AleaSoft Energy Forecasting, November 20, 2025. Climate change and the urgency to reduce greenhouse gas emissions have led Europe to set ambitious climate targets. These targets define the direction of the electricity system towards a 100% renewable energy model, with new technologies, greater electrification and a more flexible and intelligent management of energy.
European Union targets: 2030 and 2050
The European Union has set a strategic climate framework with clear goals. By 2030 it aims to reduce greenhouse gas emissions by at least 55% compared to 1990, reach a 42.5% share of renewable energy in final consumption and improve energy efficiency by 36%. This is the necessary step before the ambition to achieve climate neutrality, meaning net zero emissions by 2050.
The electricity system is key to this transition, as electricity is expected to cover a growing share of total energy consumption thanks to the electrification of transport, industry and buildings.
Electrification of the economy
Decarbonisation means that many sectors that currently rely on fossil fuels will switch to electricity. These include the transport sector, where electric vehicles and sustainable mobility are being promoted. The industrial sector, with the use of electricity and renewable heat in industrial processes. And the buildings sector, with changes such as replacing boilers with heat pumps and efficient electrical systems.
This electrification will lead to a sharp increase in electricity demand, which will require more renewable energy generation, stronger grids and new management tools.
The role of renewable energy and storage
To meet this new demand without increasing emissions, renewable energy capacity will have to multiply. A massive expansion of solar and wind energy, both onshore and offshore, is expected. However, their variable nature makes it essential to have storage systems, such as batteries or pumped hydro, which allow matching generation to demand.
In addition, it will be necessary to develop back‑up and flexibility technologies, such as green hydrogen, biogas thermal power plants or active demand management systems.
The key role of batteries
Batteries will play a central role in the electricity system of the future. As renewable energy, especially solar photovoltaic energy, gains weight in the energy mix, the need to store energy when it is generated in excess and release it when it is most needed becomes increasingly important.
There are different models for the use of batteries in the electricity system. Stand‑alone batteries are independent storage installations that operate flexibly in the market. They can provide balancing services, price arbitrage and participate in capacity markets. Hybrid batteries are coupled to renewable (solar or wind) plants and allow the delivery of energy to be maximised during the hours of highest prices or when there are grid constraints. They also help manage curtailment.
Battery costs have fallen significantly over the past decade, driven by demand from the automotive sector and technological advances. Costs are expected to continue falling, which will make more storage projects economically viable at all levels.
In addition to supporting renewable energy, batteries will be essential for system stability, helping maintain frequency, covering demand peaks and facilitating operation in energy islands or local grids.
In the 2030 to 2050 horizon, batteries will be as essential as renewable energy itself. Their large‑scale deployment will require new business models, adapted market rules and long‑term revenue visibility to attract investment.
Smart grids and digitalisation
The energy transition also requires a transformation of electricity grids. Future grids will be smart, bidirectional and highly digitalised, capable of integrating millions of distributed generation points, managing real‑time data to optimise energy flows, detecting faults and adjusting the system automatically, as well as facilitating consumer participation.
Green hydrogen and new energy vectors
Green hydrogen, produced by electrolysis powered by renewable electricity, is emerging as a key solution to decarbonise sectors that are difficult to electrify such as heavy industry and maritime and aviation transport. It can also act as seasonal storage and contribute to balancing the energy system.
Challenges and opportunities towards 2050
The transformation towards a decarbonised electricity system presents significant opportunities for investment, employment and technological leadership. However, it also poses challenges that need to be addressed such as the need for long‑term planning and regulatory coordination between countries, infrastructure financing and the social acceptance of new projects.
Europe is determined to lead this transition. Achieving the 2030 and 2050 targets will require collective effort, innovation and a clear vision of a sustainable energy future.
This publication is the fourth part of a series on the main milestones of the electricity system and its prospects for the coming years titled “The electricity system in evolution”. The objective is to provide an updated and structured overview of the present and future of the European electricity system.
The role of AleaSoft Energy Forecasting in decarbonisation: forecasts, methodology and the people behind them
At AleaSoft Energy Forecasting we have been accompanying the evolution of the European electricity system for more than 25 years. From the first projects with utilities and combined cycle gas turbines, through the expansion of wind energy and, later, solar photovoltaic energy, we have grown at the same pace as the system, always through innovation in forecasting and data modelling. This trajectory, supporting our clients at every stage of the energy transition, is part of our history and of our commitment to decarbonisation.
One of the most recent milestones has been our work in energy storage. For the past two years, through the AleaStorage division, we have deepened the analysis and revenue forecasting for battery systems, both stand‑alone and hybrid with renewable energy. Our approach is based on what truly determines the success of a storage project: the inputs to financial models. Being able to reliably forecast prices, spreads, renewable energy production and balancing services in all time horizons is essential to optimise operation and attract investment. Without quality forecasts, it is impossible to ensure the viability of these strategic projects for the energy transition.
The authority of AleaSoft Energy Forecasting is based on scientific methodology and model quality, but also on the team that develops them. Behind our forecasts there are people. Around half of our staff are PhDs and researchers, experts in energy, statistics, physics and modelling. We choose to incorporate scientific talent because we believe that the energy transition requires rigorous analysis, long‑term vision and the ability to interpret structural changes in the sector.
Since the beginning, we have defended a methodology based on coherence, the integration of fundamental variables and the reliability of long‑term forecasts. The same philosophy now applies to storage, green hydrogen or hybrid renewable energy systems. We do not believe in isolated solutions, but in a global vision of the energy system.
We tell stories through data, because data explain the transition. Every client, from the early combined cycle gas turbine projects to today’s hybrid plants with batteries, is part of this shared story. We work so that our analyses help make strategic decisions, support sustainable projects and lead the shift towards a decarbonised electricity system.
We do not simply aim to provide services, but to accompany the transformation of the sector with reliable forecasts, well‑founded analysis and a vision that combines technical knowledge, experience and commitment.
Source: AleaSoft Energy Forecasting.
