The European Power Market is expected to witness a CAGR of around 3.5% during the forecast period, 2022-2027. The COVID-19 pandemic has negatively impacted the power market of the entire region. Across the European markets, the electricity demand decreased by around 3.6% in 2020. The fall of electricity demand was due to a dramatic slowdown in the industrial and commercial sectors. The degree of urbanization in the European Union (EU) has significant implications on the trend of energy consumption because of the increase in demand from industries that use energy for construction and manufacturing. This is expected to drive the power market during the forecast period. However, countries like Bulgaria are likely to negatively impact the region's power sector. With scrubbed projects, several leading international investors and financial institutions blacklisted Bulgaria. Hence, the country would face considerable challenges in power sector investment.
- The renewable energy sector is expected to have significant growth in the European power market due to the region's renewable generation potential and upcoming projects.
- The European power market is undergoing significant changes. The EU has set an ambitious goal of reducing its greenhouse gas emissions by 40% by 2030. This opens up opportunities for investors to invest in renewable energy sources such as wind and solar photovoltaics.
- Norway is expected to have significant growth in the European power market during the forecast period.
Europe Power Market Trends
Renewables is Expected to Witness Significant Growth
- The renewable energy segment mainly consists of wind, solar, biomass, and other renewable sources, excluding hydropower in Europe. Renewable power generation accounts for a significant share in total power generation. As of 2020, Europe had 528.530 GW of renewable energy installed capacity.
- Renewable energy in the European region has grown continuously on account of its awareness regarding air pollution. Moreover, to fill up the demand gap generated due to the decommissioning of coal, power plants are supporting the renewable energy growth in the region. In 2020, compared to 2019, Europe's share of renewables rose by 9.4%, and the growth of wind energy holds a major share.
- In July 2021, the EU commission raised the renewable energy target 2030 from 32% to 40%. This means the EU will need 451 GW of wind power capacity by 2030 and need to install 30 GW of new wind farms every year to reach the target.
- Moreover, in June 2020, Iberdrola announced that it had entered into a public-private partnership to build a 100MW EKIENEA solar photovoltaic (PV) project in Spain. The project has an investment cost of USD 78.9 million and is expected to get commissioned by 2023.
- All these factors are expected to steer the segment growth during the forecast period.
Norway is Expected to Witness Significant Growth
- In Norway, most of the electricity production comes from renewable energy sources. Hydropower is the source of most of the production. Wind and solar energy also contribute to Norwegian electricity production.
- Production and consumption of energy from renewable sources have been steadily increasing. As of 2020, the generation of renewable energy in Norway was 10.3 TWh, and the total electricity generation had reached 154.5 TWh. There is considerable potential and growth in renewable power generation. The government expects the total share of renewable power generation to rise in the coming years.
- Wind energy has the greatest potential for exploitation in Norway. Wind power accounted for only a relatively modest share of production capacity but was dominating investments and held an installed capacity of 3.977 GW in 2020.
- The country is planning to commission Innvordfjellet Wind Farm with an installed capacity of 115.2MW in Trondelag county. Zephyr AS is developing the project and is expected to get commissioned in 2023.
- Moreover, factors like cheaper energy storage, reduced cost, smart grids, and digitalization drive solar power production. Norway is in the development stage in solar power production. The installed capacity reached 152 MW in 2020, which was higher than the installed capacity of 68 MW in 2018.
- Hence, Norway is expected to have significant growth in the European power market during the forecast period.
Europe Power Market Competitor Analysis
Europe's power market is fragmented. Some of the major key players in this market include Statkraft AS, Enel Green Power SpA, National Grid PLC, Electricite de France SA, and Agder Energi SA.
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