The cost of clean energy technologies is declining dramatically. While impressive reductions have already taken shape, all signs point in the direction of further improvements, in many cases merging with digital solutions, driving electrification, innovation and competition in energy business models.

Few actors in the energy field, politicians or business leaders, had considered these developments as realistic. Many now acknowledge they would have taken different, bolder and more ambitious decisions if they knew then, what we know now.

In light of these reflections, the Energy Union Choices consortium embarked on an exercise to assess the opportunities from this emerging energy landscape. The report uses the latest projections on technology cost and performance by 2030 as an acknowledgement of the new realities, based on real world cost reductions as well as intense consultation with leading experts and industry groups, while also using the same modelling tools as used by the European Commission.

This report finds that the new energy reality fundamentally changes the outlook for the power sector in Europe. Europe can aim for deeper emission reductions and higher renewables uptake at similar or even reduced cost, if only it makes the right policy choices and sets the right ambition levels.

This core finding applies even though the report makes careful and conservative assumptions in several technical and policy areas, for example around the cost of batteries, the potential for deeper efficiency, faster grid build-out or further reforms to the EU Emissions Trading System (ETS). It is therefore possible, even likely, that the report still underestimates the full potential for cost-effective decarbonisation in the energy sector and provides a rather conservative ‘baseline’ picture.

There is, however, a high likelihood that decision-makers involved in climate and energy policy remain reliant on out-of-date understanding of power market economics when deciding on EU and national energy policies.

Central to that is the perception around the need for thermal ‘baseload’ capacity for supply security. This report shows that a combination of grid infrastructure, demand side flexibility and smart electrification are more than capable of balancing very high shares of renewables, at zero emissions and at lower cost.

The findings of this report provide strong evidence to decision-makers to reap the opportunity of cheaper clean technologies and embrace higher ambition on climate and energy as the most attractive pathway for all Europeans.