KfW: Renewables in the lead across Europe in 2023

12.04.2024


Source: Energy & Management Powernews

Around 44% of the electricity generated in the EU last year came from renewable energy sources, more than ever before. The potential is far from exhausted.

In 2023, fossil fuels still accounted for 34% of electricity generation across the EU, with nuclear energy accounting for 23%. At 44%, this means that most electricity is already generated from renewable energy sources. However, the EU is still a long way from achieving its goal of completely decarbonizing the electricity sector by 2040, according to a recent study by KfW Research.

"Achieving this goal will require a further significant expansion of climate-friendly generation capacities, starting from today's level. In terms of the electricity mix, there are considerable differences between the European member states," explained Fritzi Köhler-Geib, Chief Economist at KfW.

For example, 14 of the 27 EU member states generate electricity mainly from renewable energies. According to the study, five of these countries have only been added in the last four years: Greece, Spain, Slovenia, Lithuania - and Germany.

The main energy sources differ significantly: hydropower has historically played a major role in Austria (56 percent of electricity generation), Latvia (55 percent), Luxembourg (51 percent), Croatia (45 percent) and Sweden (40 percent), for example.

In the other countries, the greatest emphasis is on wind power plants, with the highest shares in Denmark (59 percent), Lithuania (49 percent) and Portugal (28 percent).

Natural gas is the only energy source that is used to generate electricity in all European countries, according to the analysts. In Germany, the proportion of electricity generated from gas is 15 percent, which is below the European average.

With regard to nuclear energy, the countries in Europe are pursuing very different strategies. While some countries such as Italy, Portugal and Austria have completely abandoned the use of nuclear power and the last three reactors in Germany were taken off the grid last year, twelve EU countries still generate nuclear power. In total, there are 100 nuclear reactors in the EU with a total installed capacity of around 100,000 MW.

Great differences in the expansion of renewables

"There are clear differences between European countries in the current status of the expansion of renewables," explained Köhler-Geib. "In 2023, only three EU member states will have produced more than 75 percent of their electricity from renewable sources. Another ten countries are between 50 and 75 percent, including Germany. Germany is one of the countries leading the way with ambitious expansion targets. Wind power is in first place in Germany. However, the potential of photovoltaics has not yet been exhausted in any European country," said the chief economist.

For the first time since 2002, Germany's electricity exchange balance in 2023 was again characterized by an import surplus, amounting to a total of 11.7 billion kWh. Three quarters of the imported electricity was generated CO2-free.

The analysts see the reasons for the import surplus in the decommissioning of the last three nuclear power plants in Germany and the higher availability of nuclear energy in France compared to the previous year. On the other hand, the expansion of renewables in other European countries is also progressing and ensuring a greater supply of cost-effective green electricity there.

"In addition to generation capacity, the integration of national electricity markets and the physical capabilities of electricity transport are crucial for cost-efficient decarbonization. The action plan presented by the EU Commission at the end of 2023 to strengthen the European electricity grids is therefore to be welcomed. If the electricity interconnection is further strengthened and the electricity market design is also supplemented by capacity markets that take into account storage solutions and demand flexibilization and are also thought of in European terms, further efficiency gains are possible," concludes the KfW Chief Economist (see also separate report on the EU's electricity market reform).

The results of the study entitled "Out of fossil power generation - where does Europe stand today?" are available on the KfW website.

Author: Katia Meyer-Tien