Despite their vast renewables potential, Central and Eastern European countries have been hesitant to capitalise on the advantages of the energy transition, setting unambitious targets and slowing down wind and solar deployment. The upcoming revision of National Energy and Climate Plans is a critical opportunity to review this approach, benefiting from lower electricity prices, additional funding and cleaner and safer power systems. What the region needs to increase its economic competitiveness is a regional energy master plan.
Central and Eastern Europe (CEE) has a massive potential for renewables. A new Ember report shows that CEE countries could increase the share of renewables in their power system from 25 per cent today to 63 per cent in 2030. This means a six-fold increase in wind and solar capacity from 35 gigawatts (GW) to 196 GW, resulting in 29 per cent lower average electricity wholesale prices compared to a scenario based on current policy conditions and making the economies more attractive for foreign investors.
Ember’s model finds that CEE countries (Estonia, Latvia, Lithuania, Poland, Czechia, Slovakia, Hungary, Slovenia, Croatia, Romania and Bulgaria) are likely to deploy just half of their 2030 potential if there are no improvements to renewables policies across the region.
Current renewables targets in the region are among the lowest targets in the EU and the majority of CEE’s power (55 per cent) still comes from fossil fuels, leading to some of the most expensive electricity prices in the EU, as well as gas and coal supply issues. A key opportunity to enshrine higher national commitments on wind and solar is the upcoming revision of National Energy and Climate Plans (NECPs) due in June.
The region covers roughly 20 per cent of the EU population and territory, 15 per cent of the EU’s GDP and 17 per cent of the electricity demand, but still accounts for just 7 per cent and 12 per cent of EU wind and solar capacity, respectively. Last year brought significant developments, with CEE wind and solar capacity growing by around 28 per cent, almost double the EU average and Poland becoming the third largest PV market in Europe.
However, barriers to renewable deployment persist across the CEE region. Wind and solar permitting times in Croatia are the longest in Europe, Hungary has completely banned onshore wind and Poland has had the most restrictive wind spatial planning law for the last 7 years. Investors are also hitting grid bottlenecks and up to 5 times higher cost of capital than for example in Germany.
According to Ember’s analysis, removing these bottlenecks and introducing supportive policies could see the region reaching 63 per cent renewables share in 2030, just shy of the EU’s 69 per cent target set in REPowerEU. It would also open at least 137 billion euros in EU funding to invest in the energy transition. Perhaps most importantly, the region would build a significant surplus of low-cost green electricity, attracting new investments and increasing economic competitiveness. With 200 GW of wind and solar, CEE could export 23 terawatt-hours (TWh) of electricity in 2030, compared to importing 7 TWh in 2022.
Local and foreign investors are now on the hunt for this cheap electricity, including manufacturing giants such as General Motors, Hyundai, KIA, Apple, LG, Samsung and BMW, all committed to sourcing 100 per cent renewables-based electricity under the RE100 initiative.
To access the benefits of more wind and solar power, the CEE region needs an energy master plan: a framework for cross-country collaboration, in which nations with less access to renewable resources, such as Hungary or Czechia, could co-invest, for example, in offshore wind projects in the Baltic States, where the wind energy potential exceeds the national electricity demand. By working together, Central and Eastern Europe can build a cheaper, cleaner and safer power system, strengthening their economies in the process.