If European Union member states comply with their national energy and climate plans, renewable energies will account for about 53% of energy supply by 2030. Europe is on track to meet this target, although the performance of each country will vary, according to a recent analysis by Wood Mackenzie.
The continued growth of wind and solar energy will drive substantial decarbonisation of Europe’s electricity sector.
The transformation of European electricity is already underway. The annual supply of wind and solar energy will exceed coal production in Europe for the first time in 2019. The future for Europe’s coal generators is bleak, with higher cost of emissions, competitive gas policies and disposal affecting the fuel.
In 2018, one third of Europe’s energy was supplied from renewable sources. Wind energy was the single largest producer of low carbon emissions, accounting for about 12 per cent of the total supply in the region. Solar energy accounted for 4% of supply.
Peter Osbaldstone, research director at Wood Mackenzie, said: “Renewable energies are on track to account for most of Europe’s energy supply in ten years and more than 60% of the market by 2040. Despite the success of wind and solar energy, European governments, regulators and investors must continue to work hard to achieve the climate energy goals.
European energy markets look different today than they did a few years ago and the rapid decline of coal, accelerated by low gas prices, is perhaps the most significant recent change. Osbaldstone added: “Carbon-intensive energy sources will be discarded by politics if markets cannot discard them.
Nuclear power remains the region’s largest energy source, but it will also decline as older reactors are withdrawn and new capacity is built.
The contribution of gas will increase as coal and nuclear power fall, surpassing nuclear power production in the early or mid-2020s. At this point, the combined supply of wind and solar energy will rival gas, with wind producing more electricity than gas by the end of the decade.
According to Wood Mackenzie, the cost of flexible gas generators will remain relevant for the formation of energy prices, although energy prices in Europe will become increasingly volatile as the volume of variable energy supply increases.
“The degree of energy price fluctuation in Europe will depend on the mix and volume of renewables relative to hourly demand. The energy storage capacity to flatten this profile will become increasingly important as the transition progresses,” Osbaldstone added.