Europe’s clean energy transition risks slowing down as investment gaps widen. In a new position paper, Eurelectric warns that up to €500 billion in annual investment is missing and calls for urgent action to restore investor confidence and unlock private capital.
A growing investment gap threatens Europe’s ambitions
Europe’s pathway to climate neutrality depends on unprecedented levels of clean energy investment. Estimates suggest that between €800 billion and €1,200 billion per year will be required, depending on the scope and timeline of EU targets.
Yet current investment levels fall significantly short: as much as €500 billion annually is missing, putting at risk both electrification and decarbonisation objectives.
This shortfall is not due to a lack of technologies or willingness from industry. Instead, it reflects a deteriorating investment environment that is weakening the business case for clean energy projects.
Why investment decisions are becoming more difficult
Eurelectric highlights that companies base their decisions on what can be described as “strain-to-gain leverage”: weighing financial risks, costs and debt exposure against expected returns.
Today, this balance is increasingly unfavourable. Several factors are contributing to this trend:
- Policy uncertainty, which reduces long-term visibility
- Volatile power prices, affecting revenue predictability
- Grid bottlenecks, delaying project connections
- Counterparty risks, particularly in long-term contracts
The result is a growing paradox: companies are ready to electrify, the technologies are available, but key enablers such as Power Purchase Agreements (PPAs) are stalling due to credit risk concerns and an unstable investment environment.
A 10-point derisking agenda to unlock investment
While the next EU budget (2028–2034) will play an important role, Eurelectric stresses that action must start immediately to restore investor confidence.
The position paper sets out a 10-point derisking agenda aimed at addressing both regulatory instability and financing barriers. At its core is the need to create a stable, predictable investment framework. Key priorities include:
- Strengthening public financial support
- Fully leveraging the European Investment Bank (EIB) toolbox to support companies investing in clean energy
- Expanding the EIB guarantee programme, building on the existing €500 million pilot
- Reducing financial and counterparty risks
- Improving access to guarantees and risk-sharing instruments
- Addressing credit risks that limit long-term contracting
- Scaling up power purchase agreements
- Removing regulatory and accounting barriers
- Improving market frameworks to support long-term contracts
- Enabling PPAs to function at scale across Europe
Restoring confidence to accelerate the transition
Eurelectric emphasises that a stable regulatory and policy environment is a precondition for investment. Without clear, predictable rules, even well-designed financial instruments will struggle to attract sufficient private capital.
By combining regulatory stability with targeted derisking measures, Europe can unlock the investment needed to accelerate electrification, strengthen competitiveness and deliver on its climate goals.
From ambition to investment
Europe has the technologies and the ambition to lead the clean energy transition. What is missing is a sufficiently stable and attractive investment environment.
Closing the investment gap will require coordinated action to reduce risks, strengthen financial tools and build investor confidence. Without this, Europe risks falling behind on its energy and climate objectives.