Historic change in energy transition, EU and Hungary reach a milestone

New milestone reached

While the developments in the electricity sector cannot be extrapolated to the energy sector as a whole, the sector is already a key driver for the transition to a sustainable energy system and emission reductions, given its importance, and will become increasingly so in the coming years.

It is expected that more and more of our total energy consumption will be in the form of electricity, so that the share of electricity in final energy consumption could rise from 20-25% today to 50% by 2050.

In the first half of 2024, the EU electricity system, a world leader in decarbonisation, has seen several important developments that mark a milestone in the energy transition. These include, according to analysis by the think tank EMBER:

EU fossil generation fell by 17%

Fossil generation continued to fall to new lows, even as demand rebounded. Fossil fuels generated 17% less (-71 TWh) in the first half of 2024 compared to the same period in 2023, falling to 27% of generation (343 TWh), compared to 33% over the same period in 2023. Coal fell by a quarter (-24%, -39 TWh) and gas by 14% (-29 TWh). This happened even as demand rebounded by 0.7%, picking up after two years of decline.

As fossil fuels fell and wind and solar continued to grow, power sector emissions dropped by 17% in the first half of 2024 compared to the same period last year. This follows a similarly large fall of 18% in January-June 2023. As a result, emissions in the first half of the year are now nearly a third (-31%) lower than in the first half of 2022 — an unprecedented decline over such a short period.

Wind and solar outpaced a rebound in demand

Wind and solar growth was the single largest driver of the fossil fuel fall, more than exceeding a recovery in electricity demand. Electricity demand rose by 0.7% in the first half of 2024. This marked a reversal from the last two years where demand had fallen amid the gas price crisis, but a mild winter limited the increase. As wind and solar were boosted by structural growth through capacity additions as well as favourable conditions, they more than met the increase in demand to replace fossil fuel generation.

Wind and solar overtook EU fossil generation for the first time

Wind and solar generated more electricity than fossil fuels during the first six months of 2024. Wind and solar generated 30% of the EU’s electricity in the first half of the year, compared to 27% from fossil fuels. Together, wind and solar surpassed fossil generation in thirteen Member States, with four of these hitting the milestone for the first time in 2024 over a January-June period: Germany, Belgium, Hungary and the Netherlands.

The first half of 2024 shows the EU’s electricity transition in full swing, as wind and solar grew fast enough to outpace demand growth and push fossil fuels out of the mix,

the report says.

The EU’s swift action to reduce dependency on fossil fuels was evident as new wind and solar capacity came online, marking a permanent structural change.

However, sustaining the EU’s electricity transition at this pace will require dedicated policy focus to ease barriers to wind and solar integration.

Adequate support on grid connections and other enablers of swift development will be needed to ensure that economic, security and climate benefits are delivered across Europe.

An increase in renewables drove this trend. Strong wind and solar growth was the main contributor to the fall in fossil power in the first half of the year. Solar generation grew by 20-21% (+23-25 TWh) and wind generation rose by 9.0-9.5% (+20-21 TWh) compared to the first six months of 2023. Combined, wind and solar grew 13% (+45 TWh).

This meant that their share of EU electricity generation increased from 27% in the first half of 2023 to 30% in 2024, an all-time high. Hydro rebounded by 21% (+33 TWh), following droughts that had resulted in very low output for the previous two years.

The growth from solar and wind combined with the recovery in hydro generation meant that at 50%, renewables generated half of the EU’s electricity in the first half of 2024. This significantly surpasses the previous record set last year of 44%.

Low carbon sources combined to make up nearly three quarters (73%) of EU electricity generation in the first half of 2024. Alongside renewables growth, nuclear generation also increased by 3.1% (+9 TWh) across the EU, compared to the same period in 2023.

This masked two opposing trends: French nuclear generation came back online following maintenance and outages, rebounding by 19 TWh. However, closures to the last German nuclear fleet in the spring of 2023 meant a 7 TWh fall that will not be reversed.

Coal generation dropped steeply, with a 24% fall compared to the same period last year (-39 TWh). This was more than half of the 71 TWh fall in fossil generation. Gas generation fell by 14% (-29 TWh). This follows sizeable falls in the previous year: in the first six months of 2023, coal fell by 21% (-45 TWh) and gas by 16% (-39 TWh).

Unlike the last two years, the fall in fossil generation happened without significant reductions in EU electricity demand.

Demand likely would have risen further if not for a warmer-than-average winter in many Member States, which lowered electricity demand for heating. Without the impact of mild winter weather, demand would have increased by an estimated 2.1%, aligning with the IEA’s forecast rate of EU electricity demand increase of 2.3% growth per year between 2024-26.

Hungary's electricity demand in the first six months of 2024 was 4.4% higher than in h1 2023, the 7th highest among EU Member States.

This is much higher than the 1% preliminary growth figure for gross consumption of the Hungarian electricity system provided by Mavir, which excludes the production of small household power plants and power plants for own use.

The temperature-adjusted change shows an increase of 6.4%, which is how much domestic electricity demand would have increased under average temperature conditions. This Hungarian figure is the 4th highest in the EU.

Almost half of the growth in wind generation came from just two countries: Germany (+5.5 TWh, +8.4%) and the Netherlands (+4.6 TWh, +35%).

The growth in solar is more widespread, with strong capacity additions leading to large generation increases across the EU, including in Germany (+4.5 TWh, +14%), Spain (+2.7 TWh, +13%), Italy (+2.6 TWh, +17%) and Poland (+2.4 TWh, +37%). Relative growth was even faster in other countries with Hungary’s solar generation increasing 49% (+1.5 TWh) in the first half of 2024 compared to the same period in 2023.

While Hungary remains one of the EU's laggards in wind and overall renewable energy production, and is far from exploiting its existing potential, it has recently performed exceptionally well in solar energy.

Hungary achieved the largest relative increase in solar energy production, having produced 49% more solar energy in the first half of this year than in the same period in 2023. This has been accompanied by a series of new instantaneous solar production peaks in April and May, breaking Hungary's previous record set in July 2023.

EMBER also calculated in the analysis how the EU's solar and wind energy production would have developed if weather conditions had been in line with the long-term average.

Adjusted for the amount of sun reaching the ground (the difference in insolation) in the first half of 2024 compared to the first half of 2023, solar generation would have grown by 27 TWh (+24%), instead of the recorded 23 TWh (+20%).

In contrast, higher wind speeds across the EU in the first half of 2024 helped boost output. If wind speeds in the first half of 2024 had been the same as in the previous year, wind output would have grown by 5.6% (+13 TWh) instead of the 9.5% (+21 TWh) observed.

Overall, hydro generation was 15% higher in the EU than the average generation in January-June over the last five years.

The advance of solar and wind energy has been motivated by a supportive regulatory environment, low technology costs, higher market energy prices despite consolidation, and the desire to break the dependence on fossil fuels from Russia, at least for most countries, based on national security considerations.

While the scale of future falls in fossil generation is uncertain, significant wind and solar capacity additions throughout 2024 mean that this tipping point is likely to be permanent. Wind Europe expects 15.8 GW of wind capacity to be installed in the EU in 2024, while SolarPower Europe forecasts 62 GW of solar capacity additions over the same period.

Under these scenarios, wind and solar generation would still exceed fossil generation in the first half of 2025, even if hydro generation returned to its worst output for the period in the last five years and EU electricity demand grew at the fastest rate seen in the last five years.

Further acceleration is needed to sustain this transformation

Renewables have played a vital role in alleviating high power prices in the bloc, but

sustaining the pace of this transition will not be an easy feat. It will require dedicated policy action and implementation to ease barriers to future wind and solar deployment.

Annual additions of EU solar capacity increased by at least 40% or more in the three years up to and including 2023. While annual additions are expected to continue to increase, the growth rate of additions is forecast to slow to under 20% per year. Such growth would still be sufficient to reach the EU’s target of 750 GWdc installed capacity by 2030 under the REPowerEU plan. However, the latest Member State plans aim to collectively deliver only 650 GWdc by 2030, exposing a gap between EU energy goals and national ambitions.

Under current policy conditions, the EU is still forecast to fall 30 GW short of the minimum 425 GW required to meet its 2030 target, and further short of the 500 GW stipulated in the REPowerEU plan.

Beyond the positive climate and energy sovereignty effects, renewables have also played a vital role in reducing high energy prices.

As power prices return to pre-crisis levels, Europe cannot rely on the market alone to drive the necessary acceleration of renewables deployment,

EMBER warns.

Well-designed and implemented incentive schemes will remain important to sustaining momentum, as demonstrated by the impressive solar expansion continuing in Germany in 2024. Non-market barriers, such as grid capacity constraints, must also be overcome. This is evident in the Netherlands, where the network has struggled to keep pace with the country’s solar boom.

Progress has already been made in developing policies to tackle these challenges, but rapid action is needed to unlock faster growth in renewables.

EMBER concluded that that Ursula von der Leyen’s reappointment as President of the European Commission "confirms a continued mandate to deliver on the Green Deal’s ambitious targets, as she remains firmly committed to the EU’s leadership on climate action.

Thoughtful and rapid intervention to deliver on these goals is the only way to further reduce Europe’s costly reliance on fossil fuelled generation and align the EU’s energy goals with its climate obligations.

Cover photo (illustration): Getty Images