The EU’s power sector is in the middle of a monumental shift from fossil-fuel to renewable generation.
In 2023, the European Union’s power sector showed that it is entering a new era—one where fossil fuels play an increasingly diminished role. Last year, wind generated more electricity than gas for the first time and both coal and gas power suffered an unprecedented collapse.
A gap however remains between the pace of renewables growth and EU targets. More needs to be done, and rapidly, to unlock wind and solar potential, to meet climate commitments and deliver the benefits of the clean-energy transition across Europe.
Transition in full swing
Ember’s European Electricity Review finds the energy transition in full swing. In 2023, renewables comprised a record 44 per cent share of the EU’s electricity mix. Wind and solar produced 27 per cent, with their largest ever annual capacity additions.
Both coal and gas power fell by record amounts last year. Coal fell by a huge 26 per cent, to its lowest level on record (333 terawatt hours), to generate just 12 per cent of the EU’s power in 2023. And this did not mean a return to gas: gas power fell by 15 per cent, a fourth consecutive annual decline. Combined, fossil fuels fell a record 19 per cent to account for less than a third of EU electricity for the first time. This led to the highest ever fall in power-sector emissions too, a substantial 19 per cent drop.
In addition to renewables growth, falling electricity demand also contributed to the drop in fossil-fuel generation. Demand fell by 3.4 per cent (-94TWh) in 2023 compared with 2022 and by 6.4 per cent (-186TWh) from 2021 when the energy crisis began. Just over a third (38 per cent) of this decline in demand since 2021 is due to a reduction in industrial electricity consumption.
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This demand trend is however not expected to be sustained as electrification increases. As more heat pumps, electric vehicles and electrolysers come online, the EU could enter a new era of rising electricity demand, for the first time since the 2000s. Renewables will need to keep pace as demand increases, or the reduction in fossil fuels will fall short of what is required to hit EU climate goals.
Russia’s full-scale invasion of Ukraine nearly two years ago was a turning point away from fossil-fuel reliance in the EU. A temporary increase in coal generation as gas prices surged in 2022 was more than wiped out in 2023, as coal power resumed its pattern of long term decline. And that structural decline will continue, as a fifth of remaining EU coal capacity is set for closure over the next two years.
EU coal generation has halved since 2016 (-327TWh), more than matched by a rise in wind and solar, which have grown by 354TWh in that time. Coal’s decline has not led to an increase in gas generation, which has fallen slightly (-3 per cent) since 2016.
As coal phase-out approaches in the EU, the next big shift will be away from gas. In countries where coal is phased out, wind and solar growth will start to displace gas generation. This can be expected in the EU’s biggest gas power countries, Italy, Spain and the Netherlands, which accounted for half (51 per cent) of the EU’s gas generation in 2023.
The EU’s energy transition passed a milestone in 2023, as wind generation overtook gas for the first time. Up by 13 per cent from the previous year, wind power totalled 475TWh across the EU—equivalent to meeting France’s entire electricity demand. In 21 EU countries wind achieved its highest ever share in the electricity mix last year, with the largest year-on-year percentage-point increases in Lithuania, the Netherlands, Germany and Belgium.
Solar has also been booming in recent years, especially following emergency efforts to reduce fossil-fuel dependence on Russia. In 2023, solar continued to hit records, with 56 gigawatts of capacity installed in 2023, a significant increase on the 41GW added in 2022. Solar generation rose to 9 per cent of the EU’s electricity mix last year, with 24 EU countries registering a record share.
Combined, wind and solar generated a record 27 per cent of EU power in 2023, driving renewables to a 44 per cent overall share. This strong renewables growth comes as EU ambition has also increased in recent years. The REPowerEU plan foresees 72 per cent of power generation coming from renewables by 2030. This is to be driven by wind and solar, their combined contribution set to double to 55 per cent.
Targets not enough
EU member states have meanwhile upped their 2030 targets, increasing wind and solar goals in national energy and climate plans by 45 per cent and 70 per cent respectively compared with just four years ago. Yet targets alone are not sufficient. The pace of renewables growth is still not fast enough, in particular for wind. And there is still much work to be done to remove implementation barriers and bottlenecks.
Wind power has shown signs of struggling in recent years and solar’s annual generation increase was lower last year than in 2022. The challenges facing the power transition are well documented: from long and inefficient processes for the issue of permits to outdated grid infrastructure and vulnerability to global supply chains. These complex challenges require dedicated action, guided by a clear and united vision for a clean power system.
The EU has keenly felt the many threats of fossil-fuel reliance in recent years—from escalating climate impacts to supply disruption and price surges. It is widely accepted that an accelerated energy transition is the only way to mitigate these risks.
Wind and solar are driving the EU towards its new renewables target and attention is turning towards the enablers across the system which can make that future a reality. They include key providers of flexibility to accommodate intermittent supply: grids, storage and demand-side responses.
For the second year in a row, a significant fall in electricity demand has helped wean Europe off fossil fuels. But it is certainly not time to get complacent. EU power emissions may have seen their highest ever fall in 2023. But as electrification across all sectors brings increasing demand, ensuring this is covered by a step-up in renewables and their key enablers is crucial to achieving climate goals.