Significant tailwinds for EU renewables

The message from the EU in March couldn’t have been clearer. The region is firmly on course to meet its 2020 targets for renewable energy following a doubling in its share of final energy consumption since 2004. Over €1 trillion will need to be invested in renewable energy generation between 2015 and 2030 if we are to meet the proposed 2030 target.

Right direction of travel

Renewable sources supplied 16.7% of energy consumed in the EU in 2015, which is well within striking distance of the 2020 target for 20%.

The European Commission is proposing an EU target of at least 27% (likely to rise to 30%) of energy demand to be met by renewable energy by 2030, a 40% cut in GHG emissions compared to 1990 levels, and at least 27% energy savings compared with the business-as-usual scenario2. The direction of travel for EU clean energy policy over the next decade is clear.

A huge investment opportunity

This creates enormous opportunity for renewable energy development, especially for the most cost-effective technologies, namely onshore wind and solar PV. Wind farms can now compete, unsubsidised, with fossil fuel fired capacity, and the cost of solar generation is continuing to drop, making it more cost competitive every year.

Beware potential pitfalls

However, there are some potential pitfalls. For example, these goals are European-wide rather than national, and progress differs between countries. Furthermore, the energy grid in Europe is not yet integrated, but efforts to harmonise standards in order to support cross-border power trading are underway.

Energy efficiency companies will also benefit

This is also positive for companies offering energy efficiency solutions for the industrial, transport and residential markets. Overall, the Commission’s energy efficiency proposals are set to add €70 billion to the region’s GDP, create 400,000 jobs, and cut the EU’s fuel import bill.

A compelling long term investment opportunity

Investors in renewable and energy efficiency are looking forward to further clarification of the legislation. However, the direction of travel is very encouraging and the EU is clearly pressing ahead with a low-carbon transition that promises an enormous investment opportunity over many years to come.

 

ABOUT THE AUTHOR
Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 16 years he has been based in London writing about funds and investments . From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope.

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