In 2024, the European Union reached a milestone in its energy transition: renewable sources accounted for 47% of total electricity generation, following a net increase of 93 terawatt-hours (TWh). This is according to the fourth-quarter report published by the Directorate-General for Energy of the European Commission (DG Energy), offering a comprehensive annual overview of the European power market.
“The strong growth in renewable generation, especially in solar and wind, compensated for the drop in fossil fuel use and reinforced the EU’s path towards decarbonisation,” states the official document.
The total renewable output reached 1,300 TWh in 2024, driven by favourable weather conditions, new capacity additions and policy support frameworks at national and EU levels. This progress is seen as a cornerstone in achieving the 2030 targets of the EU Green Deal.
Breakdown by Technology
The rise in clean energy was primarily fuelled by solar photovoltaic, which experienced a 19% year-on-year growth, followed closely by wind power, which expanded by 11%. Together, these two sources accounted for over 70% of the new renewable generation.
Hydropower remained relatively stable, while biomass contributed marginally to the overall increase. In contrast, coal-fired generation declined by 24% and gas-based generation fell by 17%, reflecting high carbon prices and increased competitiveness of renewables in the merit order.
“Renewables are no longer peripheral—they are central to the European power system and increasingly dictate market dynamics,” DG Energy affirms.
Impacts on Wholesale Market
This shift in the generation mix contributed significantly to lower electricity prices across wholesale markets. The average wholesale electricity price in the EU dropped to €87/MWh in 2024, down from €130/MWh in 2023 and €215/MWh in 2022, representing a cumulative 60% reduction over two years.
Prices were lowest in Nordic countries, such as Norway and Sweden, due to abundant hydro and wind resources, averaging €47/MWh. Conversely, Italy reported the highest average prices at €127/MWh, influenced by higher dependence on gas and constrained interconnection capacity.
“Falling gas prices, declining demand and increased renewable supply worked in synergy to ease market pressure,” the report explains.
Regional Integration and Market Efficiency
One of the report’s key highlights is the improved efficiency and convergence of the European electricity markets. Cross-border flows rose by 7% in 2024, underpinned by the operationalisation of new interconnectors and strengthened regional coordination.
The day-ahead price convergence between Spain and France reached 83%, demonstrating high levels of integration within the Iberian and continental European markets. DG Energy notes that such developments enhance system resilience and optimise resource allocation across the region.
Retail Market and Consumer Prices
Despite the pronounced drop in wholesale prices, retail prices for consumers fell by only 12% on average in 2024. This discrepancy is largely attributed to the lag in tariff adjustments, the prevalence of fixed-rate contracts, and the structure of national taxation and levies.
Germany and Denmark continued to exhibit the highest retail rates, while eastern EU Member States maintained the lowest average prices for households. The report underscores the importance of retail market reform to ensure that end-users benefit fully from favourable wholesale conditions.
“Structural delays in price transmission remain a barrier to faster adoption of energy efficiency and electrification,” DG Energy warns.
Outlook and Structural Evolution
Looking ahead, the report anticipates continued growth in renewables, with new capacity additions in offshore wind and utility-scale solar expected to drive further increases in clean generation. Simultaneously, demand is projected to recover moderately as the macroeconomic outlook stabilises.
Volatility in wholesale prices has decreased notably compared to the crisis years of 2021–2022, creating a more stable environment for power producers and investors. Energy storage and grid flexibility solutions are identified as next-step enablers for further renewable integration.
“The transformation of Europe’s power sector is no longer incremental—it is structural,” concludes DG Energy. “The foundation has been laid for a cleaner, more competitive and resilient energy future.”
