Fossil fuel energy production took a record dive in the EU last year. An energy think tank Ember report unveils that the continent’s energy mix was greener than ever. But a rolling thunder is perturbing these clear skies, as a disastrous 2023 for Europe’s offshore wind leader, Ørsted, sharply contrasts with the record profits from oil companies.
The drop is remarkable. As Europe’s power mix increasingly shifts to renewables, production from coal and gas slipped by an impressive 19% last year. Notably, wind power surged to 18% and surpassed gas for the first time, which accounted for 17% of Europe’s electricity. Solar alone accounted for 9%.
44% in total
In combination, wind and solar reached 27% last year and are now the main focus. That’s roughly tripling the performance on a global level (12%), according to another report from Ember. The share of renewables continued to rise across the continent, with wind and hydroelectric power rebounding to a record 44% share of the EU’s power mix.
Dave Jones, the global insights lead for climate think-tank Ember, commented to Reuters: “Europe is on a path to phasing out coal, and we’ve now had four years in a row of falling gas generation, which we believe will continue.” The trend is expected to rise as more coal plants in Europe are on the verge of closure in 2024. According to the report, coal generation fell by 26% last year.
The drop in fossil fuel energy generation isn’t only an effect of investments in clean energy programs. The Ukrainian war has urged Europe to remove its gas dependency, accelerating the transition to these renewables.
Furthermore, demand has dwindled (-3.4%), but this trend will be reversed by the growing demand from the ever-increasing electric car fleet and the popularity of heat pumps.
Ørsted takes a blow
However, the uprising of the renewables’ share in the European power mix contrasts with the money drain at Danish wind farm developer Ørsted, the flagbearer of the green energy industry.
The latest financial results of the world’s largest offshore windmill builder moved in the opposite direction. Its profits of €2 billion in 2022 have backlashed into a loss of €2.5 billion in 2023, forcing the company to take drastic measures.
With turnover almost halved, the Danish group has revised its goal of building 50 gigawatts of wind power generation capacity to 38 gigawatts by 2030, a reduction of nearly a quarter. On top of that, Ørsted is saying goodbye to eight hundred employees, or 10% of its workforce.
Record profit for TotalEnergies
It’s hardly a comfort that the malaise is shared with fellow builders Vestas and Siemens, as high inflation and surging material costs disrupt their business models. But Ørsted’s boss, Mads Nipper, said that the “reset” will align his company better with the market’s growth rate, admitting that the expansion from previous years might have been too reckless.
Meanwhile, the oil and gas giants confirm their arguments about the unprofitability of the new energy sector, as they are still reaping profits from the fossil fuel trade at unprecedented levels. Following the excellent results from Shell, BP, Exxon, and Chevron, TotalEnergies joined the good news show on Wednesday, reporting its highest profit ever of $20 million (€19.8 million).