Subsidy-free renewables could balloon to a 60GW, €64bn ($78.6bn) investment opportunity across northwest Europe by 2030, according to latest analysis from Aurora Energy Research.
The UK-based research group said the prospect of large-scale subsidy-free development had emerged rapidly, with implications beyond wind and solar as a “true game-changer” for the energy industry.
Aurora released its analysis at its annual Spring Forum in Oxford, a day after Vattenfall secured up to 750MW of capacity following the world’s first zero-subsidy auction in the Netherlands.
It said the Dutch tender was one of a series of milestones paving the way for subsidy-free development to account for more than one-third of the €180bn total renewables investment potential it expects in northwest Europe by the end of the next decade.
Other key moments included the German offshore wind auctions last year, which saw the first no-support bids, a record-breaking 650MW onshore wind PPA in Sweden, and subsidy-free solar and onshore wind projects in the UK.
Aurora head of product development Mateusz Wronski said the UK alone could see 18GW of subsidy-free renewables by 2030. “Back in 2010 at the start of the Electricity Market Reform process in GB, few would have imagined that by 2018 we would be talking about a subsidy-free future for renewables. Yet, this is where we have arrived, and our research highlights clearly the enormous prize and potential in the market, not only in GB but across Europe.
“This will be a true game changer for the energy industry and policy makers, with a knock-on effect on baseload technologies as well as flexible generation,” Wronski said.
Aurora said the emergence of subsidy-free development will pose big questions for investors, who will need to assess the risks of backing projects that will have to operate unsupported in a volatile power price market.
But the research group claimed analysis makes it possible to come up with a ‘worst case scenario’ benchmark that can be used when negotiating financing or PPAs.
Aurora also highlights the role subsidy-free renewables could play in capacity markets and the potential of ‘subsidy-free CfD’ mechanisms to provide “a bridge before a deeper PPA market emerges”.
