The European power market was caught in a storm in 2022. The ongoing recovery from the Covid-19 pandemic as well as Russia’s invasion of Ukraine and subsequent energy crisis upended energy markets. Many worried that governments would revert to coal-fired power generation but that didn’t happen. Instead, EU countries doubled down on the transition to renewables.
Climate think tank Ember released a new report today analysing the European electricity transition. What happened to renewables in Europe in 2022? Energy Monitor takes you through some of the main findings from the European Electricity Review 2023 and looks ahead to what to expect this year.
A sudden drop in electricity demand
In the last quarter of 2022, electricity demand dropped almost 8% compared with the year before. This drop is similar to the one seen during Europe’s Covid-19 lockdowns: electricity demand fell by 9.6% during the second quarter of 2020, for example. According to the report’s lead author, Ember’s head of data insights Dave Jones, this fall in electricity demand was the most surprising finding in the analysis.
“The fall in electricity demand at the end of the year was very sudden and it happened in every country,” says Jones. “I have read lots on falling gas demand, but I never expected to see such big falls in electricity demand as well.”
The main driver of the drop was the mild temperatures this winter, but the energy crisis likely played a big part as well.
“Mild temperatures across October and November were the main driver, but the falls were far bigger than weather alone,” according to Jones. “We suspect it is mostly driven by people and businesses looking to save money amidst the cost-of-living crisis and – in some countries – soaring electricity bills but also using less energy in solidarity to Europe’s Russia-induced energy crisis.”
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It seems unlikely that electricity demand will see similar declines in the long term as it is not based on “traditional” energy efficiency but rather on short-term electricity savings to get through the crisis.
“The challenge for policymakers is to make sure they don't see this demand drop as true ‘energy efficiency’, and rather to use it as an opportunity to step up [action] on energy efficiency,” says Jones. “Ultimately, it is down to individuals, and I think 2022 was a tipping point for customers to understand how much energy they use, how much it costs, and with it, a desire to reduce the amount that they use.”
Renewables in Europe in 2022: wind and solar generated more than a fifth of EU electricity
In 2022, wind and solar power generated 22% of the EU’s electricity, overtaking gas for the first time. In the EU, renewables are nearing 40% of total electricity generation.
Solar was one of the biggest drivers of this increase, with a record growth of 38 terawatt-hours (TWh) compared with 2021. That growth was due to a high installation rate; 41GW of solar power generation capacity was added to the grid in 2022. Wind saw a similar rise, with an increase of 33TWh compared with 2021.
Ember expects that this year renewables will only accelerate further in response to the energy crisis.
“The speed of the transition – especially for solar power – is eclipsing most governments' expectations,” says Jones. “For individuals, the decision to buy solar panels, install them and generate electricity could be a matter of days.”
Since change is happening quicker than many governments expected, they must ramp up clean energy policy and make sure that Europe is more attractive to investors.
“The main problem right now is making sure that [governments] react quick enough to that change in all areas, from grid infrastructure investments to market design – like net-metering – to planning permissions, all the way down to the training of a new generation of workers that need to deliver this transition.”
Droughts meant less hydropower generation
In 2022, extreme droughts across Europe resulted in the lowest hydropower generation in more than two decades. Generation fell to 283TWh – much lower than the average annual of 331TWh between 2000 and 2021.
The Alpine region was the worst-affected by this drought, with a hydropower decline of 34TWh compared with 2021. The Alps were followed by the Iberian and Nordic regions, which lost 15TWh and 7TWh, respectively.
However, despite low snowfall this winter, hydropower is expected to rebound in 2023.
“The latest data shows that the Alps, Iberia and Nordic basins are all somewhere close to normal levels,” says Jones. “We expect an 80% recovery this year [back] to normal.”
Nuclear, too, saw generation plummet in 2022
Nuclear faced a similar fate to hydro; due to outages in France and the decommissioning of German plants, nuclear power generation declined in 2022. Most of the reduction was caused by the French outages. A record number of nuclear plants were offline for maintenance this year, leaving state-controlled utility EDF struggling to meet demand.
The rest of the nuclear deficit was largely the result of decommissioned nuclear plants in Germany. At the end of 2021, the country closed half of its operational nuclear plants. The remaining three nuclear reactors are scheduled to close in 2023.
Like hydropower, nuclear generation is expected to rebound in 2023 as French nuclear reactors come back online.
Luxembourg had Europe's biggest share of electricity generated from renewables in 2022
Nine EU member states had more than half of their electricity generated from renewables in 2022. This is the same number as 2021, but many of the countries further increased their renewables output. Leading the pack is Luxembourg, where renewables generated 86% of electricity last year.
Of all EU countries, Lithuania saw the biggest growth: the share of renewable electricity generation in the country increased from 63% to 75%. Lithuania has a target of 100% renewable electricity by 2050. The country’s renewables growth is impressive: in 2015, just 42% of generation was renewable, but since then it has been well over half, with a record high of 80% in 2018. The Baltics have huge potential for wind power, which could be a key contributor to EU energy security.