European New Energy Atlas and Growth Markets report

General outlook

Europe experienced a record 18% y-o-y increase in new solar capacity installation in 2022, bringing the total solar capacity to 224.9 GW by the year-end. Germany, Spain, and Italy were the top contributors to new capacities. 

In the short-term, solar capacities are expected to grow, but at a lower rate than the last four years due to changing market conditions and the rising cost of solar panels. Rooftop solar will continue to drive grid-connected solar additions, particularly given the ongoing energy crisis.

Selected Growth Markets

Key European solar markets with favourable solar generation environments include Germany, Spain, Italy, Portugal and France. Germany leads the EU solar market with a total capacity of 67 GW as of 2022, increasing by 7 GW y-o-y. Notable projects include Witznitz Energy Solar PV Park, Doellen Solar Power Plant, and Bayreuth Solar Park. Italy and Spain also experienced an increase in new solar capacities, whilst project developers face grid-connection challenges. 

Portugal aims for 20.5 GW solar by 2030, as it looks to achieve climate neutrality by 2045. France increased total grid connected solar capacity by 19% in 2023, reaching 20 GW.

General Outlook

Europe installed a record-breaking 18 GW of wind capacity in 2022 (14.5 GW onshore / 4 GW offshore capacity). These annual capacity additions still fall short of the required rates to achieve Europe’s 2030 goals. Germany, Sweden, and Finland led in onshore wind capacity, whilst the UK and France excelled in offshore wind capacity. Europe will install 129 GW of wind projects between 2023 – 2027, however this falls 10 GW per year short of the average needed to meet the 2030 wind target under REPowerEU, with permitting bottlenecks being the main obstacle. 

Selected Growth Markets

UK, France, Germany, Italy, and Ireland are key markets for utility-scale wind generation due to favourable wind policies, targets, and incentives. Germany, Europe’s largest wind market, plans to build 21 GW onshore and 6.4 GW offshore wind capacity in the next five years. The new Onshore Wind Law sets a 10 GW per year target from 2025 onwards. The UK will install significant new wind capacity, with most onshore projects in Scotland. Ireland aims to install 3.2 GW of new wind capacity by 2027 and launched its third onshore wind auction scheme, RESS 3. Sweden and Norway, despite higher wind resources, are riskier markets compared to the UK and France, due to higher contracted tariffs at recent utility-scale wind projects, which are typically denominated in local currencies rather than the US Dollar or Euros.

General Outlook

Europe’s hydropower generation fell to 460 TWh in 2022 (the lowest since 2004) due to drought conditions, which caused financial losses for some European operators. Hydropower generation is expected to increase by 3% y-o-y or 16 TWh in 2023 with high precipitation levels. However, in the short-term hydropower output could continue to be lower than the 10-year average if drought conditions persist.

Selected Growth Markets

Norway, France, Germany, and Austria are key markets to watch for hydropower generation due to their significant increase in renewable and pumped storage hydropower deployment over the last five years. Conversely, despite having higher hydropower potential, Spain and Italy ranked lower in enabling drivers due to minimal capacity deployments during the same period. Overall, Europe’s total hydropower capacity stands at 225 GW and has increased by 1% per year between 2013 – 2022.

General Outlook

European governments are exploring ocean energy to boost supply security, but face competition from the United States, Canada, and China. The EU has set ambitious targets for ocean energy but struggles with funding coordination. The revision of the National Energy & Climate Plans in 2023 provide a key opportunity for EU countries to commit to ambitious ocean energy objectives. The European Commission can enhance national ambitions through funding instruments such as the Green Deal Industrial Act and Sovereignty Fund. A dedicated fund within these instruments will drive transformative changes in the ocean energy sector.

Selected Growth Markets

France is the main market for European ocean energy generation with the most conducive environment. The Sabella’s D10 1 MW turbine on Ushant Island in France has been successfully supplying electricity, meeting nearly half of the island’s demand. In 2023, President Emmanuel Macron announced commercial tenders for tidal stream projects as part of France’s Energy Strategy update, with US$72 million in funding allocated for the flagship project FloWatt. 

General Outlook

In 2022, bioenergy accounted for 6% of Europe’s electricity, with Germany as the top producer. Estonia had the highest proportion of bioenergy in its mix at 30%. EU countries experienced a slight decline of 1.6% in bioenergy generation, compared to 2021. Bioenergy generation in Europe has grown more than fivefold since 2000, reaching 167 TWh in 2022.

Selected Growth Markets

High-growth bioenergy markets include Denmark, Sweden, Finland, and France. Sweden’s growth is driven by a large increase in biogas generation capacity over the last five years, whilst Denmark and Finland focus on waste-to-energy. France has a slightly lower bioenergy resource but still has one of the largest bioenergy generation capacities in the region, driven by liquid biofuel generation.

General Outlook

In 2022, Europe’s nuclear electricity output was 741 TWh, with France as the top producer at 285 TWh, comprising 63% of its electricity mix. Overall, Europe saw a 22% y-o-y decline in nuclear generation compared to 2021. Spain and the Netherlands saw modest increases, while Germany’s nuclear output dropped by 50% y-o-y. French nuclear production was impacted by a heatwave and maintenance activities, leading to a 22% y-o-y decrease. Since the 2015 Paris Agreement, European nuclear generation has been decreasing by an average of 3.5% per year.

Selected Growth Markets

Belgium and Slovakia are key growth markets for nuclear generation in Europe. With over 50 years of experience, both countries are well positioned to expand their nuclear capacity, with plans to triple their current capacity by 2050 under the recent COP 28 development. Similar plans are in place for countries like France, Sweden, Czech Republic, and Bulgaria – which are also aim to triple their current nuclear capacity under the COP 28 announcement, leveraging their 50 years of experience in nuclear electricity generation.

General Outlook

Europe’s hydrogen production capacity remained steady at 11.5 MT per year in 2022, but green hydrogen capacity rose 35% y-o-y to 228 MW by September 2023, accounting for less 1% of the total operational capacity. Europe’s hydrogen market is dominated by fossil fuels, but decarbonisation policies are driving low-carbon and green hydrogen growth. In order to reach REPowerEU goals, Europe needs an additional 140 GW of installed electrolysers and 10 MT per year of green hydrogen production, requiring ~US$2.9 trillion of additional investments. 

Selected Growth Markets

Germany and France are key high-growth markets for green hydrogen production, with Germany targeting 10 GW electrolyser capacity by 2030. France has a national hydrogen program and a Plan France 2030 targeting 700,000 tonnes per year green and low-carbon hydrogen production, and 6.5 GW electrolyser capacity by 2030. Belgium and the Netherlands will continue to lead in hydrogen infrastructure expansion in the short-term.

General Outlook

The total number of commercial-scale CCUS projects in Europe have increased by 61% y-o-y, reaching 119 in 2023, with support from the European Commission and funding mechanisms. The North Sea is the top CO2 storage choice, while new opportunities are arising. CCUS is gaining traction in various sectors – and bioenergy with carbon capture and storage and direct air capture and storage are gaining popularity. However, increased coordination and collaboration among EU countries will be needed to achieve cost reductions and efficiency gains.

Selected Growth Markets

The UK and Norway are top markets for CCUS in Europe. The UK government announced US$25 billion for CCUS projects in Wales and England. The UK aims to capture 20-30 MT per year by 2030, with potential storage capacity up to 78 GT in the North Sea. Norway’s Longship project, supported by Equinor, Shell, and TotalEnergies, plans to capture 5 MT per year with a US$2.3 billion investment. However, higher costs may delay CCUS at Celsio Oslo’s Klemetsrud plant. 

General Outlook

In 2022, electric cars and vans made up 21.6% of new registrations in the EU and Non-EU OECD countries, totalling nearly 2 million registrations. Norway had the highest share at 89%, with Germany, France, and Norway leading in new Battery Electric Vehicle (BEV) registrations. Starting in 2025, EU Regulation EU 2019/631 sets stricter CO2 fleet targets – aiming for a 15% reduction by 2025, and a 50% reduction for vans and 55% for cars by 2030, with a zero-CO2 emission goal by 2035.

Selected Growth Markets

Germany and France are key European electric vehicle (EV) markets. By 2030, Germany projects over 13.4 million EVs, with government incentives including extended purchase grants and a scrappage scheme. France saw an 8.4% y-o-y increase in 2022 EV sales, with a 25.2% increase in BEV sales and a 10.8% decrease in Plug-in Hybrid Electric Vehicles (PHEV) sales. Zero-interest loans for EV purchases are expected to further drive demand, with France’s passenger EV penetration rate surpassing 21.5%.