Europe's electricity market experienced a significant shift in 2025 as renewable energy sources, primarily solar and wind power, surpassed fossil fuels for the first time, according to a report released Thursday by global energy think tank Ember. This milestone signals an acceleration in the EU's transition towards green and autonomous energy, with potential ramifications for energy companies and investors.
Solar and wind generated 30 percent of the EU's electricity in 2025, exceeding the 29 percent produced by coal and gas. This 1 percentage point difference, while seemingly small, represents a substantial shift in market share and billions of euros in investment flows. The report did not specify the exact financial value of the electricity generated by each source, but the implications for fossil fuel companies are clear: their market dominance is eroding.
The rise of renewables is reshaping the European energy market. Increased investment in solar and wind projects is driving down the cost of renewable energy, making it increasingly competitive with fossil fuels. This trend is further amplified by government policies and incentives aimed at promoting green energy and reducing carbon emissions. The shift also comes as Europe seeks to reduce its reliance on imported fossil fuels, particularly in light of geopolitical instability.
German power supplier RWE AG, for example, is actively investing in renewable energy infrastructure. The company is constructing a solar panel site between Bedburg and Juechen, Germany, with the intention of supplying energy to approximately 27,700 German households by the end of 2025. This investment reflects a broader trend among energy companies to diversify their portfolios and capitalize on the growing demand for renewable energy.
Looking ahead, the trend of renewables outpacing fossil fuels is expected to continue. As technology improves and costs decline further, solar and wind power are poised to capture an even larger share of the European electricity market. This transition will likely lead to further investment in renewable energy infrastructure, increased competition among energy providers, and a gradual decline in the demand for fossil fuels. The speed and scale of this transition will depend on factors such as government policies, technological advancements, and the overall economic climate.
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