Is the European Renewable Energy Bubble About To Burst?

Well, is it? You would certainly never think so from Figure 1, which shows renewables generation in the EU28 more than doubling between 2003 and 2014 and continuing to grow at a healthy clip (note that except for Figure 3 all the data used in this post are from the BP 2015 Statistical Review):

Figure 1:  Annual EU28 generation from renewables, 1985-2014

Nor from Figure 2, which shows the EU28 on track to meet its target of obtaining 27% of its energy from renewables by 2030 with room to spare:

Figure 2:  Percentage of EU28 energy demand met by renewables, 1985-2014

Nor from this quote from the European Commission, which less than two months ago expressed its complete satisfaction with the way things were going:

The current EU renewable energy framework has been successful in triggering a profound transformation of the European energy sector. Renewable energy is becoming mainstream – not only in the EU, but also in the rest of the world, and this is a result of determined European energy and climate policies. By being pioneers and leading in the deployment of renewable energy, Europe shows the rest of the world that decarbonisation is possible. Moreover, the significant programmes and projects initiated in Europe have converted renewables from a discrete contributor to the energy mix to a visible and reliable source of energy for everyone.

But on closer inspection things are not quite as rosy as they seem.

My attention was first drawn to the fact that all is not well with renewables in Europe by the graphic below, which I came across while researching the Difficulties Of Powering The Modern World With Renewables post. It shows clean energy investment in Europe peaking in the second quarter of 2011 and declining since then as quickly as it went up:

Figure 3:  Investment in clean energy in Europe since 2004 (graphic from Bloomberg New Energy Finance, first quarter 2015 data from Reuters added by RA)

There are signs that the downtrend in investment may be flattening out, but if it continues, then what?

Then renewables growth in Europe soon grinds to a halt.

The decline in investment is not the only sign of an impending slowdown. Downtrends are also visible in the generation statistics. We’ll get to them shortly, but first we have to set the scene. Figure 4 shows annual generation in the EU28 from the three main sources of renewable energy – 1) hydro, 2) biomass, waste gases and others, collectively referred to as biomass, and 3) wind & solar, which I’ve combined for convenience, since 1985. (BP supplies incomplete generation data for seven small EU28 countries – Croatia, Cyprus, Estonia, Latvia, Luxembourg, Malta and Slovenia – but this will make no appreciable difference to the EU28 totals.)

Figure 4:  Annual EU28 generation from individual renewables sources, 1985-2014

Between 1985 and 2014 annual renewables generation in the EU28 increased by 520TWh, with 45TWh (9%) of the increase coming from hydro, 129TWh (25%) from biomass & others and 346TWh (67%) from wind & solar. So far as I know the EU28 has no significant amount of new hydro capacity in the pipeline, so future growth of renewable energy will depend on continued growth in wind and solar, and to a lesser extent biomass. What levels of growth might we expect?

Figure 5 shows annual percentage growth in biomass generation in the EU28 since 1993 (the data before 1993 are too erratic to estimate growth rates). Growth rates increased after 1993, peaked in 2003 and since then have been on a declining trend that shows no  obvious sign of  flattening out:

Figure 5:  Annual growth rate, EU28 biomass + other generation, 1993-2014

Projecting the trend line drawn through the post-2002 data (I used 2002 instead of 2003 to avoid being accused of cherry-picking a high start year) shows growth straight-lining to zero in 2025, in which case future EU28 biomass generation will look like this:

Figure 6:  Actual and projected growth of EU28 biomass + other generation, 1985-2030

Is it possible that growth in biomass generation will cease in 2025? The future of biomass in Europe is certainly questionable. I can’t get any hard numbers, but it seems that most biomass is co-fired in small amounts with coal in coal plants, which are scheduled for extinction in much of the EU28. Fuel supply is also an issue, with Europe already having to import large tonnages of wood pellets from the US. Then there are the growing doubts as to whether biomass is really as carbon-neutral as it’s claimed to be. So I think the answer is yes. Growth in biomass generation in the EU28 could indeed zero out within ten years.

Figure 7 shows annual percentage growth in wind & solar generation, the major players, since 1993 (the generation totals are too low to estimate meaningful growth rates before then). Growth rates have been generally declining since 1993 and declining precipitously since 2011, the year in which investment peaked (Figure 3):

Figure 7:  Annual growth rate, EU28 wind + solar generation, 1993-2014

Figure 8 shows what future EU28 wind & solar generation will look like if the decline continues to follow the long-term trend line. Growth goes to zero nine years from now in 2023:

Figure 8:  Actual and projected growth of EU28 wind + solar generation 1985-2030, using Figure 7 trend line

And Figure 9 shows what the growth curve will look like if the post-2011 downtrend continues:

Figure 9:  Actual and projected growth of EU28 wind + solar generation 1985-2030, using post-2011 downtrend

Are these results plausible? As the IPCC would say, they’re projections, not predictions, and certainly wind and solar growth won’t come to a total halt this year if only because of projects under development. But the writing seems to be on the wall. Renewable energy growth in the EU28 is headed for a slowdown. The bubble won’t go pop and disappear altogether, but it will begin to shrink, like a balloon with a pinhole in it. Then the question becomes whether the EU28 will blow the balloon back up with yet more renewable energy subsidies, which are what caused it to inflate it in the first place.

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53 Responses to Is the European Renewable Energy Bubble About To Burst?

  1. Yes, it was obvious from the beginning that the renewables programme was unsustainable because of the scale of subsidies.

    The justification was that subsidies could be phased out once the infant industries reached maturity. Now that governments are unwilling or unable to continue the subsidies, consumers are expected to be willing to shift to a regime of higher prices.

    More probably, the consumers will vote to replace the promoters of renewables.

    The entire farce to replace the fossil fuel and nuclear fuel industry by renewables was no better founded than belief in the Tooth Fairy or Santa Claus.

    How much economics, biology and physics was needed to see this when it was first proposed? In my opinion, not much.

    • Leo Smith says:

      I could not agree more.

      Way back in the day I found a paper – an economic analysis – of renewable energy.

      The writing was on the wall then.

      Its not 100% accurate with hindsight, but it isn’t far off. Large scale wind was so expensive it didn’t even make their graph..

      Politicians have been putting their fingers in their ears about all this ever since. Driven by a ‘need to be Green’ they have allowed the most stupendous wastes of public money to pass by, applauding them as they go.

      A global recession of unparalleled magnitude, a global climate that refuses to warm up on cue, and a growing awareness of the issues sounds the death-knell.

      It was always only a matter of time – the question is how far we will as a political system explore all the other alternatives before we discover the right thing….

  2. Willem Post says:


    That is a great post.

    Germany is a major part the EU’s RE. Your point would be made even more, if the RE graph were split: Germany + “Rest of the EU”.

    ENERGIEWENDE 1 had goals for the 2000 – 2014 period

    ENERGIEWENDE 2 has defined MW and RE goals for each renewable for the 2015 – 2030 period, i.e., Germany’s RE contribution is defined and likely will take place.

    That leaves the “Rest of EU” RE contribution the more doubtful part.

    It would be interesting to add a graph with Germany (defined) + “Rest of EU” (what it would have to be to meet goals) = 2030 goal.

    See the end of this article for data.

  3. Dave Rutledge says:

    Hi Roger,

    This is a great approach. I have my students do an exercise like this (a growth rate plot) for world wind power. It ends up at about 10% of current world electricity. Not that impressive.

    We will see.

    • Leo Smith says:

      10% is as far as you want to go with (intermittent) renewables before the externalised costs of balancing them start to really damage the whole economics.

      Or is that Eco-no-mix! 😉

      • Wind & solar supplied 11% of EU28 electricity in 2014.

        • roberto says:

          Correct… the biggest chunk being represented by the almost EIGHTY GW of wind and PV in Energiewende-land… which can keep on installing the useless turbines and even more useless solar panels only because it is, basically, the only big country with a sound economy… all of the other big economies have touched the upper limit of “integrability”of the intermittent source… where the limit is not only the engineering/physical one of being capable of handling the electricity generated by more specifically of being able to support the hefty “incentives” without which practically no turbine or panel would have been installed.
          Italy and Spain have reached the limit… Italy has gone from being the first country on the planet in terms of yearly installations… 8 GWp or so in 2011 to installing about 400 MWp in 2014 (the “incentives'” limit of 6.7 BEuro/year was reached in July 2013)… Spain same thing… now it is the turn of “sunshine England” to pull the chariot of PV (other than Germany, that is) on the front of installations… for 2014 UK has the most PV installation of them all!… 2.4 GWp out of 7 total… isn’t that incredible?… would be like Lybia being the first country in terms of pellet stoves sold! Ahahaahah… sorry, couldn’t resist.

          It’s the funniest thing I’ve seen recently.

          • Willem Post says:


            Here are some interesting German solar MW data

            2015………416.514, first 4 months

        • Willem Post says:

          And EU economic growth slowed to a crawl, partially due to costly RE.

  4. Sam Taylor says:

    This is basically how Vaclav Smil argues all energy transitions go. Rapid exponential growth from the low base until the source becomes “material” (say around 1%) and then the growth slows significantly as it gets more difficult to change up infrastructure and so on to adapt to the new energy source. Shell had a piece in nature on this the other year, and their predictions (reading from the graph) seem to be in about the right ballpark ( ).

    So I wouldn’t say it’s a ‘bubble bursting’ so much as an inevitable part of the process of expansion and integration of any new energy technology.

    • Willem Post says:


      That means the LCOE, $/kWh, of future additions of renewable energy will be more costly than the prior ones.

      Germany is now well beyond that stage, but failed to make huge investment in transmission to accommodate that next level during the past 10 – 15 years.

      As a result, it has to increasingly rely on nearby grids to spread out its energy at near zero cost to the recipients.

      Because Germany is rich in other ways, it can afford this folly longer than other countries, albeit at a lesser economic growth rate, which adversely affects those other countries.

      Losing a good chuck of the lucrative Russian market to China and others will be another headwind.

    • Here’s the graph from the Shell article.

      Shell says: “The sheer scale and inertia of the energy system may explain why some conclude that the energy challenge requires a response comparable to industrial war efforts. Alas, such arguments completely ignore the second law of deployment. In addition, was-scale efforts typically burn out within a decade, leaving a massive bill for posterity.”

      The second law of deployment states: “After materiality growth changes to linear as the technology settles at a market share. These deployment curves are remarkably similar across different technologies”.

      So what market share will wind and solar power settle at? Given the unsolved (and presently unsolvable) problem of integrating large quantities of it with the grid I would say it was already at or close to that level.

      • I might add that in a world unconcerned with climate change, sustainability and “going green” the market share for wind & solar, rounded off to the nearest percent, would be zero.

        • PhilH says:

          And presumably also nuclear, since it’s significantly more expensive than carbon fossil fuels. Until the CFFs run short, when it’ll be a choice of nuclear, renewables, or (more likely) both. We might as well go straight to this latter scenario and save ourselves the cost of the CFF infrastructure in the intermediate period, which will have to be junked and written off.

          • Roberto says:

            Nuclear is more expensive, capital-wise, only if externalities are left out, otherwise with 10-50 deaths/TWh coal has no chance of costing less than nukes over the long term.
            This makes the Energiewende joke even more of a joke… the German geniuses have stopped 65 TWh/y of perfectly functioning reactors ‘to save lives in case of a Fukushima-like’ accident, which has caused no death, and they have pumped up their life/coal production which kills a couple thousand people every year.

      • Sam Taylor says:

        Well, an upper limit would presumably be when the technology in question was supplying a share of electricity equal to it’s capacity factor, since at this point it would at times reach 100% of demand (this is discussed here: ). Though I suspect you’re right that we won’t see penetration a great deal higher than current levels, barring some kind of miraculous storage breakthrough.

        The difference between wind and solar and every other source on that shell chart is, of course, that all the other forms of energy are good enough to store themselves to allow us to use them when we please.

        However even in a non-green.climate change world I think wind and solar would get some penetration. Onshore wind is relatively cheap and would probably make limited economic sense in some places. Similarly solar in summer peaking grids in places like the middle east or Australia. Think how much extra revenue Saudi could make if they could export more oil during the hot summer days, instead of burning it to power air conditioning units.

      • Euan Mearns says:

        Past energy “transitions” have in fact been additive and not substitutions with the exception of whales. They have normally happened naturally driven by thermodynamics and their cousin, economics, with perhaps the exception of nuclear that was in part driven by national security.

        Trying to introduce poorer quality energy sources at higher price flies in the face evolution, thermodynamics and economics.

        • Roberto says:

          ‘Trying to introduce poorer quality energy sources at higher price flies in the face evolution, thermodynamics and economics.’

          Euan: if you don’t mind I’d like to use your last, concise sentence, and adopt it for my future discussions… It’s just perfect!

      • Willem Post says:


        The y-axis is marked terajoules/year. Should that not be terawatt/year?

        Is about deployment, MW, not production, MWh.

        joule = newton.meter = watt.second

  5. Graeme No.3 says:

    So long as the subsidies last, there will be “renewable energy” and people willing to put money into them.
    The subsidies will last as long as the tax payers don’t revolt.
    The hope that the Bureaucracy can continue the scam even though the taxpayers revolt is stupid.
    When the taxpayers revolt i.e. query their electricity bills the politicians will change sides. You will be amazed at the number who “always had doubts” and who have retired rather sooner than (they) expected.

    In practice, the smart ones have worked out that “renewables” won’t be profitable (Figure 3).

  6. Douglas Brodie says:

    If investment in renewables does collapse, Figures 8 and 9 will not end in flat lines, they will start to decline as old equipment wears out and is closed down without replacement.

    • The concept of peak renewables is an interesting one. It’s actually analogous to peak oil. Peak oil is caused by a decline in readily-extractable oil reserves. Peak renewables is caused by a decline in readily-extractable subsidies. Hubbert lives.

  7. PhilH says:

    What I take from Figs 1 & 2 is that the amount of RE generated has been growing steadily recently (2010-2014), DESPITE the steady fall in the amount of money needed to achieve it (Fig 3), thus indicating that RE continues to get cheaper. What this data doesn’t shed light on is when (or if) the various RE technologies (without subsidies) will become cheaper than the alternatives (without subsidies), particularly for consumer-generated energy, where it just needs to be cheaper than retail rates rather than wholesale rates, at which point the curves are likely to turn upwards.

    • A C Osborn says:

      RE will not “get cheaper” by very much as Wind Farms will have to go Offshore wherever possible due to public concerns, which is much more expensive. Solar is currently being sold at “dumped” prices so that China can offload there stocks, but their big companies are going broke.
      Investment in Renewables may continue, but i think you will see an even bigger decline in the investment in the companies supplying renewables.

    • Willem Post says:


      RE becoming cheaper? You are joking?

      The increasing RE of the past few years is due to prior RE investments. It takes years to take projects from the initiation/financing stage to the production stage.

      The decrease in investments shown by the graph will result in reduced RE percent increases for a while, and then near-zero percent and then decline; it is called peaking, followed by decline.

  8. roberto says:

    “What this data doesn’t shed light on is when (or if) the various RE technologies (without subsidies) will become cheaper than the alternatives (without subsidies), particularly for consumer-generated energy, where it just needs to be cheaper than retail rates rather than wholesale rates, at which point the curves are likely to turn upwards.”

    Other than a lucky few, particular, cases… it will never happen!… consumer-generated energy will never become widespread enough in order for the scenario you’ve outlined to be true…. there’s simply not enough “battery”, of any kind, capable of allowing the masses to leave the grid and be their own masters of energy…no way!…

    The “S” shape of the production curve of any technology is universal, they all have a similar shape,… I think to remember there was a very nice discussion about this, full of links to documents and studies, in the now discontinued blog “The Oil Drum”…


    An exemple:

  9. Graeme No.3 says:


    I think PhiH is taking the selling price as proof that renewables can be cheaper. i.e. subsidised renewables v conventional loaded with the extra costs from variability.
    The cost of going off grid is horrendous to the ordinary citizen. Especially if he wants renewable power all the time, but that could mean storing a months supply. Cue the diesel generator out of sight.

    Investment in Europe in either 2013 or 2014 was half that in either 2010 or 2011.
    The money isn’t coming in fast enough to keep the scheme going. Sweden and France are spending money, but who else?

  10. Graeme No.3 says:

    Willem Post:
    “A 1,550 Ah system, wired for 48 V, sufficient for about 4 days, would cost about $10,000 installed. An 10 kW system would cost about $40,000 less subsidies”.
    That’s $50,000 before you add in the cost of the NEW HOUSE and the NEW car.

    And what makes you think that the subsidies would be available for everybody? The whole basis of subsidising PV panels is that a minority gets the benefit (thank you) and the majority pay for it.

    I have no objection to a low energy using house, although the rate of air change looks very low in the examples calculated. Still, a heat exchange unit would help with a larger turnover rate. There is also the assumption that suitable sites (full sun access for the PV panels) would be available for all. And speaking of PV, I very much doubt their claim of over 5kWh on an overcast day. That’s not much cloud. I have had days, not many, when I’ve had the equivalent of 2kWh (scaling up to 10kW unit).

    And as someone living in a much warmer climate I believe some cooling would be necessary, unless the new house was underground as at Coober Pedy. Yet even in that town it is cheaper to build above ground and use an air conditioner for motels.

    No, your example is merely proof of what I said.

    • Willem Post says:


      I suggest you familiarize yourself with the Swedish code for houses which has been in effect for quite some years, and it strictly enforced.

      As a result, all the new-built housing since then is highly efficient.

      In the Netherlands, my cousin lives on the ninth floor in a 12-story building, part of a complex of (20) 2- and 4-story buildings, all of which are geo-thermally heated and cooled (the coils are under the parking lot).

      It uses a minimal quantity of electricity/ft2/yr, which could be produced by covering the parking lot with a roof and panels.

      The building is over 20 years old, when panels were much more expensive.

      I have over 20 years of experience analyzing/designing building energy systems.

      • BillB says:

        An expert who sat on the body advising government has told me that the weak energy efficiency standards for new build housing in the UK are seldom checked or enforced.

        As with renewables, theory is everything!

        • Willem Post says:

          Try that in Sweden and Norway and you do not get an occupancy permit.

          Retrofitting to code to rescue the situation is closely supervised and very expensive.

  11. Graeme No.3 says:

    Willem Post:

    I am not saying that reducing household energy use is a bad thing. I am saying that it has to be paid for, and that will be reflected in the buying price. My electricity ‘usage’ is slightly less than half the average for my house size and area (figure from the supplier).
    My electricity is ‘paid’ by my solar panels and their exorbitant feed-in tariff; paid by those who can’t afford the capital cost, or haven’t any suitable place to install solar PV panels. I’ve never deluded myself that there was anything “moral” in installing them. With luck they will pay for themselves this year.

    In a lot of Australia summer heat is the big problem, especially in humid areas. In the dry areas building under ground leads to the lower usage and the greatest comfort, but underground or earth berm types are rare because of cost. If I had been fortunate to have the money available when I wanted a house, I would have built an earth berm house, but too late now. Mud brick and straw bale types are still rare and appeal to a narrow section of society. Their low initial cost is offset by the higher maintenance necessary, a factor also when it comes to “every man his own power station”; those figures don’t include the cost of replacing batteries or inverters every few years.

    I wonder how suitable those combined heat and electricity units would be in Europe. Here, they are not economic, because the heat component isn’t that useful – (I forget the average annual temperature of Melbourne but it is close to double that of Copenhagen) – especially as you go North, where the dehumidifying action of air conditioners is welcome.

    • Willem Post says:


      It is true almost all people are stuck with their houses. Relatively few take the plunge and build as they should.

      But if an energy code is in place, as in Sweden, no one has a choice. You build to the code or better, or you get no occupancy permit.

      On of my in-laws lives near Oslo, Norway, has built a new house with in-floor heating with a ground source heat pump system, which, BTW, work well in warm climates as well.

      The key is maximize insulation and minimize infiltration. The heating, cooling and electrical requirements become so little, they are not worth discussing.

      • BillB says:

        An expert tells me that the UK has a problem in enforcing energy standards in newbuild housing.

        There is absolutely no point in setting even weak standards unless they are checked and enforced.

  12. Graeme No.3 says:

    Willem Post:

    The key is maximize insulation and minimize infiltration AND not share your living space with anybody hooked on baked beans.

    • Willem Post says:

      Such houses are required to have positive ventilation of 0.5 ACH per code.

      With a one micron HEPA filter all pollen, allergens, and almost all air pollution particulate is removed.

      With a 80% efficient air to air heat exchanger most heat is kept in the house.

      It requires a new level of thinking already practiced in Sweden for many years.

  13. Ed says:

    The choice faced by governments is whether to subsidise renewables at today’s prices in order to reap the rewards later on when energy prices will be far higher. This is where Germany will be laughing at the rest of the EU for their failure to invest in renewables now while it is relatively cheat to do so.

    The complacency by the average person is pretty amazing at the moment. My hunch is that at some point in time panic will set in. I have no expectation that this will occur very soon. However when it does happen, we will go all out for renewables in a desperate, but ultimately futile, bid to extend the fossil energy age.

    • A C Osborn says:

      Ed, what a wonderful freudian slip
      “This is where Germany will be laughing at the rest of the EU for their failure to invest in renewables now while it is relatively cheat”
      Yes it is all a big CHEAT for the Tax payers.

  14. Graeme No.3 says:


    The panic is to get into renewables regardless of cost. Based on an unproven hypothesis that CO2 causes global warming.

    “The complacency by the average person is pretty amazing at the moment”. Given the never ending bombardment of impending doom stories I would say astounding. Perhaps they’ve worked out it is just another improbable scare.

    As renewables such as wind and solar PV have a short life, and a poor record at reducing emissions, wouldn’t it be better to spend money on better methods with lower emission?

    • PhilH says:

      Could you please detail the costs & benefits of the “better methods” you propose?

      • Graeme No.3 says:

        Sorry, I meant to refer to research into better methods e.g. thorium, fusion etc.
        But since you want more, I point out that Australia’s electricity is based 72% on coal. Upgrading those stations to the best current practice would reduce emissions by over 26% or 21-22% of those from the sector. Around 7% overall for Australia or slightly less than 0.1% of the World’s emissions. Despite the views of enthusiasts I very much doubt whether wind turbines could achieve more than a third of that, regardless of how many are built. Given the shortage of hydro – after years of opposition from those who don’t want CO2 emissions – wind may not come anywhere near that small reduction.

        Oh, forget nuclear. The Greens won’t allow it.

  15. Mike Higton says:

    Just a small point but the investment graph shows billions of dollars, not Euros. So is some of the apparent decline due to the weakening of the exchange rate over recent years?

  16. Willem Post says:

    “As renewables such as wind and solar PV have a short life, and a poor record at reducing emissions, wouldn’t it be better to spend money on better methods with lower emission?”

    And that would be with EE, as I outlined in my above comments.

  17. Bernard Durand says:

    @ Willem Post, you seem to have a good knowledge of what is going on in Sweden concerning the use of heat pumps in housing to extract solar heat from the soil or from the air. Are they mostly air-air or soil-water devices? As a whole how much energy is pumped out of the external medium and how much electricity is use for that? Best regards. B.DURAND

    • Willem Post says:

      The drawback of ground source is its high initial capital cost, but such systems have much greater COFs than air source systems.

      The house must be designed for heating with low temperature fluids, such as used in in-floor systems.

      • Bernard Durand says:

        Willem, thank you for your answer. I realise I was not very clear. My concern is to find an evaluation of the total quantity of energy which is pumped out from the soil ( TWh, Mtoe) in the whole country, and of the total quantity of electricity which is used for that. I was unable to find these figures sofar, even by asking to Swedish officials.

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  19. Craig Austin says:

    Renewable energy is not an industry, it is a reflection of government policy.

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