Utilities policy for the energy transition: A panel data analysis of wind and solar penetration in the EU

This study examines the determinants of wind and solar energy penetration in the European Union (EU) within a technology-specific comparative panel framework. It utilizes annual country-level data for the EU-27 from 2000 to 2024 and models the shares of wind and solar power in gross electricity generation as separate dependent variables. Economic welfare, energy and carbon prices, and institutional and policy indicators constitute the main explanatory variables. The empirical strategy combines two-way fixed-effects models with dynamic panel estimations, explicitly testing the mediating role of policy mix and market design, as well as the moderating effect of flexibility capacity. Empirical results indicate a high degree of persistence in the adoption of wind and solar energy. Moreover, the results show that marginal increases in penetration are limited as per capita income rises, and the impact of political and institutional factors differs significantly across technologies. Flexibility is found to strengthen policy impact, particularly for wind, while providing a weaker conditioning effect for solar. Overall, the results demonstrate that achieving the EU decarbonisation targets requires a coherent and technology-specific policy mix for wind and solar power. A successful energy transition also depends on timely and targeted investments in system flexibility. This empirical evidence confirms that the EU's climate neutrality targets will be achievable not only through increased installed capacity but also through technology-specific market design reforms. The study makes an original contribution to the literature by empirically proving that grid flexibility for wind energy and local distribution network compatibility for solar energy are critical thresholds.