Dr Garvan Walshe // 23 September 2026

The Supply-Side Renewable Energy Revolution examines how rapid technological progress in renewable energy generation and battery storage has changed the economics of climate policy. It assesses whether the assumption underpinning three decades of climate policy, that non-emitting energy will always cost more than fossil fuels and therefore requires a permanent carbon price to compete, still matches the underlying technological reality.

By analysing the divergent trajectories of technologies such as carbon capture and storage, hydrogen, and solar power, alongside firm levelised cost of energy data and the structure of European electricity markets, the report assesses which parts of the economy can now be decarbonised at little or no cost, including electricity generation, road transport, and buildings, and which remain genuinely difficult, including heavy industry and aviation. It also examines the design of the EU's forthcoming Grids Package, the operation of the Emissions Trading System for heating (ETS2), and the financing constraints facing European clean-technology innovation.

The publication argues that climate policy has for decades been built around demand-side measures and the expectation of a permanently high carbon price, on the assumption that clean technology would never out-compete fossil fuels on cost. It contends that this assumption no longer holds: compounding improvement on the supply side, rather than regulation itself, has been the main driver of falling clean energy prices, and that future climate policy should be designed to sustain that momentum rather than to manage demand.

The main conclusions of the publication are:

• Technological advances in solar power and battery storage have made renewables, backed by storage, the cheapest source of baseload electricity across most of Europe, overturning the assumption that clean energy must cost more than fossil fuels.
• The renewables boom was driven principally by supply-side effects: policies originally designed to shift demand, such as feed-in tariffs and low-emission vehicle standards, changed relative prices and triggered a pace of technological learning that outstripped expectations.
• Not all clean technologies have followed this path: large, centrally planned investments such as carbon capture and storage and hydrogen have consistently underperformed projections, while iterative, market-tested technologies such as solar power and batteries have consistently exceeded them.
• EU and member state support for fossil fuels and for renewables has been of broadly comparable scale since 2015, indicating that the current cost advantage of renewables reflects genuine technological progress rather than subsidy alone.
• As the share of renewables and storage grows, European electricity grids will need to shift from centralised, thermal-plant-based systems towards more decentralised models that accommodate prosumers, behind-the-meter generation, and firm solar and wind supply.
• The EU's forthcoming Grids Package should be assessed against criteria covering equal treatment of storage and renewables in connection queues, transparency on behind-the-meter generation, network codes that support decentralised operation, and binding national smart meter rollout targets.
• Electrification is progressing fastest in road transport, where electric vehicles are gaining ground even in emerging markets, but remains harder in heating and heavy industry, where high upfront capital costs and technical constraints continue to slow adoption.
• Financing, rather than technology, is now the main obstacle to decarbonising heating; the report recommends further work on ETS2, alongside targeted loan guarantees, discounted tariffs, and tax rebates, to help households and district heating operators meet the capital cost of heat pumps.
• Grid connections should require maintenance payments and be subject to re-auction when left unused, to prevent hoarding of capacity by developers and power users and to reduce opportunities for rent-seeking.
• Sustaining the supply-side revolution will require better access to venture financing for European clean-technology innovators; instruments such as the ETS and the Carbon Border Adjustment Mechanism could help fund this, provided they are designed to preserve market discipline and avoid bureaucratic delay.