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- Global Research
- Energy transition
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- Disruptive technology
Europe’s renewable ambitions: Amid challenges, opportunity
- The energy crisis has put European renewables in the spotlight …
- …as governments set increasingly ambitious goals and supportive policies
- Europe is on track to exceed its 2030 wind and solar targets, in our view
2022 brought huge disruption for Europe’s energy sector as power producers scrambled for alternatives to Russian oil and gas following the invasion of Ukraine.
In some senses, however, this difficult backdrop provided an opportunity for renewables to shine – catalysing a sharper focus not only on energy security, but also on the transition to zero-carbon energy sources. In fact, we think renewables are close to a tipping point in Europe, where they move from being a disruptive technology, to a dominant one.
Many countries upped their renewable ambitions last year. Germany increased its 2030 renewable electricity target to 80%. Portugal announced targets for offshore wind and plans to meet its 2030 targets four years earlier. The Netherlands and Belgium, too, tightened their goals.
80%
Germany’s renewable electricity target by 2030
Regulators simplified the process for securing permits, and took measures to increase the number of available sites. For example, each federal state in Germany is now expected to dedicate on average 2% of their land to onshore wind.
Moves such as these are grounds to be optimistic that Europe can accelerate the development of renewables, building on the momentum achieved over recent years thanks to increasingly competitive costs and rising climate change awareness. Renewables currently account for a little over one-fifth of energy consumed in the European Union – more than double the levels seen less than 20 years ago1. But new installations exceeded the expectations of forecasters including the International Energy Association last year: and we expect the proportion of Europe’s power sourced from renewables to increase substantially over the next decade as countries and companies compete to make the most of abundant natural resources.
Technological progress will help. Development in the past decade has largely relied on onshore wind after an early boom in residential solar. Over the coming decade, we foresee a significant increase in decentralised and utility-scale solar, and offshore wind and batteries, in addition to onshore wind.
Europe’s 2030 wind and solar targets currently stand at 500GW and 600GW, respectively. We estimate that the region is on track not just to meet these ambitions, but to exceed them.
Over the longer term, too, we see factors supporting the need for renewables. Electricity demand is set to more than double in Europe by 2050. This is in part because of vehicles switching from petrol to electric; more electric heat pumps being used for heating and cooling; and more industries switching to electric power. As Europe is committed to reaching net zero by 2050, renewables are set to play a key role in meeting that demand alongside sources such as hydroelectric and nuclear.
There remain, of course, significant questions over many aspects of the path from here, such as:
- What is the future role of demand management? Some markets are already incentivising consumers to use appliances at off-peak hours. Measures such as these could help power grids flex more effectively in response to fluctuations in supply from renewable sources
- How soon will we see widespread use of green hydrogen? Surplus renewable power (generated on particularly sunny or windy days, for instance) could be used to electrolyse water, making hydrogen gas – which can be stored and deployed to boost electricity supply, power high-heat industries, or fuel long-distance and heavy-duty transport. The availability of supporting infrastructure, storage, and equipment such as electrolysers will be key
- What will be the impact of the US Inflation Reduction Act? It provides strong incentives for green investment on the other side of the Atlantic, potentially encouraging companies to prioritise new developments in the US over other locations
With European renewables increasingly centre stage, we can look forward to a lively debate on these questions and more.
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