Europe's Renewable Energy Boom: A euro 1.5 trillion investment opportunity by 2050
The development of renewable energies across Europe presents an unprecedented investment opportunity projected at around euro 1.5 trillion by 2050. Aurora Energy Research's European Renewable Energy Market Outlook 2026 (RESMOR) reports that renewable capacity is expected to more than triple between 2026 and 2050 to meet the continent's ambitious climate and energy targets.
Over the past decade, solar photovoltaic (PV), onshore wind, and offshore wind capacities have grown by over 150 per cent, laying a solid foundation for Europe's extensive long-term infrastructure investments. Nevertheless, challenges such as negative energy prices, grid congestion, and permit delays remain significant risks to the acceleration of renewable deployment.
In particular, nearly euro 600 billion of additional investment are needed by 2030 alone, as countries increase efforts to phase out fossil fuels and replace aging thermal generation plants. In the immediate future, subsidies and power purchase agreements (PPAs) are expected to remain primary market support mechanisms; however, their attractiveness varies significantly across nations and technology types.
Rebecca McManus, Aurora's senior analyst for European renewable energy, highlights that Europe is on the cusp of a renewable energy surge, with capacity expected to triple in solar and wind sectors by 2050. She emphasizes that this growth hinges on policymaker action to streamline grid infrastructure and permit processes through initiatives like the European Networks Package.
Bilateral Contracts for Difference (CfD) will continue to be critical supporting tools, with 162 gigawatts of renewable capacity already planned to be auctioned by 2030. However, Aurora cautions that auction success depends heavily on design, competition, and policy certainty.
Renewable energy auctions, particularly for offshore wind, have faced recent setbacks, with some rounds in Germany, the Netherlands, and Denmark failing to attract bids. Supply chain pressures, political uncertainty, and auction design flaws have contributed to investor reticence.
PPAs are emerging as vital alternative market entry routes, especially in Spain, the United Kingdom, and Germany, where most of Europe's PPA-backed capacity is concentrated. Recent price declines, falling below euro 40 per megawatt-hour in some markets, are driven by cannibalisation effects.
Jorn Richstein from Aurora notes that innovative and flexible PPA structures will play an essential role as industries seek decarbonisation options, responding to shifting demand and energy system needs.
Concerns over the increasing incidence of negative energy prices are mounting, with some markets recording over 500 hours of negative pricing annually. These conditions threaten profitability and have led countries to relax subsidy protections, intensifying risks for renewable generators. Aurora forecasts that after 2035, expected increases in electricity demand and system flexibility improvements should moderate negative price pressures.
Grid constraints, already exceeding 10 TWh annually in Europe, are expected to reach nearly 22 TWh in the UK, Spain, and Italy alone by 2030. Such bottlenecks hinder renewable integration and require substantial network upgrades.
Development risks persist, notably lengthy permit procedures, which can extend up to a decade despite EU regulation aiming for decisions within two years. Currently, over 1000 gigawatts of renewable capacity await grid connection approval across Europe, with Italy alone accounting for around 370 gigawatts.
Sameer Hussain, Aurora's senior analyst, concludes that record negative prices and supply constraints threaten project profitability. To sustain growth, developers must innovate, diversify energy portfolios, and incorporate battery storage solutions to manage variability and system demands effectively.