From Niche to Mainstream: Exploring Innovation and Progress of Renewable Energy Development

Abstract

This article explores the evolution of research in the field of renewable energy over the past five decades, tracing its development through various phases. Initially sparked by the 1970s energy crises and growing environmental consciousness, the journey began with a focus on technological solutions for renewables. The article highlights the shift over time away from purely technology-driven research to a broader, interdisciplinary orientation. Following the first phase of exploring technology solutions, we discuss the market expansion phase of renewables, their market integration as well as the current speeding up of the transition towards a more and more renewable electricity system. We highlight the evolution of support mechanisms and concomitant scientific debate that accompanied the move from quota obligations to feed-in tariffs. With renewables now a key element in achieving climate neutrality, research has expanded to include market and system integration, the socio-economic impacts of the renewable energy expansion, and systems transformation perspectives. The article underscores the contribution of different types of institutions and players in shaping renewable energy research and policy, emphasising the increasing importance of a systemic and interdisciplinary approach to address current energy and sustainability challenges in a holistic manner.

1 Introduction

This article looks at the development of renewable energies over the last 50 years to identify the main research topics in this field and how these relate to the “major fault lines” of energy policy during this period. We reveal the major development lines of renewables research by assessing project types, key methods, and research approaches and how these have changed over time.

As topical as it may seem, the societal, political, and scientific discourse regarding renewable energy technologies and policies has been shaped by ideological, political, and cultural dynamics for decades. The 1970s energy crises as exogenous events, however, marked the beginning of a new era, making Germany, Europe, and the rest of the industrialised world start to question their energy mix and its reliance on fossil fuels as well as shaping a lasting awareness of global interdependencies (Mittlefehldt 2018). At about the same time, Meadows et al. (1972) published their seminal work on the “Limits to Growth”, which highlighted unsustainable patterns of energy consumption. In Germany, the anti-nuclear movement started to become a force of growing importance, eventually ending the pro-nuclear consensus in the aftermath of Chernobyl (1986) (Hake et al. 2015). Since then, renewable energies research has continuously made key contributions to the debate surrounding the energy transition and energy security, with the topic becoming ever more important, not least due to the rise of climate policy and the urgency of limiting global warming.

In the European Union (EU) and many other countries across the globe, there is now little doubt that renewables have a key role to play in reaching climate neutrality and future-proofing our energy system. The topic’s relevance is undisputed in light of national and global developments, and accelerated deployment of renewables is generally regarded as a necessity. In addition to being a pillar of the energy transition, developments in the renewable energy sector can also provide interesting lessons with respect to innovation, transformation, and market diffusion. Likewise, they are a showcase for the development of policy support and adapting this in line with technology and market maturity. Finally, it cannot be underscored enough that knowledge about the history of the research and thinking on renewable energies can help us tackle current energy and sustainability challenges. A large number of research institutions, including Fraunhofer ISI, have been actively involved in these research and policy areas over the last 50 years and have helped to shape their development.

Today, renewables hold an important place in multiple sectors, most notably electricity, heating, and cooling as well as transport. Fig. 1 depicts the development of renewables in the different sectors in Germany until 2021. The graph clearly shows that even if the debate regarding renewable sources of energy started much earlier than 1990, renewable shares in the electricity mix were negligible until then. In addition, growth rates were moderate at first and expansion was slow until 2000. This was followed by increased growth, but progress has been slowing again in recent years. Higher expansion rates than those currently seen will be required to reach future targets.

Fig. 1

Shares of RES in Germany in different sectors 1990–2022. Source: Umweltbundesamt, https://www.umweltbundesamt.de/en/topics/climate-energy/renewable-energies/renewable-energies-in-figures

In terms of technology, hydropower was dominant to start with, but soon complemented by onshore wind, which started to develop in Germany at the beginning of the 1990s and then underwent rapid growth. The expansion of solar PV took place slightly later, but then with similar growth rates. The deployment of offshore wind is a relatively recent phenomenon, but rapid growth is expected in the coming years. Renewable support policies have been a crucial driver of the renewable capacities in Europe and Germany from 1990 until today, although their main design elements have changed considerably over this period. When it comes to sectors other than electricity, renewable heating, in particular, is central to the debate.

Based on the development of capacities and policies, we can identify four phases of renewable energy expansion in Germany, which are briefly characterised below. The main dynamics, scientific debate, and methods applied during each of these phases are described in more detail in the respective sections.

Exploring technology solutions: In this phase, which lasted from about 1970 to 1990, the focus was on technological developments, including solar thermal plants in Spain, for example, but also the big wind turbine, “Growian”, in Germany (Große Windenergieanlage, commissioned in 1983 by the energy industry). Attention was also paid to renewable heating technologies due to the perceived necessity to divest from oil as a result of the global oil crises. The end of this phase was marked by the first expansion of renewables.

Market expansion: In this phase, which lasted from about 1990 to 2010, the growth of renewables increased substantially, especially in the electricity sector. Germany introduced feed-in tariffs to support them. There was a heated debate at EU level about market-based or state support systems during the second half of this phase. This resulted in Member States having a high degree of freedom in the choice of support systems. At the end of this phase, the rising support costs, mainly for solar PV, triggered a debate about possible cost savings. The boom in PV expansion and the associated sharp rise in subsidy costs were due to the administratively determined level of remuneration (fixed tariffs), on the one hand, and the rapidly falling technology costs, on the other.

Market integration: In the 2010s, the market and system integration of renewables became more important given the rising shares of renewables in the electricity system. Key developments included the introduction of premium schemes instead of fixed tariffs as well as the use of auctions for allocating support. One major goal was to introduce a measure capable of controlling the costs of support while trying to provide incentives for cost reductions. Other topics included self-consumption, non-financial barriers, or the global expansion of renewables also due to decreasing costs. Furthermore, modelling tools were refined and adapted to reflect the ever-increasing complexity of energy systems.

Speeding up the transition towards a fully renewable electricity system: This still on-going phase looks to the future rather than the past. Here, we introduce and discuss some topics that are currently on the research and policy agenda and will continue to play a role in the coming years.

For every phase, we highlight important developments, topics, and actors, describe the development of policies at national and EU level, and outline the on-going (academic) discourse, explaining how these interrelate regarding topics, methodologies, and research actors. The chapter concludes with a summary of important developments across phases and lessons learned about the development of the research field.

2 Exploring Technological Solutions and Dealing with Resistance from Incumbent Electricity Suppliers (1970–1990)

2.1 Starting Research on Technological Solutions

In the years after the first oil price crisis in 1973, increasing attention was given to renewable energies, in particular in US research laboratories. In his book “Man, Energy, Society” based on the analysis of 165 citations, Cook (1976) concluded “that man must ultimately rely on renewable energy forms, but there is no promise that these energy sources can be made available at costs low enough to ensure man’s survival”. Many energy technologists started applied research activities, supported by government funding, and focused on specific renewable energies like wind power, low and high temperature use of solar thermal, geothermal energy, use of wood and biogas, and photovoltaics. This was also observed in Germany, where the Ministry of Research and Technology launched dedicated research and development funding programmes for energy, which also focused on specific renewable technologies. Up until 1982, a total of 150 million Deutsche Mark was spent on renewables research (Hake et al. 2015).

This development phase was characterised by the emergence and consolidation of several new actors in energy research, but already established institutions also reinforced their research into renewable energies. Many of these actors, of which we will only mention a few, are still an integral part of the German and European energy and renewables research landscape today.¹ Especially at the beginning of the phase, there was a clear focus on exploring and analysing renewable technology solutions including socio-economic aspects and less emphasis on policies and instruments. The most relevant actors in Germany were the German Aerospace Centre DLR (formerly DFVLR), Forschungszentrum Jülich (formerly Kernforschungsanlage Jülich, KFA), and the Helmholtz Association of German Research Centres, all of which had energy-focused institutes or units, e.g. the DLR site in Stuttgart hosting the Institute of Solar Research. Other relevant actors in this early phase included the Fraunhofer Institute for Solar Energy Systems ISE in Freiburg, which entered the scene in 1981, and the Institute for Energy Supply Technologies ISET in Kassel, which was established in 1988 and later integrated into the Fraunhofer-Gesellschaft. The Fraunhofer Institute for Systems and Innovation Research ISI was established in 1972, with the aim of taking a more interdisciplinary approach, combining natural and social sciences as well as economic perspectives. Five years later, in 1977, the Oeko-Institut was founded as an independent research and consulting institute. Towards the end of the phase in 1988, the Centre for Solar Energy and Hydrogen Research Baden-Württemberg ZSW was founded, based in Stuttgart and Ulm. Not much later, in 1990, the Fraunhofer Institute for Environmental, Safety, and Energy Technology UMSICHT was set up with its main seat in Oberhausen. As Stadermann (2021) points out in his comprehensive compendium on the “solar turn”, the renewable energy research community evolved gradually and was first and foremost also marked by individuals—scientists, engineers, technicians, economists—who broke away from “mainstream research” and delved into the topic of generating electricity from renewable sources, often motivated by ecological reasons.

2.2 Renewables in the Early Energy Policy Debate

Despite the growing interest in renewable energy research, there were also substantial doubts and even severe objections from industry, energy policy, and research organisations in the 1970s and 1980s. These concerned whether the use of renewables would have smaller environmental impacts than using fossil fuels or nuclear energy, and whether renewables could entirely substitute fossil fuels and nuclear energy. This opposition was also reflected in the considerable reduction of government funding spent on renewable technology R&D in the 1980s under the Kohl administration (Hake et al. 2015). The power industry questioned the future importance of renewables by labelling them “additive energies”. For instance, the president of the German Power Industry purported in 1987 that the “electricity economy is prepared to undertake massive efforts in order to harness additive renewable energies. […] It rejects any discrimination against electrical power. Power saving and the use of renewables will be inadequate in the foreseeable future to replace nuclear power. Treading the responsible path of power supply means accepting the realities, which safely lead to the objectives and not being lured by romantic visions” (Heidinger 1987, p. 1). Heidinger (1987) concluded that both nuclear energy and coal would be needed on a global scale to ensure an economic, environmentally responsible long-term supply of electricity. Regarding the impacts on health and the environment, Inhaber (1978), a researcher in a government-funded research institution, published a widely circulated report with the influential conclusion that the health hazards of deriving energy from wood, wind, and sunlight were comparable to those of using coal and oil and much greater than those of using nuclear power. These findings were severely criticised by Holdren et al. (1979) in a long report, which featured a harsh summary in the abstract: Inhaber’s “conclusion is in no sense derived from the actual characteristics of the technologies involved. It is based entirely on mistakes of all varieties: conceptual confusions, inappropriate selection of systems and data, misreadings, and misrepresentations of literature, improper calculational procedures, and untenable assumptions and contentions” (Holdren et al. 1979, p. i).

Holdren et al. (1979) argued several major aspects in detail, which reflected the dissent and lack of knowledge in the late 1970s: “Inhaber offers no estimates of disease effects of oxides of nitrogen, hydrocarbons, or trace metals (mercury, lead, cadmium, nickel, etc.) emitted to the air by combustion of fossil fuels. He entirely neglects public disease from water pollution from nonnuclear energy activities, e.g., caused by hydrocarbons and trace metals released in extracting, processing, and transporting fossil fuels. And he ignores disease effects in generations beyond the present one, e.g., genetic illnesses caused by chemical mutagens from fossil fuels and radiation from nuclear power, and cancers produced in future generations by radiation from uranium-mill tailings and carbon-14 released in nuclear-fuel reprocessing”. (Holdren et al. 1979, pp. 5–6).

In the spring of 1976, the Danish government published an energy plan for the period up to 1995. An essential part of this plan was the construction of five nuclear power plants. An alternative energy plan, which excluded nuclear power, was later published by a group of Danish scientists (Blegaa et al. 1977). This included an expansion of solar and wind energy and emphasised the use of decentralised fossil fuel plants with combined heat and power production and district heating. Their concluding remarks from four and a half decades ago are particularly interesting: “For a system with so much built-in inertia as the energy sector, there is a tendency to exclude qualitatively new solutions, especially if they require new types of institutional framework. In other words, new energy systems, such as those based on renewable energy sources, will suffer difficulties in receiving sufficient economic support to bring them through development into commercial large-scale production. One of the reasons that nuclear power may succeed in this respect lies in its military importance” (Blegaa et al. 1977, p. 93).

During the mid-1970s, newly founded energy systems analysis groups argued that increased oil prices would lead to higher energy costs and a more efficient use of energy; economic growth should be considered a linear annual per capita growth and its energy intensity would decline due to above-average growth in services and low-energy branches of industry. They expected a substantial slowdown in the growth of energy-intensive industries until saturation was reached in future decades. This “should result in projections of demand being considerably lower than currently available estimates” (Bossel and Denton 1977, p. 35). These low-energy demand scenarios also questioned the need for nuclear energy and pointed to renewables as a supply option (Goy et al. 1984). In 1980, the Enquete Commission published an interim report via its select committee on “Future Nuclear Energy Policy”, concluding that the use of nuclear energy might not be mandatory in the future if (West) Germany could reduce its demand for energy and alternative energy sources could be developed. For the first time in Germany, this opened a window of opportunity for a debate about moving away from nuclear power and highlighting the potential role of renewable sources of energy as well (Hake et al. 2015). In general, the narrative around renewable energies started to broaden slowly, shifting away from the initial narrow focus on affordability, efficiency, and availability of energy sources. In the same year, the Oeko-Institut published its analysis “Energy transition. Growth and prosperity without oil and uranium” (Krause et al. 1980), which also coined the term “energy transition”. A comprehensive critique of the developed theses was published in the same year by Schmitz and Voß (1980), who argued that the potential contribution of “regenerative energy sources” was substantially overestimated in the study. Despite these developments, research on the potential of renewables to reshape the energy system was slow to progress and the vision of a sustainable energy supply was yet to emerge. The study “Rational power utilisation and generation without nuclear energy: Potentials and assessment of effects on the power industry, ecology, and economy” (Masuhr et al. 1987), which was commissioned by the German Ministry of the Economy, focused on substituting the need for renewables by energy saving measures, investing in local and district heating systems and by co-generation in industry. The dissent concerning the future role of nuclear energy, energy efficiency, structural changes, and renewable energies eventually led to the foundation of the Forum of Future Energies in Germany in 1989.

While the significance of renewables for the power sector was not thoroughly investigated in the 1970s and 1980s, more interest was paid by research, policy, and media to their future role in heating. Again, the focus was more on technology solutions and other aspects were not addressed, especially socio-technological ones or the systemic importance of renewables in the heating sector. While the use of geothermal energy has a longer history in California or Iceland (Miethling 2011), Germany focused on other technologies including solar thermal energy, which was looked at for many applications including low-energy houses and passive buildings and houses, as well as greenhouses (Erhorn 1990). Solar thermal collectors were also considered for warm water generation and ancillary heating, particularly in one- and two-family houses as was heat storage in various media for short-term and long-term purposes (Reichert et al. (1980), Buchner (1980), Bakken (1981), Sørensen (1984), Jensen and Sorensen (1984)). Solar thermal systems were also examined for electricity generation and high-temperature applications in tower systems. Finally, biogas was originally considered as a substitute for natural gas in heat generation, but this was only efficient under very specific conditions (Kloss 1982). The use of biomass (such as wood, bio-based organic wastes, including the related biogas) was also investigated from various perspectives. Even the generation of green hydrogen by renewables was already studied in the mid-1970s (Nitsch 1976), although the objective here was to use it in rocket propulsion systems.

Increased attention was paid to renewable electricity generation from the early 1980s, when the first 30 kW wind turbines were successfully generating power in Denmark and the USA, particularly California. In Germany, on the other hand, the first large wind turbine (Growian) failed due to various unforeseen technical problems. This strengthened the claim of those backing nuclear power and fossil fuels that there were no suitable alternatives (Hake et al. 2015). Photovoltaics research started even earlier in the 1980s and was associated with high positive expectations due to its modular construction and no moving parts (Goetzberger 1982). Large PV fields were even planned in the upper atmosphere.

2.3 Obstacles Hindering Fast Market Diffusion

At the same time as obstacles to efficient energy use were observed (Jochem et al. (2024) in this anthology), similar barriers were identified by those analysing the market diffusion of renewable energies. Jarach (1989) surveyed the barriers reported in the literature to the diffusion of renewable energy sources at international level. These included financial (high capital cost vs. low operating cost), commercial, operational, social, and institutional factors and concerned various technologies such as solar thermal energy, wind power, and biomass-based energy production (thermochemical and biochemical processes). The evaluation carried out by Jarach (1989) also demonstrated the importance of economic barriers in terms of competitiveness with conventional energy sources that are often substantially subsidised. Operational barriers such as the lack of knowledge of planners, installers, or maintenance companies were also shown to be relevant. Consequently, Jarach recommended easy-to-run, automatic, and simple plants as well as intensifying research in the field to develop suitable renewable energy applications and overcome the barriers reported in the literature. Some of the first publications in Germany that tried to consider the efficient use of energy and maximise the use of the emerging renewables appeared in the early and late 1980s, e.g., Nitsch et al. (1981), and Luther (1989). Towards the end of the 1980s, and thus around the end of the first development phase, the general debate embraced the notion that renewables would have an important role to play in the future energy system. This slowly shifted the general narrative around renewables towards mitigating climate change. From 1987 onwards, another Enquete Commission worked on “preventive measures to protect the earth’s atmosphere”. Their final report, published in 1990, formed the early basis for German measures to protect the climate (Hake et al. 2015). Within the extensive study programme of this Enquete Commission, 13 studies were devoted exclusively to the potential of renewable energy in Germany. Their economic performance was seen as the major obstacle to the diffusion of renewables (Bölkow et al. 1990). Based on their study results, the Enquete Commission concluded in 1990 that renewables would make a limited contribution to reducing CO₂ emissions until 2005, but still called for immediate measures to foster their diffusion to bring down costs (German Bundestag 1991). This provided crucial support for the introduction of the Electricity Feed-in Law in 1991. During the 1980s, the first research was published that also considered social perspectives on renewable energies. Apart from the highly theoretical work of Meyer-Abich and Schefold (1981 and 1986) on future energy systems, the most notable project drawing on case study-based empirical evidence in this regard was the Landstuhl demonstration project, which combined energy-efficient construction and building design with the application of solar energy at the end of the 1980s. The inhabitants of the building were interviewed regarding their perceived quality of living and behavioural aspects (Gruber et al. 1988). This project, however, remained unique in its approach and non-technological research perspectives were the exception rather than the norm during this phase of development.

In 1990, the Renewable Energy Research Association (FVEE, formerly Solar Energy Research Association) was founded. This represented a crucial step towards forming and consolidating the research community as it brought together the relevant knowledge institutions in a nation-wide approach.

3 Market Expansion of Renewables in the Electricity Sector (1990–2009/2011)

3.1 Implemented Policies and Regulations

As pointed out in the previous section, the interest in renewable energy technologies of several industrialised countries was first sparked by the oil crises in the 1970s, which was followed by some efforts to develop renewable energy technologies including research and development programmes. Despite the perception of the heat sector as an important field of application for renewables, most research efforts concentrated on electricity. This focus on electricity can be at least partially explained by the major influence of the Chernobyl disaster and the resulting debate about a nuclear phase-out combined with the increasing importance of climate protection. However, decreasing oil prices in the 1980s led to a diminishing interest in renewables and their deployment could not be fostered on a larger scale. This changed in the 1990s with the start of the second development phase which was characterised by a growth in the deployment of renewables. The merit of renewable energy sources was rediscovered in light of the discussion about climate change and picked up by the EU in the 1990s. Relevant milestones included the Rio Summit in 1992, the first major international conference to discuss climate and environmental issues on a global scale and the Kyoto Protocol in 1997, which committed industrialised countries and economies in transition to reducing greenhouse gas emissions in combination with country-level targets.

Lively discussions about how to best support the deployment of renewable energy sources ensued in the research, science, and policy communities in the EU as Member States were free to choose their own approach. Feed-in tariffs were introduced as a dedicated support instrument in Germany and several other countries. In general, the targets set at both national and EU level strengthened the analysis of renewable energy potential as a separate field of research. Following the adoption of the Directive of the European Parliament and of the Council on the Promotion of Electricity Produced from Renewable Energy Sources in the Internal Electricity Market, referred to as the Renewable Energy Directive or RED (European Commission and European Parliament (2001)), an extensive descriptive literature emerged concerning policy differences and trends of renewable support in the EU, e.g. Meyer (2003), Reiche and Bechberger (2004), Johansson and Turkenburg (2004). The focus here was clearly on techno-economic analysis, with other factors discussed only on the sidelines, if at all. At the same time, this phase also saw the rise of energy system models incorporating increasingly high shares of intermittent renewables. According to Pfenninger et al. (2014), energy system models can be distinguished into four types: energy system optimisation models, energy system simulation models, power systems and electricity market models, and qualitative and mixed-methods scenarios. There are many different models available, which were designed for different purposes and cover different scopes. Some modelling approaches were also extended and combined with other perspectives during the subsequent development phases.

Figure 2 shows the evolution of renewable energy support policies over time in Germany and provides an interesting showcase for the development of a support regime. The figure clearly shows that a system of guaranteed fixed tariffs, which were linked with a high level of uncertainty for investors, has over time incorporated incentives to strengthen the market integration of renewables. Germany began its systematic support for renewables in the electricity sector in the 1990s with its Electricity Feed-in Law (“Stromeinspeisungsgesetz”). The basic principle of this law was to ensure grid access for electricity generated from renewable energy sources by obliging utilities to purchase electricity from RES at predefined fixed feed-in tariffs. The Stromeinspeisungsgesetz initiated a market diffusion process especially of onshore wind power plants in the 1990s, despite opposition from the incumbent electricity suppliers at the time. The evolution of the German support scheme can be seen as a consequence of political necessities and requirements, e.g. at EU level, a changing market environment and a continuous, scientifically-supported monitoring process (EEG-Erfahrungsberichte—Progress Reports for the Renewable Energy Sources Act).

Fig. 2

Evolution of renewable energy support policies in Germany. Source: Own compilation

Based on strong efforts by the EU to establish a liberalised internal EU market for energy and to unbundle generation and transmission, the German energy market opened up to third party generators. Extensive discussions on the efficient set-up of the energy system took place between policymakers and large energy companies, including the role of integrated energy companies and the need for regulators in the power system. Newcomers and private investors had been the drivers behind the initial market diffusion of renewable energies. Ownership-unbundling of the transmission grid assets of large utilities at the end of the 2000s was accompanied by strategic shifts in these utilities to invest more in renewables and play a major role in their development. Overall, the Stromeinspeisungsgesetz led not only to an unprecedented expansion in installed capacity, but also to the creation of “learning networks” between suppliers of wind turbines and local component suppliers (Jacobsson and Lauber 2006).

As can be seen from the timeline, the Erneuerbare Energien Gesetz (Renewable Energies Sources Act, (EEG), which replaced the Stromeinspeisungsgesetz in 2000, has become the core policy instrument supporting renewables. This act can be seen as providing the basis for the successful market development of onshore wind and solar photovoltaics in Germany. In a Europe-wide comparison, Germany, together with Denmark and Spain were the forerunners in terms of renewable energy market development, especially for onshore wind.

The EEG has been continuously monitored, evaluated, and amended, as proven by the regularly commissioned EEG Progress Reports (EEG-Erfahrungsberichte). Thus, the EEG has proven a fruitful topic for research within the vast body of literature on the performance and monitoring of policy instruments, either comparatively or looking at measures in an isolated manner, e.g. Krewitt and Nitsch (2003), Bode and Groscurth (2006), or Langniß et al. (2009).

3.2 How to Best Support Renewables: The Support Scheme Discussion

The EU first stated that increasing the share of renewable energy sources in energy supply was a core objective in the White Paper “Energy for the future: Renewable sources of energy” in 1997 (European Commission 1997) due to their potential contribution to climate protection and the security of supply in Europe. This White Paper was a declaration of intent and did not yet include a call for concrete action. However, national indicative targets for the use of renewables in the electricity sector were stipulated in Directive 2001/77/EC to provide 12% of the total electricity consumption in the EU-25 by the year 2010 (European Commission and European Parliament 2001). In this context, the liberalisation and unbundling of the electricity market were the pre-conditions for a better integration of renewables into the market. The research community quickly embraced the new challenge posed by the White Paper, with a focus on establishing the baseline for future monitoring, target setting, and analysing instruments. One prominent example is the work conducted in the “Progress of Renewable Energy: Target Setting, Implementation and Realisation” project PRETIR (Harmelink et al. 2001). This agenda was also driven by the European Commission, which had to put a monitoring and indicator framework in place to pave the way for implementation.

The decision about how to design the policy measures used to achieve the targets was left to the individual Member States, which employed a variety of instruments resulting in country-specific renewable policy mixes. This has been accompanied by a lively debate reflected in the large body of both theoretical and empirical scientific literature as well as policy documents on how to support renewable electricity, which focus on effectiveness while ensuring support costs remain at acceptable levels to society. Different policy mixes and the interactions of individual instruments increasingly became the focus of analysis.

A common taxonomy in the literature is to split the applied instruments into price- and quantity-based ones, which can then be further grouped according to different characteristics as shown in Table 1. It is also possible to distinguish direct and indirect instruments. While direct measures aim to stimulate the deployment of renewable energy sources directly, indirect measures aim to foster a conducive framework. Over the years, a variety of methods, including case studies, simulations, and econometric modelling have been applied to study the effects of these different instruments, which has become a prolific field of research (Del Rio et al. 2012).

Table 1 Characterisation of policy instruments for renewable energies

The two predominant and most controversially discussed support schemes in the 2000s were price-driven, fixed feed-in tariffs, and quantity-driven quota obligations with tradable green certificates. Feed-in Tariffs (FIT) represent a generation-based, price-driven approach. This means that a price per unit of electricity is predetermined by the government and has to be paid by the obliged actor, usually represented by a utility or the grid operator. This FIT can either be a fixed global tariff substituting the market price or a premium paid on top of the market price. In some cases, the time horizon for a tariff is fixed and provides additional planning security for potential investors. Generally, FITs allow technology-specific promotion of renewable energy technologies and can stimulate future cost reductions by considering certain criteria within the specific design of an FIT. In contrast, quota obligations based on Tradable Green Certificates (TGC) follow a generation-based but quantity-driven approach. Instead of predefining a price, a quota is established by the government. This quota then has to be fulfilled by one particular actor of the electricity supply chain, e.g. generators, suppliers, or consumers. Subsequently, the certificate price results from matching supply and demand in a market for TGC. The certificate price formed in this way serves as one revenue component in addition to the electricity market price. A penalty level may be defined, which must be paid if the obligated parties cannot prove quota fulfilment. In theory, there are different options for implementing technology diversification within TGC systems. However, these options are associated with several problems, e.g. loss of liquidity if markets are split up. Weighting certificates according to the respective technology option and its financial requirements may impede target setting and complicate the monitoring process of target fulfilment.

As more and more real-life evidence became available in the 2000s, research increasingly turned to monitoring experiences, shifting away from purely conceptual analysis. Most EU countries already applied feed-in-based support schemes, with only a few Member States using quota obligations in combination with tradable green certificates. Based on empirical evidence, some studies, e.g. Lauber and Toke (2005), Lehmann and Peter (2005), or Mitchell et al. (2006), concluded that feed-in tariffs and premiums outperform quota obligations, especially with regard to effectiveness while keeping support costs at an acceptable level. Backed by these analyses, more and more countries turned away from quota obligations. The majority of the studies focused on the effectiveness and efficiency of the employed instruments. Other investigated criteria included social acceptance, legal and/or political feasibility, and macroeconomic effects, e.g. impacts on the labour market (Ragwitz and Steinhilber 2014). A debate was triggered on the importance of different design elements with many studies concluding that there is no “single-right choice”, but that design matters.

Another stream of research examined the evidence for either (top-down) harmonisation or (bottom-up) convergence of support schemes across Europe, e.g. Muñoz et al. (2007), Kitzing et al. (2012). Some of these analyses also took place in the context of EU-funded research projects, e.g. Huber et al. (2004), Bergmann et al. (2008), and were subsequently reflected in EU policy documents, including the 2005 Communication from the Commission on the support of electricity from renewable energy sources (European Commission 2005) and the Commission staff working document on the support of electricity from renewable energy sources accompanying the proposal for the subsequent Directive (European Commission 2008). In parallel, political developments in the overall energy sector moved on to a discussion about longer term targets and the target of 20% RES in gross final energy consumption was defined for 2020. In contrast to the Directive 2001/77/EC, this new proposal set targets for the whole energy sector, not just electricity. In addition, the targets were binding and no longer only indicative as in Directive 2001/77/EC. The Directive 2009/28/EC translated the required increase in the share of energy from renewable resources from 8.5% in 2005 to 20% in 2020 into individual targets for MS (The European Parliament and the Council of the European Union 2009). The existence of binding targets led to an emerging literature on depicting and analysing the trends and progress towards achieving these targets. In addition to an emerging body of scientific literature, many other institutions contributed to this endeavour in various projects for the European Commission and other clients, including the Progress project, for example, which assessed the progress in renewable energy and sustainability of biofuels, and Eur’Observer.² Approaches to monitoring and measuring the performance of policy instruments in practice were developed within the context of various research projects, such as OPTRES, RE-Shaping, or Towards2030. This approach was then applied by the European Commission in their official communications (COM(2005)627) as well as by the International Energy Agency to monitor the effectiveness and efficiency of policy instruments at international level (European Commission 2005). Similar to the findings of COM(2005)627, an updated evaluation supported by Fraunhofer ISI researchers concluded that well-designed FITs were generally the most effective and efficient policy measure for supporting RES-E (European Commission 2008).

3.3 Assessing the Effects of the Expansion of Renewable Energy Sources

Growing shares of renewables in electricity generation meant that the impacts of renewable energies on the electricity sector and the economy became increasingly important. This led to three domains of research, which differentiated positive and negative impacts at the micro, system, and macro levels and analysed them in detail (Breitschopf and Diekmann 2015; Breitschopf et al. 2016).

At the micro level, studies included the impacts of renewable electricity generation on the market electricity prices, the so-called merit-order effect (Sensfuß 2015), distributional aspects of the EEG levy on households (Diekmann et al. 2016a) and industries (Grave et al. 2015), and analyses of network expansion costs and their distributional effects (Diekmann et al. 2016b). Additional distributional aspects in the electricity, heat, and mobility sectors of energy efficiency and renewable energy expansion were systematically outlined and analysed (Lutz and Breitschopf 2016). Besides costs, some studies explored the benefits of the feed-in tariffs paid to photovoltaic and wind-based electricity generators (Breitschopf et al. 2014). At the system level, studies focused on the impact of renewable energy deployment on innovations (Groba and Breitschopf 2013), the contribution of renewables to energy supply security (Diekmann et al. 2016b), network expansion and enforcement costs as well as the contribution of variable renewables to providing capacity and the necessary back-up capacities. Forecasting tools became an important new area of research. These provide short-term information on current renewable generation levels, substantially improve the value of renewables, and are applied around the world.

Impacts at the macro level have received a lot of attention and have been compared to the costs of expanding renewable energies. A variety of studies analysed the impacts of expanding renewable energies on employment and growth. Over time, different approaches developed to assess these and other effects of renewables, which ranged from structural top-down models, such as Hillebrand et al. (2006), to computational general equilibrium (CGE) models, Bohringer and Loschel (2006), Schumacher and Sands (2006), or Abrell and Weigt (2008). These are applied at different levels, including the EU, national, and regional levels, and for different focus areas. Studies using macroeconomic models to analyse employment effects display different results, ranging from positive net effects, Fragkos and Paroussos (2018), to net losses, e.g. Frondel et al. (2010). The magnitude of effects is characterised by and depends on the underlying assumptions. This debate also sparked new approaches, such as the sectoral energy-economic econometric model (SEEEM) (Blazejczak et al. 2014).

Fraunhofer ISI elaborated a systematics of these different assessment approaches and outlined their underlying assumptions and input parameters that affect their results (Breitschopf et al. 2013; Winkler et al. 2018). A key focus was on the different types of effects and the resulting gross and net impacts. The latter were based on a scenario comparison and the results were incorporated in publications of IRENA and CEM (2014) and the European Parliament (Winkler et al. 2018).

A seminal work for assessing the impact of renewable energy policy on economic growth and employment in the European Union was the EmployRES study (Ragwitz et al. 2009), which combined top-down and bottom-up approaches for the first time when analysing renewable energies. This study followed the conceptual work of Walz (2006) and included first-mover advantages in its empirical analysis regarding the export of renewable energies. Several years later, Fraunhofer ISI updated its 2009 study for the EU (Duscha et al. 2016) and conducted macroeconomic impact assessments for Germany (Sievers et al. 2019). Both studies assessed the impact of renewable energy deployment on GDP and net employment, i.e. comparing a deployment scenario to a counterfactual scenario and thus accounting for all additional positive and negative aspects. Overall, research in this area became more and more interdisciplinary, increasingly considering additional effects.

Over the course of the market deployment of renewable energies, the focus of discussion slowly shifted from net or gross job creations associated with the expansion of renewable energies to the jobs and qualifications needed to power the energy transition. As the technology costs of wind power and photovoltaics decreased, another increasingly important issue was the cost of capital, determined by risks at project and country level (Breitschopf and Pudlik 2013).

Overall, there are numerous different approaches and focus areas in the literature during this phase of the market expansion of renewables, some of which covered different paradigms and mechanisms. The growing body of data regarding the deployment and effects of renewables triggered a wealth of empirical studies. Slowly, an increasingly systemic perspective was being embraced and interdisciplinary approaches started to become more widespread, combining sociology, energy economics, and agent-based modelling, etc.

4 Market Integration of Renewables (2011–2019)

With increasing shares of renewables in the energy systems in Germany and the EU, the related challenges continued to develop. First, the market and system integration of renewables became more important. Second, non-financial barriers were assessed in more detail and there was a focus on dismantling them to enable even faster expansion. The development of renewable technologies and their increasing deployment in the 2000s also led to research on the innovation process of renewable energy technologies. This research built on the innovation system approach, which had been developed for national, sectoral, and technological systems (see, e.g., Lundvall et al. (2002), Malerba (2005), Carlsson et al. (2002)). In addition, the multi-level perspective framework became more important, as the focus shifted to an increasingly systemic perspective.

New areas of research that emerged during the market integration phase included the impacts of renewable energy self-consumption as well as the global expansion of renewables. This led to the research perspective broadening considerably in the geographical sense and the global perspective becoming more and more important for renewables, along with the growing awareness that a country’s energy problems cannot be viewed in isolation, but that global interdependencies exist. Furthermore, with the Paris Agreement and the UNFCCC process, more and more countries were having to embrace carbon-neutral development pathways and expand their renewable energy capacities. In this context, many researchers started to look at the specific conditions for expanding renewables in certain countries or regions. Equally, several projects emerged that focused on different geographical areas. Such projects needed to consider certain aspects that are not as relevant in the EU context, such as existing direct subsidies for fossil-based electricity, high grid losses, or a greater focus on supporting domestic industries.

4.1 Renewable Energy Innovation System Research

Studies investigating the innovation process related to renewable energies mainly used the technological innovation system (TIS) approach. With Germany becoming one of the key locations for renewable energy development, research on the renewable energy innovation system in Germany started with applications for wind energy, photovoltaics, and biomass (e.g. Jacobsson et al. (2004), Jacobsson and Lauber (2006), Walz (2007), Negro and Hekkert (2008)). In parallel, innovation researchers put forward the concept of a functional approach to account for the systemic nature of innovation (Smits and Kuhlmann (2004); Hekkert et al. (2007); Bergek et al. (2008), Hekkert and Negro (2009), Markard et al. (2015)). This type of TIS approach, linked to seven innovation functions, has been widely used since the late 2000s for the field of renewable energy technologies and beyond.

The TIS approach is so important for energy policy as it improved our understanding of the interplay between market formation policies and innovation. In particular, the approach was able to explain the role of energy policies and also provided evidence for the vital role of feed-in tariffs and policy mixes for promoting innovation in renewable energy technologies (Jacobsson and Lauber (2006), Walz (2007), Negro and Hekkert (2008), Dewald and Truffer (2011), Negro et al. (2012), Bergek et al. (2015), Reichardt et al. (2016), Reichardt et al. (2017)). This primarily case study-oriented research was supplemented by econometric research on the determinants of renewable energy technology innovation in the 2010s, which used patent counts as a proxy for innovation. Both Johnstone et al. (2010) and Costantini et al. (2015) focused on the effects of the different types of support mechanisms, particularly on FITs. Schleich et al. (2017) and Böhringer et al. (2017) found that policies increasing the demand for renewable energy technologies have a positive effect on innovation, but also that factors other than the instrument type are important.

To sum up, both qualitative case studies and quantitative statistical analyses underlined the importance of early market formation for further innovation in renewable energy technology. The fact that key energy policies increasing the deployment of renewable energy technologies were also demand-side innovation policies highlighted the fact that innovation research and energy policy research were increasingly becoming two sides of the same coin. This also involved the perspectives of research on sectoral energy policy and research on innovation policy moving closer together.

In addition to the paradigm of the technological innovation system, energy-related innovation research also began to embrace the multi-level perspective (MLP) approach, initially applied to analyse the energy transition. Fraunhofer ISI made an important contribution here by combining MLP and modelling, e.g. Rogge et al. (2020). Several studies examined the policy mixes facilitating renewable energy deployment, combining the lenses of technology push and demand pull. Using the German Energiewende as an example, Rogge and Reichardt (2016) developed a concept and framework analysis for policy mixes for sustainability transitions. This was picked up by several other works, including the GRETCHEN project, which explored the influence of policy mixes on technological and structural change in renewable power generation technologies in Germany.

4.2 From Market Integration to the System and Grid Integration of Renewable Energies

As renewable energy generation continued to grow across the EU, its market and system integration was probably the most important discussion point in policy and research during the period 2011–2019. Besides theoretical and empirical studies and analyses of integrating renewables into the market and electricity system as well as the diffusion of technologies, testing laboratories were established to try out innovative technological solutions in practice under the existing infrastructure and external framework conditions. One example is the SINTEG programme, which analysed the role of digital technologies in the energy transition based on experiments in several model regions. One core element was the regulatory sandbox approach to gather experience in adapting and further developing the legal framework to the innovative technologies (Brunekreeft et al. 2022).

While generation from the most relevant renewable energies of onshore and offshore wind and solar PV is variable and dependent on weather patterns, electricity demand needs to be met at all times and does not necessarily match the production output of renewables. If supply is no longer fully dispatchable, coordinating supply and demand and integrating renewables become even more important. Other reasons for including renewable energies in regular electricity markets included their growing share of generation and the liberalisation of electricity markets across Europe. It was simply no longer a viable option to exclude large shares of renewable electricity generation from the market.

Figure 3 gives an overview of the main aspects regarding the market integration of renewables over time that are analysed in the literature. It shows that the market integration of renewable energies has two different dimensions. The first one concerns measures to enable renewable energies to react to the price signals of regular electricity markets. The second concerns the use of competitive or market processes to determine support levels. The figure also shows the development of renewable energy support over the last decade in Germany. Support in 2010 was still based on fixed feed-in tariffs that were administratively set. The market-premium system was introduced for larger plants, but still based on administratively set tariffs in 2011. Setting tariffs was changed to an auction system from 2015. The zero bids in onshore wind auctions in 2017 and the development of big PV plants without support indicate that we are gradually approaching full market integration.

Fig. 3

Different aspects of the market integration of renewable energies. Source: Winkler (2017)

4.2.1 Market-Premium Schemes

As described above, prior to the introduction of the Renewable Energy Directive (RED) at EU level in 2009, there had been a heated debate about how to support renewables in the electricity sector between proponents of the market (who preferred quota schemes to support renewables) and those of the state (who opted for fixed feed-in tariffs). In the years following this debate, there was a gradual shift among those supporting feed-in tariffs towards a more market-based integration of renewables.

Research was conducted on different market-premium systems, which were increasingly implemented in policies. The common factor shared by these premium schemes was that the renewable energy plants were obliged to sell the electricity produced on the regular electricity market. In addition, they received a premium payment to cover generation costs, which (at least throughout the previous decade) were typically still higher than those of fossil-based electricity generation. The most important change for the renewable energy plants in this context was that they were responsible for sticking to their generation forecast. As a result, the introduction of feed-in premium schemes led to a dramatic improvement in the generation forecasts for renewables.

As shown in Fig. 4, there are different types of feed-in premium schemes, namely fixed feed-in premiums, (one-sided) sliding feed-in premiums, and (two-sided) sliding feed-in premiums, which are also called “contracts for difference”. All have different advantages and drawbacks which have been discussed at length over the last decade, see, for example, Winkler et al. (2020). In Germany, a one-sided sliding premium scheme was introduced in 2011 based on the proposal of a project led by Fraunhofer ISI, which is still the main support instrument for renewables in the electricity sector (Klobasa et al. 2013). Following the introduction of market-based instruments in Germany, a discussion regarding their suitability ensued as well as options to improve them via various design elements. Despite the mainly positive assessment of the one-sided sliding premium, there were also some critical voices, e.g. Bardt (2014) or EEX (2014).

Fig. 4

Different types of feed-in premium schemes compared to feed-in tariffs. Source: Own compilation (DiaCore/ReShaping)

4.2.2 Auctions

The other aspect of the market integration of renewables is the market-based determination of the level of support. This can either be realised via a market for renewable energy certificates (as is the case in quota systems) or based on auctions or competitive bidding.

Auctions for allocating support to renewable energies were introduced based on the EU’s new State Aid Guidelines, which were introduced in 2014 by the European Commission’s Directorate for Competition (European Commission 2014). Contrary to the 2009 Renewable Energy Directive (RED), new support schemes were increasingly steered towards using auctioning.

Many other institutions and researchers have been heavily involved in research and policy advice projects for auctioning renewable energy support and developed the auction design for offshore wind in Germany. There is a vast and continually growing literature on auctions’ effectiveness and efficiency under various circumstances as well as their optimal design due to their increasing importance on a global scale. In addition to country-level studies, e.g. Anatolitis and Welisch (2017) for Germany, Kitzing et al. (2022) for South Africa, and Mora et al. (2017) for several EU countries, other studies focus on auctions’ optimal design and the significance and role of different design elements. Methodologically speaking, auction theory approaches co-exist with other methodologies, but there is a dominance of empirical studies here, and within those, qualitative approaches dominate quantitative ones (Del Río and Kiefer 2023). The Horizon 2020 research project AURES is a notable project at EU level dealing with the relevance of auctions for the renewable energy sector, which has actively accompanied renewable energy auctions at Member State and EU level. Designing effective and efficient auction schemes is quite challenging, as many different parameters need to be considered and the specific market and framework conditions as well as the policy objectives need to be respected. The AURES project website provides detailed information on past and current auctions in EU Member States as well as an auction database and analyses of many specific aspects of auction design.

The expansion of renewable energies not only required their market integration, but also the adaptation of grids and the overall energy system to the new requirements (Auer et al. 2004). Particular attention was given to the extension and operation of the transmission grid by policymakers and the broader public as the acceptance of new infrastructure became a major barrier to the further deployment of renewable energies. This resulted in interactions between new groups and participatory approaches to grid planning and long-term scenario developments for the energy system. Substantial research efforts were needed to identify the best-practice approaches and integrate numerous stakeholders and research disciplines to draw up grid development plans. Grid planning in the past had been managed by a limited number of electrical engineering experts but has since become an issue of broad stakeholder participation and involves the consultation of different societal groups.

Many institutions supported this engagement and stakeholder participation process with advisory studies on techno-economic solutions for different grid operators and policymakers among other formats. Increased efforts have been made by policymakers on national and EU levels to optimise grid operation and increase the security of supply. An intensive discussion at EU level concerned whether capacity markets were needed for the security of supply. Other key topics for the grid integration of renewables included interconnection capacity with neighbouring countries as well as across the EU, and the establishment of ancillary service markets for grid operation.

In addition to their other unique characteristics, renewable plants are often not connected to the transmission grid but to distribution grids. This requires grid reinforcements but there are also other options to enhance flexibility at the local level. In the past, almost no generation units were connected to the distribution grid and no active operation of this level was foreseen. With the increasing number of renewable generators connected to distribution grids, however, the need for more active operation emerged. This gave rise to questions about what impacts could be expected at system level and how active distribution grids could contribute to an efficient power system. These questions have not yet been comprehensively and extensively addressed by the research community. They are the subject of on-going debate, and future research should contribute to closing these research gaps.

4.3 Self-Consumption of Renewable Electricity and Non-financial Barriers

Self-consumption refers to the on-site production and consumption of renewable power. Self-consumers are also called “prosumers” in the debate on this topic. As the costs of renewable energies and specifically rooftop PV have decreased, self-consumption or prosumerism has become increasingly attractive over the last decade. Although prosumerism helps to get more people actively involved in the energy system, it can lead to adverse distributional effects, as self-consumers are often exempt from paying grid fees or other energy taxes and levies. As these costs then have to be redistributed among the other consumers, prosumerism can result in a higher burden on socially disadvantaged households who are less likely to own a house and therefore have no possibility to install rooftop PV or who do not have the financial means to invest in self-consumption. The self-consumption of renewable power has also become a prolific research area, often associated with interdisciplinary approaches and the combination of multiple methods, including case studies from various European and non-European countries and involving different types of actors, modelling or interviews, see, for example, the EU-funded projects COMPILE or FlexCoop. Systematic literature reviews and comparative studies from different angles can form a good starting point for further analyses, e.g. Bauwens et al. (2016), Capper et al. (2022), or Lode et al. (2022).

4.4 Refinancing the Expansion of Renewable Energies and Non-financial Barriers

In Germany, support for renewable energies has long been financed via a levy on electricity prices. The increasing cost of support, especially due to the increase in solar rooftop capacity between 2009 and 2011 based on very high tariffs, meant the high renewable support levy in combination with other taxes and levies led to a high cost of electricity, also when compared to fossil energy carriers, especially natural gas and coal for heating. High electricity prices are problematic in the context of fostering the electrification of other sectors using sector coupling. From summer 2022, therefore, taxes have been used to finance the renewable energy levy. In addition, the introduction of a national CO₂ emissions trading system for transport and heating has helped to boost the competitiveness of heat pumps and electric cars, in particular.

Apart from financial support for renewable energies, reducing the non-financial barriers to their deployment is key for their expansion at low cost. The recent auction results for onshore wind in Germany are a clear example of this. Due to the low number of wind energy permits, there was not enough competition in most of the auctions. This led to auction results that were the same as or very close to the administratively set ceiling price and thus to very high support levels and profits for wind installations. Numerous research projects were conducted assessing the non-financial barriers to renewables, starting with a project about the relevant obstacles to wind energy between 2008 and 2010.³ Based on this early experience, a comprehensive methodology for analysing barriers was developed (Boie 2016), which has already been applied to EU Member States in the RE-Frame project⁴ and to non-EU countries as well, such as the six Western Balkan countries or Indonesia. Social acceptance issues regarding renewable energies are also moving into the focus of research, but these will become even more pronounced during the next development phase.

5 Speeding up the Transition to a Fully Renewable Electricity System (2019-Present)

The future energy system will have to rely fully on renewable energy, which will have major impacts on all its areas. In electricity, the share of renewables needs to increase to 100%. In order to integrate this renewable power and adapt to the fluctuating generation, the rest of the energy system must be very flexible. Direct electrification via heat pumps is necessary in the heating sector, including decentralised systems in buildings as well as centralised ones in district heating systems. In addition, the direct use of renewables must be expanded, e.g. solar thermal and geothermal as well as the use of waste heat. Direct electrification will also play a vital role in the transport sector. In addition, synthetic or renewable fuels will be necessary for long-distance aviation and shipping. It is not yet clear what the solutions will be for heavy-duty road transport. In industry, materials and processes need to be adapted. Apart from recycling and circular economy approaches, direct electrification but also hydrogen will contribute to an increasingly climate-neutral system. One approach is to develop future scenarios based on detailed modelling tools, which were already employed during the previous phase of research but have recently been expanded and become much more sophisticated. One example is the official modelling for the German Ministry for Economic Affairs and Climate Action, the Long-term Scenarios (Fraunhofer ISI et al. 2021). This will also be used as a basis for grid expansion plans in the future.⁵ Sector coupling is another highly relevant topic, which is predominantly investigated using modelling approaches, e.g. Bernath et al. (2021). This attempts to integrate all the energy-consuming sectors of the economy into one system, including electricity, buildings/heating and cooling, transport as well as industry.

In addition to modelling approaches becoming more and more sophisticated, this phase is also characterised by a plurality of different research paradigms and approaches existing in parallel and cross-pollinating one another.

5.1 Ambitious Targets and EU Governance Structure for Renewables

Renewable energy is strongly embedded in the EU regulatory context. After a sector-specific target of 10% renewables in gross final electricity consumption had been set for the year 2010, the Renewable Energy Directive (2009) set a general target of 20% renewable energy sources in final energy consumption. Both the 2010 electricity target and the 2020 RES targets were broken down to Member State level.

The European Union launched its “Energy Union” strategy in February 2015 in order to align its energy and climate policies. This strategy aims at making the use of energy more secure, affordable, and sustainable. The Energy Union Strategy builds on existing legislation including the 2020 energy and climate policy framework, which set the targets of reducing greenhouse gas emissions by at least 20% by 2020 (compared to 1990), increasing the share of renewable energy sources in final energy consumption to 20% by 2020, and reducing energy demand by 20% (also compared to 1990).

The EU legislative package “Clean energy for all Europeans” was proposed and partially adopted to regulate EU climate and energy policy from 2021–2030. It covers energy performance in buildings, energy efficiency, renewable energy, electricity market design, and the governance structure of the Energy Union. The target for the share of renewable energy sources in gross final energy consumption is 32% by 2030, but this has not been broken down to Member State level. In its Fit-for-55 package, published in summer 2021, the European Commission proposed increasing this target to 40% by 2030.

In addition, the current target architecture laid out in the Governance Regulation requires Member States to prepare “Integrated National Energy and Climate Plans” (NECPs), an integrated planning and monitoring process for the five dimensions of the Energy Union, which includes plans for renewable energies. NECPs should include the Member States’ proposed contribution in terms of renewable energy to the EU target of at least 32% (Governance Regulation, Article 3) as well as an indicative trajectory for several reference points, namely 2022, 2025, and 2027. A Member State shall not fall below a defined percentage of the total increase in the renewable energy share between that Member State’s binding 2020 national target and its contribution to the 2030 target (Governance Regulation, Article 4). The indicative trajectory is slightly below a linear development between 2020 and 2030. The European Commission will assess and monitor the collective ambition and progress against the EU target and propose measures if required. This has also given rise to a prolific area of scientific activity concerned with the assessment of the EU’s 2030 Climate and Energy Policy Framework as well as individual Member States’ contributions to it, e.g. de Paoli and Geoffron (2019), Oberthür (2019), Mišík and Oravcová (2022).

5.2 How to Achieve Higher Expansion Rates: Acceptance Issues and Limited Land Availability

Research is now increasingly starting to tackle acceptance issues, a prominent non-financial barrier to the implementation of renewable energy projects. Various studies show that, in principle, the energy transition in the sense of a predominantly renewable power supply is viewed positively by the population, with an approval rating ranging from 60 to 80%, see BMU and UBA (2019) and Wolf et al. (2021). The highest level of support is for the expansion of rooftop solar power. There is less support for the construction of new onshore wind power plants compared to offshore expansion (Wolf et al. 2021). However, despite this general approval, the expansion of renewables often encounters resistance at local level. This is a major challenge of the energy transition and has been further investigated by many researchers, e.g. Kühne and Weber (2016) or Wüstenhagen et al. (2007). Many of these analyses are both qualitative and quantitative case studies and cover various groups, including residents, experts, and other stakeholders (Segreto et al. 2020). This topic was also explored within the research project Akzept, which shows that resistance is lower if citizens participate financially in the energy transition (Breitschopf et al. 2024). An important area of research is concerned with how to incorporate these issues into the planning processes of renewable energy projects and how to reduce local community opposition to wind energy. One prominent example is the WISE - POWER project (2014–2016, funded by the European Commission), which resulted in the development of the so-called “Social Acceptance Pathways” (SAP).

One way to increase the social acceptance of renewable energy projects (on site) is public participation (formal or informal, different intensities: information, consultation, cooperation, financial and non-financial) (Wolf et al. 2021). In the Akzept project (2020–2022, funded by the Federal Ministry for Economic Affairs and Climate Action), several research institutions investigated whether citizens who participate financially in the energy transition tend to have higher levels of acceptance than those who do not. The findings indicate a correlation between financial participation and acceptance. Those who benefit economically from the energy transition not only advocate it more often but are also more often willing to pay higher electricity prices, accept photovoltaic systems even if they do not hold a stake in them, and accept wind farms if they do hold a stake in them. In addition, the project found that financially involved citizens actively support the energy transition, for example by getting involved in initiatives and purchasing green electricity. However, it is important to point out that the direction of impact could not be investigated, i.e. it is not clear how financial participation and acceptance are related (Breitschopf et al. 2024).

5.3 Future Support Requirements for Renewables

One very important question concerning the future of renewables is whether there will be a need to support them in the medium to long term, if their competitiveness improves considerably over time. The German Renewable Energy Act aims to end the support for new plants in 2030. Support can be phased out if plants refinance themselves from the market and market prices cover the increased risk premiums implied by fluctuating electricity prices. The following sections look at the research on identifying the important factors that determine whether to end support. These are divided into factors driving the costs of renewables and those driving the revenues of renewables. Both sides are somehow linked through the financing costs, which depend on the risk profile of plants. Higher revenue risks imply higher financing costs (if financing is still possible) and therefore increase the overall costs, which in turn require higher revenues.

There is an on-going scientific debate about how to design future support systems, led also by several projects at national and EU level. As an example, Held et al. (2019) provide an overview of the challenges to be addressed when phasing out support for renewables. The paper finds arguments for continuing the dedicated support for RES in order to create a predictable and secure investment framework.

5.3.1 The Future Costs of Renewables

In the past, costs for renewable energy generation, especially wind and solar, have decreased continuously. Most recently, however, this trend has stalled and sometimes even been reversed. The main cost driver of electricity generation costs is the resource quality at a specific site. The costs of raw materials, labour, etc. also play an important role as do risks and financing costs. This has opened up a new research area dedicated to facilitating the full market integration of renewables in the future.

A support system, especially one offered by a low-risk state like Germany and other EU countries, substantially reduces financing risks and therefore also the overall costs of electricity generation. Projects like AURES and DIA-Core found that financing costs have fallen across countries over the last decade. In terms of renewable support, the main factor driving down investment risks is a steady and reliable support system without retroactive changes. In terms of designing the premium, systems that smooth out electricity price fluctuations and lead to constant and predictable revenue flows imply the lowest risks and financing costs (Breitschopf and Alexander-Haw 2022).

5.3.2 Revenues of Renewable Energy Plants: The Market Side

Renewable energy sources, especially wind and solar energy, have very low or even close to zero variable costs. On the regular electricity market, prices are typically constructed based on these variable costs. Consequently, prices are typically low in hours when renewables set the price (i.e. renewables produce sufficient energy to cover the total electricity demand). This effect is called the “merit-order effect” or “cannibalisation effect” of renewables. Sensfuß et al. (2008) quantified this “Merit-Order Effect” for the German power market based on the agent-based simulation platform PowerACE (now Enertile). The merit-order or cannibalisation effect leads to decreasing revenues for renewables at higher expansion rates due to the simultaneity of their electricity generation combined with their low costs. The extent of the effect depends heavily on the elasticity of electricity demand and thus on the flexibility of the energy system as a whole. Bernath et al. (2021), for example, found that the existence of flexible heating grids considerably increases the revenues of renewable energies in electricity. In the short to medium term, the prices for gas and CO₂ also play a role (Winkler et al. 2016).

Apart from the level of future market revenues, the predictability of these revenues is important for investments in renewables. Again, the cost structure of renewables with their high investment expenditures and low variable costs makes them especially vulnerable to systemic changes in electricity prices, e.g. based on a re-arrangement of market zones or other political decisions. In this context, long-term contracts with private companies for trading electricity (power purchase agreements or PPAs) are often mentioned as an alternative solution to state-based support programmes. The potential for PPAs is, however, restricted on the part of industry and its interest in long-term contracts (at least 10 years) is limited, among others, because of the required company size in terms of electricity consumption and the creditworthiness of the offtaker. Furthermore, in the case of large purchase quantities, the PPA contract can adversely affect an offtaker’s credit rating. Relevant research topics include the availability of and barriers to PPA contracts.

Discussions with regard to the longer term also address the market design for electricity in general. One topic is whether renewables and flexibility options will be able to recover their costs based on the current market design (energy-only market) or whether there is a need for specific revenue mechanisms called “capacity mechanisms”. In Germany, there has been a very lively debate surrounding the market design for electricity over the last decade. Based on political discussions and research-based assessments, the energy-only market has been retained, but complemented by a strategic reserve. Recently, more general debates about capacity mechanisms are regaining momentum, also due to the increasing number of capacity mechanisms across EU Member States.

5.4 New Developments with Regard to Support Scheme Design

Apart from the question about phasing out support for renewables in the electricity sector, there are also new developments in the research field with respect to designing the allocation of support or de-risking tools. The most important discussions here concern different types of zero support auctions, on the one hand, and new support tools at EU level, on the other hand. Both are briefly outlined in the following.

Since 2017, especially offshore wind auctions but also solar PV and onshore wind auctions have sometimes resulted in zero bids by the auction participants. These plant operators no longer required support payments, but they participated in these auctions just to be able to secure a specific site or gain access to an existing grid connection. At the same time, merchant investments in solar PV and wind onshore plants were realised, mainly based on PPA contracts with private companies.

These results sparked a debate about how to design zero support auctions, e.g. Anatolitis et al. (2022) or Jansen et al. (2020). In Germany and many other EU countries, this especially concerned offshore wind. In the Netherlands, a tender design for zero support was already introduced in 2017. There, a “beauty contest” (de Rijke et al. 2017) selection process is used involving several criteria that are adapted for each tender. The most recent tenders also include a financial bid component, where bidders can offer what they are willing to pay for the opportunity to build and operate their wind park at the specific site. The UK has chosen another way to deal with the fact that market revenues are expected to fully cover the costs of offshore wind parks, at least in the medium term. The UK uses a Contract for Difference (CfD) system, where plant operators have to pay back money to the state whenever the electricity market price is higher than the auction strike price (Welisch and Poudineh 2020). Even though the grid connection costs are financed by the plant operators in the UK, the last auction resulted in a very low strike price, which, under the assumption of rising electricity prices, will lead to negative support payments due to the nature of the CfD system. Denmark also used a CfD design in the most recent tender for offshore wind in order to avoid zero offers. However, because payback was limited to a certain volume as part of the tender conditions and all auction participants expected higher profits than this amount, the auction still resulted in zero bids and a lottery was used to select the winner. In Germany, the first proposal of the government to include a negative bid component to select the winner in the case of more than one zero bid was not successful. In a new proposal, the main support instrument for offshore wind will change to a CfD system. A “beauty contest” combined with a negative bid component is proposed for additional areas without central predevelopment.

In the past, support systems for renewable energies were mainly organised on a national level. Although the Renewable Energy Directive has included cross-border cooperation to support renewables since 2009, this opportunity has only been used very rarely so far. As the new system only plans a binding target at EU level, and not at Member State level, the EU has proposed additional support programmes at EU level. The most important of these are the renewable energy financing mechanism and the new funding instrument for cross-border renewable energy projects under the Connecting Europe Facility. The financing mechanism is an auction for supporting renewables at EU level. Member States can participate by either offering renewable energy sites or buying renewables from the auctions. The new funding instrument supports cross-border renewable energy projects that fulfil certain criteria and participate in an application process.

6 Summary and Outlook

The research on renewable energy sources over the last 50 years has developed very dynamically. While the 1970s and 80s were characterised by finding technological solutions for renewables in a predominantly hostile environment dominated by incumbents, the market diffusion of renewable energy sources really took off in the electricity sector in the 1990s, stimulated by different support policies. In the early 1990s and 2000s, research was predominantly concerned with investigating, comparing, and analysing different diffusion policies and instruments, underpinned by a growing number of real-life experiences and data. As renewables expanded and the focus shifted to market and system integration, the range of research topics and approaches also expanded considerably. While research was heavily technology-driven in the first decades and non-technological perspectives were the exception rather than the rule, over time, inter- and multidisciplinary approaches started to become more important. Of course, technology-driven research still exists and is essential, but is not the focus of this article.

In light of policy developments at both the EU and national level in the 2000s, a large descriptive scientific literature has started to emerge on the existing support instruments for renewables and trends. A much-discussed subject has been the choice of recommended support regime, with feed-in tariffs and quota obligations the most prevalent instruments chosen by Member States. As numerous studies have concluded that feed-in tariffs and premiums tend to be more effective and efficient, many countries have abandoned quota-based mechanisms. Overall, however, the general conclusion is that there is no “one-fits-all” approach when it comes to supporting renewables and that it is vital to select appropriate design elements that are adapted to the unique conditions and system boundaries of a given country. In this context, a new research strand has emerged, which focuses on finding evidence of either harmonisation or the convergence of support schemes across the EU. At the same time, complex energy system models have become more widespread, which incorporate the growing contribution of intermittent renewables. Approaches to monitoring and measuring the performance of policy instruments in practice have also developed in the context of various research projects and investigate the effects of renewables expansion on the electricity sector and the economy. Positive and negative impacts are differentiated into effects at the micro, system, and macro levels and analysed in detail. At the system level, studies include the impacts of renewables in electricity generation on market electricity prices, the so-called merit-order effect. Further distributional aspects of energy efficiency and renewable energy expansion in the electricity, heat and mobility sectors have been systematically outlined and analysed. At the macro level, a variety of studies have analysed the impact of renewables expansion on employment and growth. Over time, different approaches have developed to assess these and other effects of renewables, ranging from structural top-down models to computational general equilibrium (CGE) models. Over the course of the market deployment of renewable energies, the focus of discussion has slowly shifted from net or gross job creations to the jobs and qualifications required to power the energy transition. Overall, there are many different approaches and focus areas in the literature on renewables during the phase of market deployment of renewables, some of which cover different paradigms and mechanisms.

Later on, in the third phase of development, a stronger market integration of renewable energies has been promoted, e.g. by introducing auction procedures for renewable energy support. This illustrates how renewables have developed from niche technological applications to a mass market, their dominant role in a future decarbonised energy system, and the challenges this poses for designing and continuously adapting policy. It has been possible to reduce electricity generation costs significantly, especially regarding solar PV, with Germany playing a major role in stimulating these cost reductions through large capacity additions. This phase is also marked by a broader research perspective in geographical terms and the global perspective of renewables becoming more important.

With increasing shares of renewables in the energy system in Germany and the EU, the market and system integration of renewables have become more important. Non-financial barriers have been assessed in more detail and priority given to dismantling them to encourage even faster expansion. In addition to market integration, the need for adjustments to the overall energy system and the grid also are increasingly important topics. New topics have emerged, such as prosumerism and self-consumption of renewable electricity, and are being addressed with interdisciplinary approaches and by combining multiple methods. A prolific area of research assesses the EU’s 2030 Climate and Energy Policy framework as well as individual Member States’ contributions to this. Acceptance issues, which had developed into a major barrier to the further expansion of renewable energies, have also become more relevant. Many acceptance analyses are qualitative and quantitative case studies and cover different groups, including residents, experts, and other stakeholders. A new and still on-going debate is on how to design future support systems for renewables, as many technologies are now more mature. Another current and highly relevant topic is sector coupling, i.e. shaping the energy system by integrating all the energy-consuming sectors of the economy, including electricity, buildings/heating and cooling, transport as well as industry.

To sum up, the first development phase focused on technology research. This was followed by the 1990s research into different policies supporting the diffusion of renewable technologies. The subsequent shift in research focus attached greater importance to exploring questions of systemic change using interdisciplinary approaches. Now more than ever before, research is called upon to take a systemic perspective and integrate different approaches, including systems and transformation research to monitor complex socio-technical changes and provide relevant impulses for holistic transformation of the energy sector. Interdisciplinary initiatives and associations that bundle different competencies in energy research, such as the Fraunhofer research cluster Integrated Energy Systems CINES, can play a major role in this context. In general, an increasing differentiation of the research questions can be observed over time, from technology-centric research to more interdisciplinary research. This is also valid for the methods applied.

The actor landscape has become more diversified over the years, with an increasing share of non-university research. Overall, it can be observed that the research field of renewables has developed from a niche to a mainstream topic, accompanied by increasing cross-pollination between research areas.