Europe Renewable Energy Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

Europe Renewable Energy Market Trends and Insights

Fit-for-55 & REPowerEU 45% Target

The REPowerEU plan elevates the 2030 renewables target to 45% of final energy, with Germany pledging 80% renewable electricity and the Netherlands aiming for 21 GW offshore wind by 2030.^{[1]European Commission, “REPowerEU Plan,” europa.eu} Fast-track permitting in designated “go-to” areas cuts average lead times below two years and trims WACC by 50-100 bps, yet reaching the headline goal still hinges on synchronous grid reinforcement.

Rapid Solar and Onshore-Wind LCOE Decline

Utility-scale solar in Southern Europe achieved EUR 25-30 per MWh in 2025 after bifacial-module and tracker gains, while high-resource onshore-wind sites reached EUR 30-35 per MWh, enabling subsidy-free auctions in Spain and merchant builds in Italy.^{[2]International Renewable Energy Agency, “Renewable Power Generation Costs 2025,” irena.org} Investor appetite is shifting toward merchant projects that exploit intraday volatility, even as narrower margins accelerate developer consolidation.

Rising EU-ETS Carbon Price

An average allowance price of EUR 82 per tonne in 1H 2025 rendered coal uneconomic for most hours and forced 4.2 GW of German lignite retirements. Long-term industrial PPAs are locking in wind supply for steel and chemical clusters to hedge against escalating carbon costs.

Offshore-Wind Build-Out Strategies

The EU targets 60 GW offshore wind by 2030 and 300 GW by 2050, with UK seabed leases, Germany’s 5.5 GW 2025 tender, and the 3.5 GW Bornholm Energy Island underpinning the pipeline. Turbine ratings have jumped to 15-18 MW, lowering installed costs 15-20% and turning offshore wind into a quasi-baseload resource in North Sea grids.

Grid Congestion & Interconnection Bottlenecks

Curtailment erased 8 TWh of wind and solar output in 2025, costing EUR 800 million in unrealized revenue. Limited capacity from Spain into France and from Nordic hubs into Central Europe suppresses merchant capture rates, driving co-located battery deployment despite 10-15% higher capex.^{[3]European Network of Transmission System Operators for Electricity, “Ten-Year Network Development Plan 2025,” entso-e.eu}

Retroactive Policy Shifts

Spain’s windfall levy, Italy’s tariff index caps, and Greece’s revenue claw-backs trimmed project IRRs 8-12% for legacy assets and widened WACC 50-100 bps for new builds. Developers now favor corporate PPAs and capacity-market hedges to ring-fence regulatory risk.

Segment Analysis

By Technology: Ocean Surge, Solar Scale

Solar held 38.24% of Europe's renewable energy market share in 2025, reflecting broad rooftop adoption and utility builds across Iberia. Ocean energy is on track for a 31.83% CAGR to 2031, buoyed by Scotland's commercial tidal arrays and Portugal's wave pilots.^{[4]Ocean Energy Europe, “EU Market Outlook 2025,” oceanenergy-europe.eu}

Utility-grade solar remains the volume anchor of the European renewable energy market, yet developers increasingly hybridize with batteries to smooth intraday volatility and satisfy green-hydrogen offtake contracts. Offshore wind, now standardizing 15-18 MW machines, contributes growing baseload hours at 50-55% capacity factors. Pumped-storage hydro, 12-14% of capacity, is being uprated for six-plus-hour storage duty. Bioenergy and geothermal preserve niche roles but supply key flexibility in Nordic and volcanic belts.

Note: Segment shares of all individual segments available upon report purchase

By End-User: Utility Dominance, Residential Upswing

Utilities accounted for 69.81% of Europe's renewable energy market size in 2025, leveraging green-bond access and balance-sheet depth to win capacity auctions. Residential systems, forecast to rise 11.19% CAGR to 2031, gain from subsidy-backed batteries and improved net-metering in Germany and Italy.

Utilities now bundle generation, demand-response, and retail tariffs, monetizing distributed energy through virtual power plants. Residential uptake exceeds 20% of peak-day supply in parts of Bavaria and Flanders, prompting DSOs to install smart inverters and local flexibility markets. Commercial-industrial rooftops and virtual PPAs deliver hedge value for data centers and auto plants, rounding out the demand stack of the European renewable energy market.

Note: Segment shares of all individual segments available upon report purchase

Geography Analysis

Germany retained 19.67% of Europe's renewable energy market size in 2025, under Energiewende mandates that target 80% renewable electricity by 2030. The United Kingdom is set to grow fastest at 12.41% CAGR through 2031, propelled by 8 GW of new offshore leases and competitive CfD strike prices. Spain and France each stood near 13% of capacity; Spain continues merchant solar growth while France accelerates offshore wind in Normandy and Brittany.

Italy, at 8-9%, concentrates solar in high-insolation south, while the Netherlands pairs rooftop solar with North Sea wind to reach 6-7% share. Denmark and Sweden punch above their weight per capita, the former sourcing 80% of electricity from wind and the latter balancing hydropower and wind. The rest of Europe cohort, Poland, Greece, Portugal, Belgium, and Ireland, collectively supplied one-quarter of capacity in 2025 and presents the next wave of greenfield builds supported by EU Just Transition funds and lower permitting friction. Weak Iberia-France and Baltic-Central Europe links still localize price risk, dampening project valuations by up to 15% versus well-meshed grids.

Note: Segment shares of all individual segments available upon report purchase