European renewable energy policy and investment
Europe’s policy and finance environment has enabled some of the fastest deployments of renewable assets globally. In 2016, it became the first region in the world to surpass 100GW of solar PV capacity, with 140GW of wind power installed. But policy and finance issues are now arguably at least as important as technology, with policy now the key determining factor in ensuring continued growth in renewables at least cost to consumers. Investment in the energy system has traditionally come mainly through large utilities. But policymakers are not in the same position as they were five years ago when deployment levels were lower, the costs of technologies such as solar were much higher and policy decisions had very different outcomes. Even the costs of offshore wind are falling as indicated by DONG’s recent winning bids for the Borssele 1 and 2 projects at €72.2/MWh. This report finds that the cost of financing will be driven as much by the types of investors as by how investors evaluate project risks, returns and policy. In other words, how investment is divided among utilities, institutional investors, households or companies is one of the most important factors determining the average cost of renewable energy to the system.