Grid Reliance as an Industrial Risk: The Case for On-Site Heat Generation
Overview
- On 28 April 2025, the Iberian Peninsula suffered the largest blackout in recent European history. Spain lost approximately 60% of total electricity generation capacity within five seconds. Total economic damage reached between €2.2 billion and €4.5 billion. Some industrial sites did not return to full operation for days.
- The IEA projects electricity's share of final energy demand must rise from 23% to 35% by 2035. The more industrial operations depend on the grid for process heat, the greater their exposure to disruption events that are outside their control.
- Solar thermal generates process heat on-site, from a European supply chain, without drawing from the grid at any point in the generation process. That is not only a carbon argument. It is an operational resilience argument.
- The IF26 Heat Auction provides up to €1 billion to support industrial operators making this transition. Applications are expected to open December 2026.
Grid Reliance as an Industrial Risk
At 12:33 CEST on 28 April 2025, Spain and Portugal lost power. Within five seconds, approximately 60% of Spain's electricity generation capacity disappeared from the grid. What followed was the most serious event in the European power grid for over two decades, according to the ENTSO-E Expert Panel that investigated the incident. Factories shut down. Production lines halted. Refrigeration systems failed. Some industrial sites did not return to full operation for days.
The direction of travel for European energy policy is clear: the IEA's analysis indicates that electricity's share of final energy demand needs to rise from 23% today to 35% by 2035. That transition is underway and is not in question.
What Happened in Spain, and What It Cost Industry
The 28 April 2025 Iberian blackout was triggered by a cascading grid failure. ENTSO-E's 472-page final report identifies systemic failures in voltage control, reactive power management, and regulatory frameworks as the root causes, distributing responsibility among Spain's grid operator Red Eléctrica, conventional and renewable generation facilities, and the regulatory environment in which they operated. The Panel also stressed the need for regulatory frameworks to evolve alongside a changing power landscape, where decentralised generation and higher renewable shares demand new approaches to system stability. Read more on the report here.
Within five seconds, Spain lost around 15 gigawatts of generation capacity, approximately 60% of demand at the time. The grid was not fully restored in Spain until 4am the following morning. Some areas of Portugal were without power for over 15 hours.
The industrial consequences were immediate and significant. Volkswagen's Navarra plant, employing 4,600 workers, lost production of around 1,400 cars. The SEAT plant near Barcelona, with 14,000 employees, had not fully resumed normal operations even after power was restored. Alcoa's San Ciprián alumina complex in Galicia required a full operational and financial damage assessment before production could restart. Oil refineries including Repsol's five Spanish sites faced uncertain timelines for full recovery, with some expected to take a week or more to resume normal operations. Some industrial ovens were reported as permanently damaged by the abrupt loss of power.
Spain's main business lobby CEOE estimated the immediate economic impact at €1.6 billion, representing 0.1% of GDP. Investment bank RBC's assessment placed total economic damage between €2.2 billion and€4.5 billion, roughly equivalent to Spain's entire daily GDP. The meat industry alone reported losses of up to €190 million as refrigeration systems failed across the country.
The cause was not a single technology failure. It was a cascade of systemic failures in a grid management framework that lacked sufficient resilience when the sequence began. Read ENTSO-E Expert Panel Final Report here
The lesson for industrial operators across Europe is not that Spain's grid is uniquely fragile. It is that any operation whose process heat and production lines depend entirely on grid-supplied electricity is exposed to events that are, by definition, outside its control.
The Grid Is Already Under Structural Pressure Across Europe
The Iberian blackout is the most dramatic recent example of grid risk, but it sits within a broader pattern of grid constraint that is already affecting industrial decarbonisation timelines across Europe.
The IEA has stated that electricity grids need to expand 40% faster than the pace of the previous decade to keep pace with rising demand, or face growing connection queues. Click here to learn more. That expansion is not happening fast enough. Analysis by Ember published in 2026 found that at least 120 GW of planned renewable capacity across Europe is facing delays, with nearly 700 GW of renewable capacity sitting in connection queues across eight reporting EU member states.
For industrial operators seeking to decarbonise through electrification, the grid constraint is already a practical barrier, not a future concern. Surveys of European manufacturers across chemicals, cement, and ceramics sectors have found that grid connection delays are actively blocking decarbonisation plans. In the UK, more than a third of companies that have experienced grid connection delays report the issue has halted their growth plans entirely. In some parts of Europe, new industrial grid connections cannot be guaranteed until the mid-2030s.
The European Commission's 2025 Grids Package acknowledges the scale of the challenge. Policy frameworks, permitting processes, and physical grid investment all move slowly relative to the decarbonisation timelines industrial operators are working to. And that pressure is set to intensify: EU ETS 2 extends carbon pricing to industrial and commercial heat from January 2028, which will drive further demand for electrified heat solutions across Europe, adding additional load to a network that is already congested. Click here for more information on how ETS 2 will impact industry in Spain.
Why Electrifying Industrial Heat Increases Grid Exposure
Industrial heat pumps are an important part of the decarbonisation toolkit. They are efficient, well-suited to a wide range of commercial and industrial applications, and improving in both performance and cost. This article is not an argument against them.
It is, however, an argument for understanding what each technology asks of the grid, and for designing heat systems that minimise that demand wherever the opportunity exists. A large industrial heat pump running at full load during peak demand hours adds directly to grid load at exactly the moment grid capacity is most constrained. That is a not a technology flaw, but it is a consequence that specifiers and energy managers need to account for.
Had the industrial sites affected by the April 2025 Iberian blackout been running electrified heat pump systems as their sole source of process heat, those systems would have failed at the same moment the lights went out.
The question for industrial operators is not whether to electrify, but how much of their heat load genuinely must be grid-dependent, and how much can be served by a source that operates entirely independently of the transmission network.
On-Site Solar Heat as a Grid-Independent Asset
Solar thermal collectors convert sunlight directly into usable heat. There is no conversion from electricity to heat. The heat is generated on-site, can be stored on-site, and consumed on-site.
Per square metre, Virtu solar thermal collectors deliver approximately three times more energy as directly usable heat than solar PV ,with no conversion losses and reducing the demand from the grid. For industrial sites where roof space is constrained, that energy density advantage is directly relevant to system viability and capital efficiency.
The storage economics compound the advantage.Water-based thermal storage costs approximately 10% of comparable battery storage per kilowatt hour, with the additional benefit of reduced safety requirements for the installation. At district scale the gap widens further: large-scale pit thermal energy storage, as demonstrated in Denmark, has been delivered at €0.40 to €0.60 per kilowatt hour of heat capacity, compared with turnkey battery systems in Europe at roughly €100 to €200 per kilowatt hour. Thermal storage converts weather-dependent generation into demand-driven heat supply, decoupling the moment of generation from the moment of use. It is a design feature, not an optional extra.
VirtuHOT's operating range is up to 120°C, or 185°C when paired with a heat pump, which covers the full temperature spectrum of low- and medium-temperature industrial process heat, including the 80°C to 150°C band that accounts for the majority of thermal demand in food and beverage, dairy, chemicals, and pharmaceuticals. At 80°C VirtuHOT carries an additional benefit of being able to go direct into the process which negates the need for additional stages.
For a fullbreakdown of temperature matching by sector, see our Solar Thermal Operating Temperatures guide.
Critically, in a grid outage event, a solar thermalsystem with thermal storage continues to provide heat to the process or buffertank.
The Financial Case Alongside the Resilience Case
Risk reduction and cost reduction are not separate arguments. They are the same argument, framed differently depending on who in an organisation is listening.
For low-temperature industrial process heat below 150°C, solar thermal typically delivers heat at €30 to €70 per MWh, according to IEA Solar Heating and Cooling Task 64 analysis. That range is comparable to industrial heat pump operating costs at typical European electricity prices, but with no fuel bill, no exposure to gas or electricity market volatility, and no grid connection dependency. The cost per unit of heat generated does not change in response to geopolitical events or commodity price shocks.
The carbon cost trajectory adds further pressure to the financial case for acting now. EU ETS 2 embeds an escalating cost into every kilowatt hour of natural gas consumed on a site that has not yet begun its transition. Combined with rising electricity prices and the demonstrated financial cost of grid failure events, the case for on-site solar heat generation has rarely been clearer.
For industrial operators with qualifying process heat demand, the IF26 Heat Auction offers up to €1 billion to support exactly this type of investment. Applications are expected to open December 2026, with a February 2027 deadline. For more information or assistance on your application, visit our IF26 Heat Auction blog article.
What This Means for Heat Pump Projects Already in Progress
For specifiers and energy managers working on heat pump projects that are already planned or underway, the operational case for adding solar thermal upstream is straightforward.
When VirtuHOT is integrated as a pre-heat stage upstream of a heat pump, two things happen simultaneously. The heat pump's inlet temperature rises, reducing the temperature lift it must achieve and improving its coefficient of performance. And the electrical load the heat pump draws from the grid falls, directly reducing peak demand on a connection that may already be operating close to its consented capacity.
In congested grid areas, that demand reduction can be the difference between a project that receives a grid connection within an acceptable time frame or one that joins a pre-existing queue. Pre-heating the supply reduces the electricity the heat pump needs, which in turn reduces the grid connection capacity the project requires.
For a full guide on how solar thermal and heat pump systems are designed and integrated, see the Solar Thermal and Heat Pumps hybrid heating systems blog.
European Energy Security and the Manufacturing Advantage
Energy security sits at the top of every European industrial policy agenda in a way it has not since the 2022 gas crisis as a result of Russia’s invasion of Ukraine.
Solar thermal's contribution to that agenda is structural, not aspirational.
EU manufacturers supply approximately 90% of European solar thermal demand and have the capacity to triple production. That is a domestic supply chain, not a new import dependency. 43.6 GWth of solar thermal capacity is already in operation across Europe, across 12 million rooftops. And with 16,000 district heating networks across the continent providing ready infrastructure to take on carbon free solar heat on, the potential for solar thermal enabled decarbonisation is significant.
The EU's IF26 Heat Auction, opening December 2026 with €1 billion available, represents precisely the kind of policy signal that drives that scale of response.
For industrial operators considering the full picture of European energy security, manufacturing advantage, and site-level resilience, solar thermal addresses all three at once.
Conclusion
The April 2025 Iberian blackout cost European industry between €2.2 billion and €4.5 billion in a single day. See the full report here. It was caused by a cascade of complex, interrelated factors, not a single technology failure, and it exposed an industrial vulnerability that exists across every country connected to a transmission network.
Solar thermal does not eliminate all energy risk, but it removes the risk that dependency on a largely centralised energy grid presents. Solar thermal generates heat at the point of use, at a lower cost, from a European supply chain that doesn’t require a grid connection.
A solar thermal-supported heat system ensures that available renewable energy is used in the most efficient way: carbon-free heat to cover as much of the base thermal load as possible, with only as much energy drawn from other technologies such as heat pumps, heat recovery or traditional boilers as the process genuinely requires.
To discuss a system design feasibility assessment or Heat-as-a-Service financing, visit the System Design solution page or the Heat-as-a-Service page or contact the Naked Energy team directly at commercial@nakedenergy.com.
Frequently Asked Questions
What caused the April 2025 Iberian blackout?
The ENTSO-E Expert Panel's final report, published in March 2026, identified systemic failures in voltage control, reactive power management, and regulatory frameworks as the root causes of the blackout, rather than any single point of failure. The investigation distributed responsibility among Spain's grid operator Red Eléctrica, conventional and renewable generation facilities, and the regulatory environment governing them.The panel issued 22 recommendations to strengthen European grid resilience. A separateSpanish government investigation attributed significant responsibility to planning failures at grid operator REE.
How does solar thermal generate heat without a grid connection?
Solar thermal collectors absorb solar irradiance and convert it directly into heat within a fluid circuit, typically via a water-glycol mixture. That heat is then transferred via a process circuit to a heat exchanger. The heat is then stored in a thermal storage. No electricity is generated or consumed in this process. The only grid electricity typically required in a solar thermal system is for the circulation pump, which draws a small fraction of the heat generated. During a grid outage, a system with a thermal buffer or stand-alone pump circuit continues to generate and store heat as long as solar irradiance is available. For more information, visit our blog on How Solar Thermal Collectors Work.
Does solar thermal compete with or complement industrial heat pumps?
Solar thermal is most accurately described as complementary to industrial heat pumps, and other heating technologies, rather than competing with them. When integrated upstream of a heat pump in a pre-heat configuration, solar thermal raises the inlet temperature to the heat pump, reducing the temperature lift required and improving the heat pump's coefficient of performance. At the same time, the electrical load the heat pump draws from the grid falls, reducing peak demand and, in congested grid areas, potentially reducing the grid connection capacity the project needs. For further details, read: Solar Thermal and Heat Pumps hybrid heating systems blog.
What temperature range does VirtuHOT cover for industrial process heat?
VirtuHOT evacuated tube collectors deliver process heat up to 120°C as a standalone system. When paired with an industrial heat pump in a cascade configuration, the combined system can reach up to 185°C, covering the full temperature range of low- and medium-temperature industrial processes including pasteurisation, CIP, pre-heating, washing, and a range of chemical and pharmaceutical applications. For a breakdown of temperature requirements by sector and application, see the Solar Thermal Operating Temperatures guide for more details.
How can industrial operators fund on-site solar thermal installations?
Several routes are available. The IF26 Heat Auction offers EU grant funding of up to €1 billion for qualifying industrial heat decarbonisation projects across EEA member states, with applications expected to open in December 2026.
Multiple national subsidy schemes, for example Germany's BAFA process heat grant programme and Spain’s CAE certification, provide additional support in specific markets.
For operators where upfront capital is a constraint, Naked Energy's Heat-as-a-Service (HaaS) model, allows the system to be financed and operated by a third party, with the customer paying only for the heat delivered.
HaaS and grant funding can be structured togetheras part of a complete project financing approach.
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