European Electricity Review H1 2021

European Electricity Review: H1-2021

Emissions down as Europe's electricity comes back cleaner

Charles Moore

European Programme Lead

28 July 2021 | 12 min read

Executive summary

EU-27 key findings

  • 01


    Fossil fuels fail to recover as renewables grow.

    Electricity demand was back to pre-pandemic levels, but fossil fuels are not. Emissions were 12% lower.

  • 02


    Coal’s structural decline continues.

    Coal generation was 16% lower (-36TWh) in H1-2021 than in H1-2019.

  • 03


    Clean power growth resilient but insufficient.

    Two-thirds of EU power was clean in H1-2021, but year-on-year progress must double to meet EU climate targets.

  • 04


    Fossil power costs skyrocket.

    It is now twice as expensive to generate electricity from existing fossil gas & hard coal power plants than new wind & solar.

*Clean power includes all generation sources except unabated fossil fuels

Now the pandemic effect on the power sector has passed, the overall trend is clear: fossil fuels are in rapid decline as Europe cleans up its power sector. But progress is nowhere near fast enough to meet the EU’s own emissions target, let alone reach 100% clean electricity by 2035. There’s never been a better time to accelerate the transition to wind and solar with the costs of sticking with fossils painfully clear.

Charles Moore European Programme Lead, Ember

EU Country Insights

How is the electricity transition progressing in EU countries?

The Big Five


These five countries account for almost two-thirds of EU electricity demand.

Germany
Reduced coal power exports sees coal fail to recover to pre-pandemic levels despite a strong rebound in electricity demand and poor wind output in H1-2021.

In H1-2021 Germany’s electricity demand fully recovered vs. H1-2020 and was even a little higher (+1.4% / +4TWh) than H1-2019. However, electricity generation from fossil fuels in H1-2021 remains 6% lower (-7TWh) than before the pandemic (H1-2019), driven by coal power which was -14% lower. Fossil gas has increased (+12% / +4TWh) over the same period. Output from renewables actually declined 4% (-5TWh) in H1-2021 compared to before the pandemic (H1-2019) due to very poor wind output (-11% / -7TWh) as a result of weather conditions. This is despite solar output growth of 12% over the same period. Nuclear output was also 7% lower in H1-2021 than H1-2019 due to the Government mandated closure of the Philipsburg power plant. The fall in fossil power in H1-2021 compared to pre-pandemic (H1-2019) is due to a reduction in electricity exports (-11TWh), renewables deployment outside of Germany and rising carbon prices that have reduced the demand for German coal power exports. Overall, CO2 emissions from electricity generation were 9% lower in H1-2021 than the same period before the pandemic (H1-2019). Electricity production costs from new onshore wind farms in Germany (€45.3/MWh) are half those of existing fossil gas and hard coal plants.

N.b data quality checks indicate up to 5TWh of generation is missing from the Ember dataset in the early months of H1-2021, this reduces our confidence in the exact generation figures set out above but will not change the overall picture.

France
Clean electricity exports down compared to pre-pandemic levels as nuclear output suffers from ongoing maintenance issues and plant closures.

In H1-2021 France’s electricity demand almost recovered vs. H1-2020 coming in less than 1% below H1-2019. Nuclear output increased (+8TWh) in H1-2021 compared to H1-2020 on improved availability after the pandemic had impacted maintenance schedules – but remains 11% (-22 TWh) below H1-2019; partly due to ongoing plant issues, partly due to the closure of the reactors at Fessenheim in 2020. The decline in nuclear power output in H1-2021 compared to H1-2019 has only been slightly offset by growth in wind and solar (+4TWh / +20%) and strong hydro output (+5TWh) over the same period, resulting in lower exports of clean power to France’s neighbours. Fossil power output is unchanged in H1-2021 compared to H1-2019 and remains a small (<10%) share of electricity production. Overall, CO2 emissions from electricity generation were 4% higher in H1-2021 than the same period before the pandemic (H1-2019), due to a small switch from fossil gas to coal.

Italy
Subdued electricity demand leaves coal almost 40% lower than before the pandemic despite very slow growth in wind and solar power.

In H1-2021 Italy’s electricity demand grew over 8% vs. H1-2020 but far from fully recovered, remaining 3.9% lower (-6TWh) than H1-2019. With demand remaining subdued, in H1-2021 electricity generation from fossil fuels was 14% lower (-11TWh) than before the pandemic (H1-2019). Coal output declined further between H1-2020 and H1-2021 and is now almost 40% lower than pre-pandemic (H1-2019) levels. Renewables output increased 5% (+3TWh) in H1-2021 compared to H1-2019, however this was mostly hydro (+2TWh). Slightly stronger solar output (0.7TWh / +6%) due to installed capacity growth was mostly offset by weaker wind (-0.5TWh), with limited additional capacity available to offset weaker weather conditions. Growth in wind capacity was negligible in 2020 and only 0.5GW (+4%) in 2019. Electricity production costs from new onshore wind farms in Italy (€46.3/MWh) are half those of existing fossil gas and hard coal plants. Overall, CO2 emissions from electricity generation were 17% lower in H1-2021 than the same period before the pandemic (H1-2019).

Spain
Surging wind and solar leaves electricity generation from fossil fuels a third lower than before the pandemic and curbs electricity imports.

In H1-2021 Spain’s electricity demand only partially recovered from the drop in H1-2020 remaining a little over 2% lower (-3TWh) than H1-2019. Renewables output has surged, growing over a third (+17TWh) between H1-2021 and before the pandemic (H1-2019), driven by a 65% increase in solar power output (+5TWh), a 16% increase in wind output (+4TWh) and strong hydro output (+8TWh). Wind power alone produced more electricity than fossil fuels in H1-2021. Wind and solar output growth is following rapid capacity additions, Spain has doubled installed solar capacity in the last two years (+7GW) and wind capacity has grown by 3.6GW (16%). Growing wind and solar output has led to lower electricity imports and over the last 12 months, net imports have been negligible. Spain had been a large net importer of electricity from 2016 until recently. Electricity generation from fossil fuels has declined 33% (-14TWh) between H1-2019 and H1-2021 and coal power has fallen 75% over the same period, now accounting for less than 2% of electricity production. Spain was one of the few countries where electricity generation from fossil fuels fell further in H1-2021 compared to H1-2020, despite rising electricity demand compared to the national Covid-19 lockdowns the previous year. In Spain, the costs of generating electricity from existing fossil gas and hard coal plants are triple those for new onshore wind (€31.7/MWh) and double those for new solar PV (€39/MWh). Overall, CO2 emissions from electricity generation were 40% lower in H1-2021 than the same period before the pandemic (H1-2019).

Poland
Little change in fossil power output (predominantly coal) since before the pandemic with the solid growth in solar power offset by lower imports and less wind.

In H1-2021 Poland’s electricity demand bounced back vs. H1-2020 and was higher (+2%) than H1-2019. Fossil power was 2% higher (+1.5TWh) in H1-2021 than before the pandemic (H1-2019). Modest renewables growth was offset by lower net imports (-2TWh) and therefore rising demand was met with fossil fuels. The rise was roughly evenly split between coal and gas. Electricity generation from renewable sources increased 13% (1TWh) between H1-2019 and H1-2021, driven by a doubling in solar power output after 2.5GW of capacity was added in 2020. However solar still contributes just 3% of electricity production. Growth in solar was partially offset by declines in wind output. Wind capacity additions were modest (0.4GW) in 2020, and continued to be constrained by Poland’s “10h” rule. Consequently, new wind capacity was insufficient to offset worse weather conditions. Overall, CO2 emissions from electricity generation were 2% higher in H1-2021 than the same period before the pandemic (H1-2019).

Other major coal countries


The following countries have at least 3GW of installed coal capacity.

Czechia
Lignite output 20% lower than before the pandemic despite a recovery in demand as coal power exports continue to decline.

In H1-2021 Czechia’s electricity demand bounced back vs. H1-2020 and was 2% higher (1TWh) than H1-2019. However, electricity generation from fossil fuels in H1-2021 remained 11% lower than before the pandemic (H1-2019), due to a significant reduction in electricity exports (-3TWh). High carbon prices are reducing demand for Czech power exports from its old inefficient lignite plants, although exports still account for around 10% of domestic production. Lignite output, which plunged during the first wave of the pandemic, declined further in H1-2021, producing 20% less electricity than before the pandemic (H1-2019). Wind and solar output was unchanged at just 4% of electricity production, with no new capacity installed in 2020, and almost no plans to do so in the next decade. Overall, CO2 emissions from electricity generation were 15% lower in H1-2021 than the same period before the pandemic (H1-2019).

Greece
Wind and solar growth, subdued electricity demand and a partial switch to fossil gas cause lignite to collapse from pre-pandemic levels.

In H1-2021 Greece’s electricity demand did not recover vs. H1-2020 and remained 7% lower than H1-2019. Renewables output was 45% higher (+3TWh) in H1-2021 than before the pandemic (H1-2019), driven by strong growth in wind (+42%) and solar (+29%) and solid hydro output (+1TWh). Wind and solar accounted for almost one third of electricity production (31%) in H1-2021 – up from 23% before the pandemic (H1-2019). Lower demand, and rising renewables output has caused a decline in fossil fuel use – despite a significant drop in electricity imports. In H1-2021, electricity generation from fossil fuels was 15% lower than before the pandemic (H1-2019), coal power output (all lignite), fell 9% between H1-2020 and H1-2021 and has now more than halved (-3TWh) from pre-pandemic (H1-2019) levels. A third of the declines in lignite output between H1-2019 and H1-2021 have been replaced by increased electricity generation from fossil gas. Overall, CO2 emissions from electricity generation were 30% lower in H1-2021 than the same period before the pandemic (H1-2019).

The Netherlands
Explosive growth in wind and solar output and weak demand keep fossil fuel output below pre-pandemic levels.

In H1-2021 the Netherland’s electricity demand did not recover significantly vs. H1-2020, remaining at about similar levels. Between H1-2021 and H1-2019 solar output has more than doubled (+3TWh) following the addition of 3GW of solar in 2020 alone, wind output expanded 45% over the same period with 2GW of capacity also added in 2020. Wind and solar output combined supplied over a quarter of Dutch electricity demand in H1-2021 up from 16% in H1-2019. Electricity generated from fossil fuels in H1-2021 remained 12% below (-5TWh) pre-pandemic (H1-2019) levels, with coal down 28% (-3TWh) and gas down 2%. Overall, CO2 emissions from electricity generation were 15% lower in H1-2021 than the same period before the pandemic (H1-2019).

N.b. data quality checks indicate some issues with Dutch demand figures (due to the treatment of solar) reducing our confidence in figures relating to changes in total demand.

Romania
Electricity demand recovers but coal is held down by strong hydro output.

In H1-2021 Romania’s electricity demand bounced back vs. H1-2020 and was higher (+1%) than H1-2019. Electricity generation from fossil fuels was 8% lower in H1-2021 than before the pandemic (H1-2019), almost completely due to increased hydro output. Lignite output declined more significantly in H1-2021 (-1.4TWh) and was 23% below pre-pandemic levels (H1-2019) due to a 16% rise (0.7TWh) in fossil gas use. The share of wind and solar in the electricity mix is unchanged since 2015 at around 13%, with no new capacity deployed since then due to an unsupportive policy framework. Overall, CO2 emissions from electricity generation were 16% lower in H1-2021 than the same period before the pandemic (H1-2019).

Bulgaria
Electricity demand recovers but coal is held down by strong hydro output.

In H1-2021 Bulgaria’s electricity demand bounced back vs. H1-2020 to reach the same level as H1-2019. Electricity generation from lignite was 18% lower in H1-2021 than before the pandemic (H1-2019), almost completely due to increased hydro output. The share of wind and solar in the electricity mix is unchanged since 2015 at 7%, the electricity transition is yet to begin. Overall, CO2 emissions from electricity generation were 16% lower in H1-2021 than the same period before the pandemic (H1-2019).

Neighbours of the European Union

How are EU neighbours moving towards electricity transition?

In the following section we assess how the EU’s neighbours are progressing towards a decarbonised electricity system. We include countries or regions which produce a significant amount of electricity from fossil fuels, are interconnected with the EU and where we have access to data of sufficient quality.

The European electricity system is closely intertwined. The speed and pathway taken to decarbonise the power sector in the EU’s neighbours will have important ramifications for the EU’s electricity system and its citizens. For example: air pollution from coal is a continental problem, not one that can be solved in the EU alone; disparity in carbon prices could lead to carbon leakage and undercut the competitiveness of cleaner electricity generation within the EU; and the shift to from fossil fuels to electricity systems based on variable renewable sources such as wind and solar will have profound implications on the production and trade of electricity across the continent.

Key Findings


United Kingdom

Fossil gas generation failed to recover to pre-pandemic levels; it was 8% lower in H1-2021 versus H1-2019. Electricity demand did not fully bounce back (-2%) but escalating fuel costs and ambitious renewable targets have weakened the outlook for fossil gas.

Turkey

Even with the steady increase in wind and solar generation, fossil fuels’ share in generation rose to 61% in H1-2021 due to reduced hydro. Hydro share in generation was the lowest since 2014 because of drought.

Western Balkans

Higher hydro generation in the region has only had a limited impact on coal generation. Surplus power has been exported to the EU with Bosnia leading the way, this is a clear sign of carbon leakage.

United Kingdom


  • UK fossil gas generation was 8% lower (-5TWh) in H1-2021 versus pre-pandemic levels (H1-2019) as electricity demand failed to fully recover (-3TWh / -2%). Power sector emissions were also 8% lower than pre-pandemic levels.
  • Coal generation declined further in H1-2021 compared to H1-2020 despite a demand increase of 6% (+9TWh) but had already fallen to just 2% of electricity production by 2019.
  • Clean electricity output growth temporarily paused between H1-2019 and H1-2021 due to poor wind conditions in H1-2021 and extended nuclear outages. However, growth looks set to accelerate through this decade with ambitious renewable targets.
  • Due to rising fossil gas prices, the cost of producing electricity from existing fossil gas power plants in the UK is now more than double the cost of electricity from new onshore wind.

UK electricity demand did not fully recover to pre-pandemic levels in H1-2021 and remained 2% below (-3TWh) H1-2019. Growth in clean electricity output temporarily paused between H1-2021 and H1-2019; this was due to poor wind conditions in H1-2021, which more than offset the structural growth in wind capacity, and lower nuclear output, which suffered due to an extended outage at Sizewell B. The pause in clean electricity growth led to a strong rebound in gas power (+31%) in H1-2021 vs. H1-2020, unwinding much of the previous year’s declines, although the subdued demand meant that fossil gas generation was still 8% lower (-5TWh) and coal 17% lower (-0.6TWh) than H1-2019. And overall power sector emissions were 8% lower in H1-2021 than H1-2019.

However, this is just a temporary reprieve for gas power in the UK. The government has set ambitious targets for renewables deployment this decade and now the rising costs of fuel look set to further accelerate the transition away from fossil gas power. Gas prices in the UK have not experienced quite the same year-on-year increase (+65%) as European (TTF) gas prices (+188%). However, at current prices (30 June 2021) the cost of generating electricity from existing fossil gas power stations in the UK is around £82/MWh (€96/MWh), more than double the costs for power from new onshore wind installations £38/MWh (€44/MWh) and significantly above the £57/MWh (€67/MWh) the UK Government estimates for offshore wind deployed in 2025.

Coal generation in the UK has collapsed by 93% since 2015 and currently only accounts for 2% of electricity production, coal fell further in H1-2021 compared to H1-2020, despite the increase in electricity demand.

Turkey


  • Turkey increased the share of wind and solar to 12.9% in H1-2021 despite the demand rebound after Covid-19.
  • Even with the steady increase in wind and solar generation, the fossil fuel share of electricity generation increased to 61% in H1-2021 due to reduced hydro. Hydro share in generation was the lowest since 2014 because of drought.
  • In H1-2021, Turkey dropped to 18th place in Europe for renewables share, down from 10th in H1-2020.

In 2021, Turkey continued to increase its wind and solar generation share in similar fashion to recent years. Share of wind and solar rose to 12.9% in the first half of the year, up from 12.2% in H1-2020. On the other hand, despite the steady increase in wind and solar, Turkey’s renewables share in its generation mix dramatically dropped between the first halves of 2020 and 2021.

Turkey produced more than half (50.5%) of its total generation from renewable sources in the first six months of 2020, which placed it at the 10th place among all European countries for renewables share in total generation. However, in H1-2021, Turkey was much more reliant on fossil fuels (61% share of generation) and found itself at 18th place in the same ranking. This fact cannot only be explained by the post-Covid demand rebound.

The reason behind the low renewable share lies in hydro generation. The country has always been highly reliant on its hydro fleet. However, this reliance comes with a cost in dry seasons. The hydro generation share in H1-2021 was at a record low, the lowest share since 2014. In 2014, fossil generation share in the country reached a record high (78.4%) just because of the drought. Today Turkey has a more diversified renewable portfolio relative to seven years ago. Yet wind and solar were unable to stop the dramatic increase in fossil generation.

Recent years in Turkey have proved the fact that the country’s energy transition is still highly reliant on its hydro generation. In the last 10 years, Turkey has only twice generated more than half of its electricity from clean sources in the first half of the year; and that was only possible with high hydro generation. 2021 saw a hydro share of 21%, which is far less than the last 10 half-yearly average of 27.2%. Drought is another obstacle for Turkey to reach a fossil-free future.

Diversifying renewable generation and creating a synergy between various sources will keep Turkey away from the fossil threat. The country has large hydro reservoirs and could couple them with floating solar in order to hedge itself against dry seasons.

Western Balkans


  • Higher hydro generation in the region in H1-2021 has only had a limited impact on reducing coal generation. Surplus power has been exported to the EU with Bosnia leading the way.
  • Bosnia’s power exports to the EU are a clear sign of carbon leakage, as the country highly relies on coal in power generation.
  • Carbon leakage from the region can be blocked by the implementation of carbon border adjustment mechanism (CBAM). CBAM is a real threat to the profitability of Bosnia’s electricity sector dominated by coal power plants.

Western Balkans includes Albania, Bosnia and Herzegovina, Kosovo*, Montenegro, North Macedonia and Serbia

(*All references to Kosovo, whether the territory, institutions or population, in this text shall be understood in full compliance with United Nations Security Council Resolution 1244 and without prejudice to the status of Kosovo.)

Contrary to Turkey, in H1-2021, hydro generation was higher than H1-2020 in the Western Balkans. However, this only had a limited impact on electricity generation from coal. For instance, a 2.4 TWh increase in hydro generation in Serbia in H1-2021 compared to H1-2020 caused only a 1.2 TWh drop in coal generation, while in Bosnia a 1.7 TWh increase in hydro generation hardly reduced coal generation at all (-0.5 TWh).

The electricity surplus in the region has been exported to neighbouring countries including the EU. The region is connected with several EU countries namely Bulgaria, Croatia, Greece, Hungary and Romania. The Western Balkans was a small net importer from the EU in H1-2020, with less than 0.2 TWh net power flows. This year, thanks to hydro generation, the region has turned into a net exporter to the EU, with 2.35 TWh net flows only in the first half. The amount is more than 6% of the total electricity production of the region.

Bosnia is the main source of these exports to the EU this year, exporting 23.5% of its generation into the EU. Around two-thirds of Bosnia’s net electricity exports (2 TWh out of 3.2 TWh) flowed into Croatia; its only cross border trading partner from the EU.

Bosnia has coal intensive power production. The country produced 68% of its electricity from coal in 2020, but higher hydro generation this year was only able to curb it to 56%. Hence this is a clear sign of carbon leakage from the Western Balkans to the EU. When the Carbon Border Adjustment Mechanism (CBAM) is in place, exporting power will be more costly for Bosnia because of the carbon levy to be applied at the border. CBAM is expected to pose a real threat to the profitability of Bosnia’s electricity sector dominated by coal power plants.

Conclusion

Concluding Remarks

Across the first half of 2021, the impact of the Covid-19 pandemic on the electricity system was quite small, and certainly considerably less than in the first six months of 2020. This allows a better assessment of the state of the EU’s structural transition from coal to clean electricity. Our analysis makes clear that the EU has made significant progress in reducing emission from power generation over the past two years, and, despite an uptick in coal power output in 2021, the EU remains in the end-game for coal with its share of the electricity mix almost halving since 2015. The United Kingdom has called on countries to ‘consign coal to history’ at the upcoming COP26 UN Climate Change Conference in Glasgow. It is essential for global action on climate change that the EU uses all possible leverage to achieve this COP26 objective – confident in the knowledge that its own domestic coal phase-out continues apace.

However, while the share of electricity produced from clean electricity sources in the EU continues to expand, driven by growth in wind and solar, our analysis also highlights that progress in the EU’s power sector is not happening fast enough to meet the EU’s own 2030 climate targets, let alone to achieve a 100% clean electricity system in 2035, as the IEA recently outlined would be necessary in all advanced economies to keep global temperature rises to 1.5C. In the context of the EU Commission’s Fit for 55 legislative proposals, it is essential that the EU Commission, national governments and the EU Parliament quickly remove the regulatory and policy hurdles preventing the required rapid expansion of clean electricity, particularly wind and solar, which will be the primary driver of growth in the coming decade.

Supporting Material


Downloads


Methodology

Notes on methodology

For the last five years, Ember has published an annual report into the European power sector. This mid-year analysis aggregates electricity grid data for all EU countries except Malta, as well as Bosnia Herzegovina, Serbia, Montenegro, Turkey and the United Kingdom. Ember then curates the data to make a robust analysis of Europe’s electricity system.

Please see the full downloadable report for the methodology and definitions.


Acknowledgements

Document design and layout

Wilf Lytton