders, policymakers, financial institutions and SMEs to break down barriers and accelerate adoption.
Technologies exist, business models are evolving, and policies are aligning to empower SMEs to participate actively in Europe’s energy transition. Find out more, via real-life case studies and actionable policy guidance, how collaboration and execution will pave the way for a cleaner, more competitive, and more resilient Europe.
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