• The EU’s ambitious plan to reduce its dependency on Russian fossil fuels is going to require at least €1 trillion in investment.
• In order to achieve the goals they have set out, the EU will require wartime levels of investment, construction, and production.
• The EU is already working to speed up the permitting process to ensure that new solar and wind projects can be brought online in time.

Assuming an average cost for solar PV of €1.1 million per megawatt (MW) of installed capacity, installing 411 GW between now and 2030 would represent an investment of €452 billion. Reaching 45% renewable energy supply by 2030 additionally requires significant investments in wind capacity – for which the plan does not have a lot of detail. Rystad Energy’s estimates suggest another 450-490 GW of wind capacity would need to be installed by 2030 to reach the target of 45% renewable energy supply, requiring an additional €820 billion in investments.

Such a transition will require huge investments but thus far the European Commission has been unclear about the total amounts allocated to achieve its goals. Recent announcements and communications mention that €225 billion is already available in loans and that an additional investment of €300 billion could be needed by 2030. Regardless of the total amount being assigned to new renewable energy developments, the figures seem to fall considerably below the required additional investment needed in power transmission, storage, gas infrastructure, and hydrogen production. Furthermore, such a large demand for new capacity will put additional pressure on the supply chain for solar panel and wind turbine manufacturing and could lead to a further increase in costs for these technologies.

“The ambition of the REPowerEU plan is huge. Power companies and energy markets will be looking for details on investments and infrastructure. While the targets are achievable, it will require wartime-like planning, levels of investment, construction, and production to meet goals by 2030,” says Carlos Torres Diaz, head of power research at Rystad Energy.

Targets breakdown

The EU has identified six key areas to reach REPowerEU targets: 

• Smart investment
• Tackle slow and complex permitting for major renewable projects 
• Saving energy
  • Increase binding energy efficiency targets from 9% to 13%
  • Cut gas and oil demand by 5% through behavioral changes
• Diversifying fossil fuels supplies
  • Develop a joint purchasing mechanism to negotiate gas purchases
  • Develop major hydrogen corridors in the Mediterranean and the North Sea
• Accelerating the rollout of renewable energy
  • Increase the target for renewables from 40% to 45% of total energy supply by 2030
  • Double solar PV capacity by 2025 and reach 600 GW of installed capacity by 2030
  • Double the rate of heat pump deployment
  • Eliminate red tape for renewable energy project permitting
  • Produce 10 million tonnes of renewable hydrogen and import an additional 10 million tonnes by 2030
• Reducing fossil fuel consumption in industry and transport
  • Reduce natural gas consumption from the industrial sector by an additional 35 Bcm by 2030 by using renewable hydrogen, biogas, and biomethane

Reducing red tape

REPowerEU acknowledged the need to address the bottlenecks in the permitting process. Currently, a wind energy permit could take up to nine years. To address this issue, the Commission put forward a new legislative proposal on renewables permitting based on three things:

1. It will declare that renewables are presumed to be in “overriding public interest”. That would ensure renewable energy projects are prioritized, especially in the current scenario and until climate neutrality is reached.
2. The proposal also urges nations to create so-called, “go-to” areas. These areas are to be set following an environment assessment (declaring that renewables projects are not a direct threat to the environment). Projects in these areas would need to be permitted within one year.
3. The Commission also plans to keep existing permitting deadlines (i.e., two years) for the normal new projects and one year for repowered projects.

Speeding up the permitting process is crucial for the European Union to be able to meet its ambitious targets.

By Rystad Energy