Clean energy is shielding the European Union from the worst of the Middle East crisis

Key points:

• In response to the energy crisis exacerbated by Russia’s invasion of Ukraine in 2022, the EU ramped up investments in renewables to reduce exposure to volatile global fossil fuel markets.
• By the end of 2025, the bloc had increased its installed solar PV capacity to 406 gigawatts (GW), more than double the amount in place at the start of the Russia-Ukraine war. The bloc’s Installed wind energy capacity rose by around 31% over the same period, to reach 246 GW.
• Without the growth in wind and solar output between 2022 and 2025, the EU would have spent an additional EUR 58 billion on coal and gas imports for power generation over the same period. This is more than the EU spent on energy subsidies for industry in 2022 as it sought to shield manufacturers from extreme price increases.
• According to our analysis of Eurostat data, most EU countries with above-average shares of wind and solar in their electricity mix have below-average household power prices (pre-tax).

EU energy policy harnesses renewables for greater security

In 2022, the year that Russia invaded Ukraine and sent oil and gas prices soaring, the EU’s annual fossil-fuel energy import bill more than doubled to EUR 602 billion, or 3.8% of the bloc’s GDP. Higher imported gas prices pushed up the cost of generating electricity, while the elevated oil price made it more expensive to transport goods and people. Among other impacts, this substantially inflated energy bills for EU consumers and businesses.

In response, the European Commission launched the RePowerEU Plan in May 2022. The strategy aims to make the bloc more energy-efficient while also ramping up its investments in homegrown clean energy to reduce its reliance on imported fossil fuels. This was complemented by a range of other policy tools, including the revised Renewable Energy Directive, which aims to increase the share of renewables in the EU’s overall energy consumption to 42.5% by 2030.

By the end of 2025, the EU had increased its installed solar PV capacity to 406 gigawatts (GW), more than double the amount in place at the start of the Russia-Ukraine war, according to SolarPower Europe. The bloc’s installed wind energy capacity rose by around 31% over the same period to reach 246 GW.

As a result, wind and solar generated close to a third (30.3%) of the EU’s electricity in 2025, up from 19.1% in 2021. This pushed coal’s share of the mix down to 9.2% (from 14.6%) while gas dropped to 16.7% (from 19%).

Since the EU’s own data shows it is heavily dependent on imports of these fossil fuels, the progress it has made in shifting to domestic clean energy means it is now better placed to handle global energy shocks – though it is still far from immune. 

EU investment in renewables partially mitigates fresh crisis

Just four years after Russia invaded Ukraine, another global energy crisis took root as the US and Israel launched a war on Iran, which responded by effectively closing the Strait of Hormuz, a key oil and gas shipping route. 

This time, at least, the EU appears slightly less vulnerable to external shocks. Heading into the current crisis, the rapid rollout of renewable energy was starting to break the link between gas and electricity prices in some parts of Europe.

This is significant given that the most expensive generator operating at any time sets the wholesale electricity price in the EU – and gas plants generally assume this role.

Thanks to ongoing renewable energy investments, Spain has made particularly notable progress in delinking its power and gas prices, according to an Ember analysis. In the first half of 2019, the country’s power prices reflected the cost of fossil generation 75% of the time, but this share had dropped to just 19% by the first half of 2025. As a result, Spain now has one of the cheapest electricity markets in the EU.

Spain’s average day-ahead wholesale power prices are frequently the lowest in the EU, while in Italy, where gas still accounts for close to half of power output, prices are often the highest.

Over 50% of Italy’s total electricity generation is derived from imported fossil fuels, making it one of just two countries in the EU (the other being Malta) still in this position, according to Eurostat data.¹ Further, liquefied natural gas (LNG) shipments via the Strait of Hormuz account for around 10% of Italy’s gas supplies, according to the International Energy Agency (IEA).

Households are better protected as the share of gas in the energy mix falls

In the first 16 days of March 2026, the immediate aftermath of the Strait of Hormuz blockade, average hourly spot prices for electricity in the EU² were highest in Italy (EUR 142.08 / MWh) and lowest in Finland (EUR 35.72), Sweden (EUR 54.20), Portugal (EUR 57.28) and Spain (EUR 58.79) – each of which has a low share of fossil fuels in their power mix.

Based on the most recently available data, Spain’s transition to cheaper power generators appears to be benefiting end users. The average pre-tax electricity price for Spanish households was EUR 0.18/kWh in the first half of 2025, or 13.1% lower than the EU average, according to Eurostat.

Figure 1

Most EU countries with above-average shares of wind and solar have below-average household power prices (pre-tax), including Denmark, which currently leads the world in the shift to variable renewables (see Figure 2).

Figure 2

Clean energy growth means lower import bills

Thanks in part to the energy crisis sparked by Russia’s invasion of Ukraine, and the subsequent launch of RePowerEU in May 2022, the EU’s wind and solar energy generation rose 54% in four years, reaching 846 terawatt hours (TWh) in the calendar year 2025.³

Without the growth in wind and solar output between 2022 and 2025, ZCA analysis finds the EU would have spent an additional EUR 58 billion on coal and gas imports for power generation over that period.⁴ This is more than the EU spent on energy subsidies for industry in 2022 as it sought to shield manufacturers from extreme price increases.

ZCA analysis shows that if the bloc had zero wind and solar capacity, its additional fossil fuel import bill would have been EUR 215 billion between 2022 and 2025. This equates to more than half of the EU member states’ combined spending on defence in 2025 (EUR 381 billion).

Further investment in renewables among measures needed to more effectively shield countries from fossil fuel volatility

In the four years since Russia invaded Ukraine, sparking a global energy crisis, the EU has made substantial progress in reducing its reliance on coal- and gas-fired power generators, which rely heavily on volatile imported fuels. However, the gains have not been even across the bloc, and there remains a long way to go to fully shield the region from current and future supply disruptions.

Fossil gas, once considered a bridge fuel toward a cleaner energy system, continues to push up power prices in many key markets, including Italy. As the second major energy crisis in just four years takes root, another major push is required to reduce the EU’s reliance on fossil fuels, not just in electricity generation, but also in transport, industrial processes, heating and agriculture.

To accelerate the build-out of renewables and avoid rising curtailment rates, the EU will need to expand its electricity grid and invest more heavily in energy storage technologies.

Meanwhile, a renewed focus on energy efficiency is required. Electricity demand in the EU declined by only 3% between 2021 and 2025,⁵ while new IEA statistics show that OECD Europe’s gross gas consumption was down just 1.2% in December compared to a year before.

Progress has been made under the RePowerEU framework, yet the current energy crisis requires member states to double down on these efforts.

1. Based on each country’s share of fossil fuels in electricity generation and their import dependency ratios. Gas generation shares include gas used in combined heat and power plants allocated to electricity output under Eurostat methodology. ↩︎
2. Data accessed 17 March 2026. ↩︎
3. Calculated using Ember data. Wind and solar generation in 2025 totalled 846 TWh, up from 550 TWh in 2021. ↩︎
4. Calculated by assuming that wind and solar output growth since 2021 never materialised, and replacing this lost output with coal and gas. We assume that prevailing import dependency ratios for coal and gas in the power sector remain constant. We also assume that hard coal is the only type of coal imported. Front month historical TTF gas prices and AP12 coal prices were used. Efficiency rates used were 50% for gas and 40% for coal. ↩︎
5. Total electricity generation in the EU was 2,797 TWh in 2025, versus 2,875 TWh in 2021. Generation is used as a proxy for demand. ↩︎