New Generation: Building a clean European electricity system by 2035

A clean power system in Europe can be achieved by 2035; at no extra cost above stated plans and without compromising security of supply.

In least-cost pathways, wind and solar scale rapidly this decade to provide the backbone of an expanded power system. This enables higher electrification that could halve Europe’s fossil fuel consumption by 2030.

Upgrading the system and quadrupling growth in wind and solar capacity requires an additional upfront investment of €300-750bn. The avoided fossil fuel consumption would save Europe an estimated €1 trillion by 2035, with multiple benefits to climate, health, and energy security.

This analysis reveals that an expanded and (~95%) clean power system in Europe can be achieved by 2035 at no extra cost above stated plans. Larger upfront capital costs for wind and solar in the power system are offset by avoided carbon costs and avoided costs associated with new nuclear and fossil capacities. There is no cost penalty for choosing the clean power path, even when the electricity supply is simultaneously expanded to enable further electrification. If the full potential of electrification and energy savings can be realised, Europe’s consumption of fossil fuels could fall by 50% by 2030. At the EU level, this represents a greater reduction than the REPowerEU plan, albeit not as targeted at reductions in fossil gas. Nonetheless, it would deliver major improvements in Europe’s energy sovereignty at a time when reducing fossil fuel dependence is an urgent priority for climate, the economy, and security. 

The resulting fossil fuel savings – mostly delivered by electrification – could save Europe at least €530-1010bn in total by 2035. This amount is likely an underestimate given high fossil fuel prices are likely to persist. A clean and expanded power system is the critical enabler of this wider energy sector decarbonisation and the huge potential cost savings that follow.

Building a bigger, cleaner, cheaper power system

In the least-cost pathways, wind and solar provide the backbone of an expanded electricity supply by 2035.

These technologies expand to provide between 70-80% of electricity generation by 2035. To achieve this, annual growth in wind and solar capacity must quadruple by 2025 compared to the last decade; this is the central challenge to deliver a clean power sector by 2035. Over the period 2025-2035 the combined deployment rate should reach 100-165 GW per year, compared to an annual growth of 24 GW per year between 2010-2020. There are signs of acceleration, with additions hitting a record 36 GW in 2021, but a big deployment challenge lies ahead. Meeting the challenge requires permitting times to be slashed, and supply chains and manufacturing capacity to be secured. In least-cost pathways Europe’s wind fleet quadruples to 800 GW by 2035, and solar expands 5-9 fold reaching 800-1400 GW.

Stated policies would deliver just 45-65% of the wind and solar capacity required by 2035. Ambitions for 2030 set out previously by the European Commission as part of the Fit-for-55 package also fall short. However, recently enhanced proposals in the REpowerEU plan go a long way to closing the gap between stated ambition and the pathways to 2035 clean power presented here. While this is encouraging, major challenges remain in translating this higher ambition into European and national policy, and deploying the infrastructure on the ground.

Despite leading to lower overall energy system costs, building a clean, wind and solar dominated power system by 2035 will require an additional upfront investment of between €300-750bn above existing plans. While larger upfront investment is needed, cost savings are rapidly realised (as stated above). Extra investment needs are dominated by wind and solar, which require €460-720bn above existing plans by 2035. These additional capital requirements are partially offset by avoided investments in new nuclear capacities (€170bn by 2035) and unabated coal and gas (€100bn by 2035). Further investment is also required in infrastructure to increase system flexibility, such as doubling interconnection by 2035, adding clean dispatchable power sources, and deploying an electrolyser fleet to supply green hydrogen. Cost savings are quickly delivered, providing strong justification for these additional upfront investments.

Coal must be phased out by 2030 and unabated gas reduced to <5% of generation by 2035 to make Europe’s power system fit for the Paris Agreement.

Planned investments in unabated fossil capacities – particularly baseload gas power stations – are currently higher than what is needed for clean power by 2035. While the conventional gas fleet maintains a role in balancing until 2035, current energy plans deliver an estimated 60 GW of excess baseload gas assets. Instead, modelling reveals that no new baseload (unabated) gas plants need to be commissioned beyond those expected by 2025. 

The varied paths to a more flexible, reliable power system

A clean and expanded power system, dominated by wind and solar, is reliable and resilient to extreme weather events.

Granular modelling reveals that Europe can operate a 95% clean power system by 2035 without compromising reliability and that the weather-dependent, intermittent nature of wind and solar does not pose a threat to the resilience of the grid, even when faced with unfavourable climatic conditions. 

Enhancing system flexibility through a varied portfolio of technologies is key to cost-effectively integrating wind and solar, while maintaining the power system’s ability to supply growing demand. As the power supply transforms into one dominated by wind and solar, a parallel system transformation is required to provide for their distinct flexibility needs, and to efficiently integrate new types of power demand. Maximising system flexibility reduces dependence on thermal (gas) capacities for balancing. Enhancing system flexibility ensures that – if adequate wind and solar can be deployed – fossil assets can be phased out without compromising system reliability.

Fully leveraging demand flexibility enables the cost-efficient operation of the future power system. Electrification provides challenges but also opportunities if demand-side flexibility (such as smart charging EVs and flexible heat pumps) and battery storage, including that carried by electric vehicles, can be activated. This is particularly important for the integration of solar power, as shifting demand by a few hours can boost the alignment of demand with daylight hours. These flexibility services also enable peak shaving, a key tool supporting grid resilience and managing the growth of demand peaks.

Three key technologies emerge as the cornerstones of flexibility in a clean power system, maintaining system balance over a range of temporal scales: electrolysers, interconnections, and clean dispatchable generation.

By 2035, wind and solar output frequently exceed demand, at which point electrolysers convert excess supply into green hydrogen. The electrolyser fleet grows to 200-400 GW by 2035 and supplies 14-27Mt of green hydrogen, enough to cover the majority of estimated European domestic demand while maximising the value of renewables output. The REPowerEU plan broadly puts the EU27 on track for this by 2030, aiming for more than 65 GW of electrolyser capacity and 10Mt of hydrogen production. If green hydrogen is instead imported or produced off-grid, it is found that a smaller fleet of ~100 GW by 2035 would still provide sufficient flexibility to the clean power system. 

Exchange over interconnectors enables system balancing when mismatch between supply and demand is geographic. The least-cost path for the European grid sees interconnections at least double by 2035 compared to 2020, enabling the cost-efficient expansion of wind and solar capacities by allowing their deployment in countries with the most favourable conditions. 

New clean dispatchable power sources enter the system by 2035, but the complete replacement of declining fossil and nuclear capacities is not required. As such, the general trend in all modelled pathways is towards a smaller and cleaner fleet of dispatchable sources by 2035, despite increases in electricity demand (and peak demand). Maintaining the existing hydropower fleet through continued investment and modernisation is strongly recommended. New clean dispatchable capacities can take a variety of forms. Differences in system cost are small, but each technology has a unique risk profile which decision makers must consider.

The wind and solar deployment levels are unaffected by choices between dispatchable capacity options, which have bigger implications for Europe’s dependency on fossil gas. This reinforces that accelerating wind and solar deployment is the central challenge for power sector decarbonisation, as it remains essential across a range of possible system configurations.

Gas with CCS only plays a small role by 2035 in pathways that include it. The role of this technology becomes larger if interconnection expansion is limited, as wind power cannot be as effectively moved across the grid. This would compound two risk factors: the possibility that CCS technology will not reach maturity before 2035, and a prolonged gas dependence. Conversely, the need for gas CCS can be entirely replaced, at minimal additional cost, by a combination of additional solar, earlier deployment of hydrogen turbines, and some additional unabated gas capacity.  

Bringing forward investment in clean dispatchable technologies can remove the need for any new unabated gas deployment after 2025. Alternative flexibility options, such as  hydrogen turbines, gas with CCS and utility-scale batteries can be used, at minimal additional cost, to build a resilient and clean power system by 2035. 

No new nuclear is found to be cost-competitive in modelled pathways, but sensitivity analysis reveals that developing new nuclear according to national plans does not incur significantly higher system costs. Doing so would quicken the transition away from gas in the medium term, and lower long-term reliance on this fuel by providing an alternative form of clean generation to abated gas. These benefits of course need to be weighed against safety risks and the issue of nuclear waste disposal.