As Europe faces an energy crisis amid volatile fossil fuel markets, investments in renewables have proved vital to shielding consumers and businesses from the worst price hikes.
Since 2019, Spain has doubled its wind and solar capacity, adding over 40 GW – more than any other EU country except Germany, whose power market is twice the size of Spain’s.
As a result, Spain’s electricity price is much less influenced by the ever-fluctuating cost of gas, which increased by 55 per cent the day after the Iran war started and has continued to fluctuate.
In the UK, wind power has helped break a new renewable record. On 26 March, British wind energy generation hit a new high of 23,880 megawatts, enough power to cover 23 million homes.
An analysis by SolarPower Europe found that harnessing sunlight for energy has saved Europe more than €100 million per day since 1 March, resulting in total savings of more than €3 billion.
If gas prices remain high, experts say that total savings in 2026 could reach as much as €67.5 billion.
Now, a new report has found that electricity was made on average almost 25 per cent cheaper in some European countries between 2023 and 2025, thanks to renewables.
Wind and solar can reduce Europe’s exposure to fossil fuel shocks
“A growing literature shows the role that renewable energy plays in displacing high-cost fossil fuel generation out of the electricity mix, and, in that way, exerting downward pressure on wholesale electricity prices,” Positive Money, an advocacy group that campaigns for monetary reform, writes in its report.
The organisation found that the expansion of renewable generation reduced electricity prices by an average of 24.2 per cent over the 2023-2025 period in the 19 countries analysed.
Data also shows that price impacts grow stronger when more renewables come online.
However, the decoupling of electricity prices from gas prices remains at an early stage in many European electricity systems.
“Our findings therefore underline the importance of wind and solar deployment, which, together with flexibility resources, can largely reduce Europe’s electricity markets’ exposure to fossil fuel shocks,” the group writes.
“By doing so, this process makes the electrification of the economy more attractive, further reducing Europe’s vulnerability to fossil fuels.”
‘An opportunity to reduce Europe’s vulnerability’
Positive Money says there are two key policy implications that follow from their findings.
In countries with limited wind and solar capacity, accelerating their deployment is “low-hanging fruit” for reducing wholesale electricity prices.
In countries with large wind and solar capacity, scaling up flexibility resources will further enable the disconnection of wholesale prices from traditional cost drivers. This could include investing in batteries to store excess power, encouraging home solar, and introducing policies to balance supply and demand, such as variable tariffs.
“The exposure of electricity prices to fossil fuel shocks complicates the electrification of the economy, which is a key pillar of the energy transition,” the group says.
“However, accelerating these system-wide changes leads to the decoupling of electricity prices from fossil fuel shocks, which in turn supports further electrification.”
Ongoing events highlight the urgency to accelerate these trends.
“Continued fossil fuel shocks compromise Europe’s energy security, price stability, and competitiveness, among others,” says Positive Money. “In the absence of sufficiently rapid progress, Europe will remain subject to the multifaceted risks that fossil fuel dependency poses.”
