Key Highlights

  • In the EU, wind and solar became the largest electricity sources in 2025, surpassing fossil fuels for the first time
  • In the U.S., wind and solar outpaced coal in 2024, a milestone reached in 24 states
  • The shift reflects accelerated deployment of renewables driven by policy and falling costs
  • Gas-fired power plants face declining utilisation as grids decarbonise and storage scales
  • Investors are reallocating Capital toward wind and solar projects as gas Assets lose appeal

The milestone

For the first time on record, wind and Solar Energy have overtaken gas-fired power generation in the European Union, marking a structural inflection in the continent’s energy transition. According to Ember’s analysis of 2025 data, renewable sources supplied 39% of the EU’s electricity last year, edging past the 38% achieved by fossil fuels—a category dominated by gas. The crossover reflects the rapid expansion of solar and wind capacity, which now accounts for more than half of all new installations across the bloc. Ember’s data show solar alone grew by 22% year-on-year in 2025, while wind added another 18%. This surge has been accelerated by policy support, including the EU’s REPowerEU plan, which fast-tracked permitting for renewable projects and aimed to reduce reliance on Russian gas. “The data confirm that the energy transition is no longer a distant ambition but an unfolding reality,” said Dave Jones, Ember’s global insights director. The milestone also underscores the diminishing role of gas—a trend that has accelerated since Russia’s invasion of Ukraine in 2022, which exposed Europe’s vulnerability to energy shocks.

A continental shift

The EU’s achievement follows a similar landmark in the United States, where wind and solar overtook coal for the first time in 2024—an inflection point that occurred in 24 states, half of which made the transition in just six years. Ember’s analysis reveals that renewables supplied 28% of U.S. electricity in 2024, up from 24% in 2023, while coal’s share fell to 19% from 22%. The crossover was driven by a combination of federal incentives under the Inflation Reduction Act and the relentless cost declines of solar panels and wind turbines. Analysts at the Energy Information Administration (EIA) note that solar costs have fallen by 85% over the past decade, while onshore wind is now cheaper than 90% of existing gas plants on a levelised cost basis. The shift has been uneven, however: states like Texas and California have led the transition, while coal-reliant regions such as West Virginia and Kentucky have lagged. Yet even in those areas, the Economics of renewables are becoming irresistible. “The coal crossover was a psychological barrier broken,” said an Ember analyst; “it signals that the energy transition is irreversible.”

The gas sector’s reckoning

The ascendancy of renewables has sent shockwaves through the global gas industry, which had banked on gas as a “bridge fuel” to a lower-carbon future. In the EU, gas-fired power generation fell by 12% in 2025, according to Ember, as utilities increasingly mothballed or repurposed gas plants. Utilities such as Uniper SE (FWB: UN01) and RWE AG (ETR: RWE) have accelerated plans to decommission gas assets, while operators in the U.S., including NextEra Energy Inc. (NYSE: NEE) and Dominion Energy Inc. (NYSE: D), are pivoting toward renewables-driven growth. The financial implications are stark: gas plant utilisation rates in Europe have slumped to below 20%, well below the 40-50% threshold needed to justify new investments. Analysts at UBS warn that gas assets risk becoming stranded if policymakers accelerate decarbonisation targets. “The writing is on the wall,” said a UBS energy strategist; “gas is no longer a safe bet for long-term investors.” The sector’s decline is mirrored in Equity markets: shares in gas-focused utilities have underperformed broad energy indices by 15% over the past two years.

Capital in motion

Investor sentiment has shifted decisively in favour of renewables, with global clean-energy Investment hitting a record $1.8trn in 2025—up 18% from the prior year, according to BloombergNEF. Wind and solar projects now attract more than 60% of all energy-sector capital, while fossil fuel investments have stagnated. In the EU, corporate power-purchase agreements for renewables surged by 35% in 2025, as companies seek to meet net-zero pledges. Major utilities such as Ørsted A/S (CPH: ORSTED) and Iberdrola SA (BME: IBE) have pivoted toward offshore wind and solar, while traditional oil majors like Shell plc (LSE: SHEL) have scaled back gas expansion plans. Private Equity funds are also piling in: BlackRock Inc. (NYSE: BLK) recently committed $25bn to renewable energy infrastructure. “The capital is voting with its feet,”, “the energy transition is now the primary driver of investment flows.” Yet risks remain: Supply-chain bottlenecks for critical minerals and grid congestion could slow momentum, while geopolitical tensions—particularly in the South China Sea—threaten to disrupt the supply of solar panels and wind turbines.

The road ahead

The crossover of wind and solar over gas is unlikely to be a one-off event. BloombergNEF projects that renewables will supply 45% of global electricity by 2030, with wind and solar alone accounting for 35%. In the EU, the European Commission’s 2040 climate targets imply that renewables will need to supply 70% of electricity by that year, requiring annual installations to triple from current levels. The U.S. faces a similar trajectory: the EIA forecasts that wind and solar will surpass coal nationwide by 2027 and gas by 2035. Yet achieving these goals will require overcoming significant hurdles. Grid modernisation remains a bottleneck, with transmission lines struggling to keep pace with renewable deployment. In Texas, for instance, congestion costs have surged by 40% since 2023 as solar and wind farms outstrip local Demand. Policymakers are responding: the U.S. recently allocated $20bn to grid upgrades under the Infrastructure Investment and Jobs Act. “The transition is inevitable,” said an IEA analyst; “but its speed depends on whether we can solve the infrastructure puzzle.”