In 2023, wind and solar accounted for more than 25% of Europe’s total electricity production while fossil fuel-based generation dropped below 30%. Will the trend continue in 2024? Will wind and solar exceed fossil fuel-based generation?
Emissions from electricity consumption in Europe decreased by 22% in 2023, reaching lower levels than during the pandemic. The demand destruction that started at the end of 2022 following the energy crisis and the surge of gas prices continued for most of the year. A slight rebound was observed at the end of the year which is expected to amplify in 2024.
In reaction to the energy crisis, Europe continued and even increased efforts in the development of renewable energy generation. Electricity generation from wind and solar reached record levels in markets such as Great Britain and Spain putting Europe on a trajectory in which wind and solar generation could exceed fossil fuel-based electricity production in the coming years.
However, several challenges are yet to be addressed to reach this major milestone such as developments in the power grid. Europe also still relies on fossil fuels to absorb peak demand from electric heating and cooling while only a few countries can maintain a carbon-free baseload generation throughout the year.
Electricity consumption decreased by 4% between 2021 and 2022. It decreased by 3% again between 2022 and 2023. As a result, electricity consumption levels in 2023 were lower than those observed in 2020 during the pandemic when multiple lockdowns slowed down economic activity throughout Europe. In June 2023, electricity demand nearly reached the lowest monthly value recorded in April 2020.
This year's demand reduction was less a result of the weather than the repercussions of industrial demand reduction and behavioral changes in consumption due to high gas and power prices. Electricity prices skyrocketed in 2022 and remained high until the second half of 20231.
Electricity demand increased during the second half of 2023 to finally exceed the levels of 2022 during the same period, hinting at a possible rebound effect that the IEA forecasts to happen in 20242.
While summer 2023 was the warmest recorded worldwide3, it was milder than 2022 in Europe4 which still holds the record. As a result, cooling demand decreased compared to last year and the demand reduction increased during summer.
Wind and solar generation kept increasing in 2023 with a continuous installation of new renewable energy capacity throughout Europe. In 2023, wind and solar respectively represented 19% and 8% of total electricity generation in Europe. Between 2021 and 2023, wind generation increased by 12.5% while solar generation increased by 14%.
Europe accelerated the deployment of solar and wind energy with the energy crisis triggered by Russia’s invasion of Ukraine. In 2022, more than 50GW were added to the grid in Europe representing a 45% increase compared to 20215. Distributed solar PV was the main contributor to the increase in renewables capacity in 2023 and is expected to remain so in 2024, driven by high electricity prices and increasing policy support in key EU markets6. This surge in renewables capacity is expected to continue due to regulatory changes that ease permitting.
Spain contributed significantly to this rise in solar generation, increasing its electricity generation from solar by 60% between 2021 and 2023. Price-based and quantity-based mechanisms contributed to the rapid development of solar in Spain over the last years and favorable weather (drier and sunnier than average) in 2023 helped reach high generation levels. Wind and solar generation together accounted for more than 40% of the country’s electricity generation (solar alone covered 16% of the generation). Meanwhile, fossil fuels covered less than 25% of power production. Grid constraints are however a major obstacle today to further grid decarbonization in Spain and the development of renewables might slow down in the coming years7.
The increase in gas prices observed during the second half of 2022 and the first half of 2023 had a significant impact on gas-fired electricity generation in Europe which decreased by more than 20% in 2023 compared to 2022. Despite this decrease in gas-fired electricity generation, coal-fired electricity generation also decreased in 2023 as a consequence of electricity demand reduction and production increase from renewables. After an increase in coal-fired generation in 2021 and 2022, Europe was back to a reduction trend in 2023. At the end of the year, coal-based electricity generation represented 12% of electricity generation with an almost 10% reduction compared to 2020.
Great Britain has led the way in the fossil-to-wind transition in Europe in recent years. With great installations of offshore wind capacity, Great Britain produced close to 40% of its electricity from wind and solar in 2023 (wind alone representing 33% of total electricity production). This caused large reductions in fossil fuel-based electricity generation allowing Great Britain to set a 46-day streak of coal-free grid around May8. This streak stopped as the country was hit by a heatwave which meant electricity demand rose for air-conditioning while wind speeds fell. At the end of the year, Great Britain reached a new milestone in its electricity transition with more electricity produced from wind and solar (93 TWh) than fossil fuels (92 TWh). Further decarbonization of Great Britain’s electricity grid will highly depend on its ability to cope with periods of low wind speeds as well as heatwaves and cold snaps which often cause a rise in electricity demand.
Electricity generation from fossil fuels has been decreasing in Europe since the end of 2021. It increased pace in 2023 with low demand and additions in wind and solar capacity. As a result, electricity generation from wind and solar surpassed generation from fossil fuels for some months in 2023 (in May, July, and October) yet falling short by 10% to exceed it at the end of the year. As illustrated by the cold snap in December 2023, Europe still relies on fossil fuels to cover sudden increases in electricity consumption caused by heating and cooling needs. Additionally, with the continued electrification of end-uses and a return to normal levels of electricity prices, a rebound effect in electricity demand might make it harder for wind and solar generation to exceed fossil fuel-based electricity production in 2024.
This year saw the confirmation of nuclear phase-out plans in Spain where nuclear generation currently accounts for a fifth of electricity production9,10. The first power plant shut-down will happen in 2027. It also marked the closing of the last nuclear power plant in Germany in April 2023 while at roughly the same time Olkiluoto 3 was commissioned on the Finnish grid. Europe’s largest nuclear power plant with a capacity of 1.6 GW started commercial operation on May 1st, 2023.
In parallel, generation increased in France after difficult times during the second half of 2022, when unplanned maintenance affected a large share of its nuclear power plant fleet. Nuclear generation levels were almost back to normal in 2023 and are expected to keep increasing in 2024 as Flamanville EPR is expected to go online11. In contrast, nuclear generation in Great Britain reached the lowest value in four decades following the closing of two nuclear power plants, while the commissioning of Hinkley Point C is not expected before the end of the decade12.
While Europe managed to maintain its overall share of electricity generation from nuclear in 2023 compared to 2022, it remained well under 2021 production levels (representing a decrease of 15%).
Electricity demand decreased in 2023 and reached lower than the pandemic levels. This has mainly been a consequence of industrial demand reduction and behavioral changes after the surge in gas prices at the end of 2022 that continued during the first half of 2023. In reaction to the energy crisis, Europe continued and even increased efforts in the development of renewable energy generation. Electricity generation from wind and solar reached record levels in markets such as Great Britain and Spain putting Europe on a trajectory in which wind and solar generation could exceed fossil fuel-based electricity production in the coming years.
However, several challenges are yet to be addressed to reach this major milestone such as developments in the power grid. Europe also still relies on fossil fuels to absorb peak demand from electric heating and cooling while only a few countries can maintain a carbon-free baseload generation throughout the year.
1 https://ember-climate.org/data/data-tools/europe-power-prices/
4 https://climate.copernicus.eu/european-summer-2023-season-contrasting-extremes
5 https://www.iea.org/energy-system/renewables
6 https://www.iea.org/reports/renewable-energy-market-update-june-2023
