Mission Solar 2040

Solar is growing much faster than anyone would have expected, as market expansion keeps surprising all solar and energy analysts.

As the global solar market is on track to exceed 500 GW of new installed capacity in 2024 and is projected to cross the TW level before 2030, the effects of this strong acceleration are also visible in the European Union. Having reached an operating solar fleet of 269 GW in 2023, the EU is projected to control nearly 900 GW of solar capacity by the end of the decade, outpacing national and EU solar targets.

Meanwhile, current trends in the EU power system, coupled with climate and energy policy targets towards 2030 and 2040, indicate that variable renewable energy sources like solar PV and wind will provide the largest bulk of EU electricity supply in the coming decades. The REPowerEU plan, and more recently the EU Commission 2040 impact assessment scenario, outline pathways and targets for a large increase in variable renewable energy generation.

However, a deep integration of variable renewables, in particular solar energy, into the power system does not come without challenges. Already today, some Member States with comparatively high levels of solar PV penetration are starting to face issues related to the smooth integration of variable renewable generation in their power mixes. These issues include both challenges of technical nature (integration of solar projects into the grid, increasing level of curtailment) and financial nature (market structure, investment attractiveness and remuneration of renewable producers).

This study explores the interplay between the rollout of PV capacity, and the deployment and operation of flexibility solutions in the EU power system, looking at the 2030 and 2040 time horizons. Modelling simulations of investment and hourly EU power system operations over a full year, it analyses three scenarios with increasing levels of solar PV and flexibility solutions, namely flexible capacities and flexible demand from electrification.

The study results highlight the fundamental role of flexibility solutions in a power system characterised by a strong penetration of variable renewable generation. Tapping flexibility potential not only enables the deployment of more solar as the key to meet climate targets and security – it also allows to make better use of abundant, clean and cheap electricity.

The analysis shows that:

Boosting European competitiveness

A solar-led, flexible, and electrified energy system will lead to a drop in day-ahead energy prices by 25% by 2030. By 2040, day-ahead prices will drop by 33%.

Lowering greenhouse gas emissions

Unlocking flexibility solutions lowers total GHG emissions. Carbon emission linked to the additional power demand from electrification are largely counterbalanced by cross-sectoral emission savings from the reduction of carbon-intensive alternatives. Annual net GHG emission savings amount to 151 MtCO²sq in 2030 and 555 MtCO²sq in 2040.

Enabling further PV deployment

Unlocking flexibility solutions enables further PV deployment, resulting in additional solar electricity into the EU power mix. Solar capacity exceeds 1.2 TW in 2030 and 2.4 TW in 2040, providing 32% and 39% of EU power demand respectively.

Reinforcing the PV business case

Unlocking flexibility solutions reinforces the PV business case. In 2040, solar curtailment rates are reduced by 49% and solar capture prices increase by 63% compared to the baseline.

Reducing total energy system costs

Unlocking flexibility solutions reduces total energy system costs, thanks to the massive cost savings from the electrification of the heat, transport and hydrogen sector. Annual net system cost savings amount to 30 billion EUR in 2030 and 160 billion EUR in 2040.

This Mission Solar 2040 report finds that building a clean energy system based on renewables, flexibility and electrification is the best way to bring the benefits of the energy transition to Europe’s businesses and citizens and secure Europe’s overall competitiveness and prosperity.