Key View

• Sustained growth in non-hydropower renewables across the CEE region will boost its share of overall capacity from an estimated 10% at end-2021 to 17% by 2030.
• Turkey and Poland will be the region's non-hydropower renewables growth outperformers, accounting for over 66% of total net growth in renewables capacity between 2022 and 2030.
• The limited penetration of non-hydropower renewables in most other markets in the region will see renewables playing a limited role in the overall regional electricity mix.

We expect sustained growth in non-hydropower renewables across the Central and Eastern Europe (CEE) region, expanding in its share of overall capacity from an estimated 10% at end-2021 to 17% by 2030. Overall renewables capacity will rise by 60.5GW over the coming decade, 74% of which will come from only three of the region's 25 markets: Turkey, Poland and Romania. Wind and solar power will account for 89.7% of CEE's non-hydropower renewables capacity, with biomass/waste and geothermal power making up 8% and 2.3% respectively. Relatively low equipment and development costs and increasingly efficient technologies will boost the attractiveness of renewables investment options. This will ensure continued growth in the sub-sector as thermal, hydropower and nuclear capacities either recede or see comparatively low net growth over the coming decade. As a result, there is strong potential for non-hydropower renewables to become an increasingly important segment of the region's power mix over the next decade to 2030.

Turkey and Poland will be the region's non-hydropower renewables growth outperformers, accounting for over 66% of total net growth in renewables capacity throughout the CEE region between 2022 and 2030. Turkey's non-hydro renewables sector will have robust growth over the decade, with capacity increasing from 21.4GW in 2021 to 42.9GW by 2030. Our outlook on Turkey's solar power growth has been strengthened following the announcements of two additional solar project tenders from the government. The YEKA GES-4 and GES-5 auctions are both slated for 2022, and are planned to award solar capacity amounting to 2.5GW. Similarly, a strong project pipeline and vast natural potential play into our bullish wind power outlook for the market. We believe that Turkey will remain highly committed to expanding its renewables industry over the coming decade, aiming to diversify its power supply to improve power security. This will help to reduce its reliance on gas imports and improve the market’s current account deficit, which has highlighted an economic risk amid the Lira's currency value fluctuations.

In Poland, we forecast sustained strong growth in renewables between 2022 and 2030, spearheaded by robust investment in new wind and solar power plants after the government's landmark energy policy reforms which seek to diversify the power sector and reduce its reliance on coal. Growth in the solar segment will be driven by a combination of large-scale utility projects and smaller residential systems which both benefit from supporting incentives. For wind power, we expect onshore wind farms to dominate growth in the segment, though we note significant upside risk in offshore wind power presented by the government's aim to bring online 5GW of new offshore wind capacity by 2030. Overall, we expect Poland to bring online more than 10.6GW of new solar and 6.5GW of wind power between 2022 and 2030. Over that time frame, renewables will be the only growing segment of the country's power sector (apart from less than 100MW of hydropower capacity growth) as its thermal power capacity declines steadily. There is further upside risk in the data that some Polish energy research estimates have outlined, stating that 2GW of solar capacity growth could be expected annually over the coming five years.

However, the lack of penetration of non-hydropower renewables through most other markets in the region will see renewables playing a limited role in the overall regional electricity mix between 2022 and 2030, making up an average annual share of just 7.6%. We expect that thermal and hydropower sources will remain dominant in most markets in the region, due mainly to the large and established infrastructure already in operation to support the industry, as well as the relatively low cost of thermal power and the social significance held by the coal and natural gas industries in the region. As the chart below shows, we forecast that by 2030 the markets with the largest share of non-hydropower renewables in their power generation mixes will be Lithuania, Estonia, Poland, Turkey and Croatia. Estonia will be the region's outperformer for its shift in reliance from from thermal power to renewables, increasing from an estimated 37.5% 2021 to 70.1% by 2030.