Falling costs for wind and solar energy projects, alongside high renewable ambitions and countries’ support, have led to a jump in investment during the last decade that is expected to continue through to 2030, according to Morningstar’s latest Utilities Landscape report.
Exploring trends in the renewable energy industry, the report found renewables, including hydro, accounted for 45% of total power generation in 2023, up from 14% in 2005. Adding nuclear, this increased from 44% in 2005 to 67% in 2023, as the surge in wind and solar capacity largely offset the decline in nuclear power generation attributable to Germany.
Growth is expected to continue as costs come down, and falling interest rates ease financing while enhancing value creation. Additionally, thanks to the absence of CO2 and fuel costs, and limited operating and maintenance and capital costs, solar and onshore wind were found to be much more competitive than conventional sources of power, which the report argues is underpinning its high growth potential.
However, although growing faster, solar is not expected to overtake wind by 2030.
Elsewhere, the report predicted electric grid investments to boom by 2030 in the EU. Grid investments have lagged behind renewables installations for many years, resulting in costly congestion issues and connection queues for renewables and data centres. However, the European Commission launched an action plan for grids in November 2023, calling for €584bn of investments by 2030, or €83bn annually – nearly double the average annual investments of the past five years.
“Renewable energy now accounts for 45% of Europe’s electricity generation, equaling thermal power for the first time in 2023. As solar continues to outpace wind, and grid investments surge to an estimated €584bn by 2030, Europe is solidifying its position as a leader in the transition to cleaner energy, despite challenges like infrastructure delays and volatile energy markets,” said Tancrede Fulop, senior equity analyst at Morningstar.
