Climate Risk Index for the European Energy Sector

Europe's renewable energy revolution is critical to industry, consumers and climate security

The last decade has seen unprecedented momentum in Europe's clean energy transition. Renewables are set to increase their share of electricity generation from 49% to 67% by 2030 across the five countries analysed, moving from nearly 1,000 TWh to nearly 1,600 TWh - approximately 60% growth in just five years.

This transformation is being driven by ambitious net-zero commitments and the urgent need for energy security following geopolitical disruptions. Solar capacity is expanding most rapidly, while onshore wind continues to dominate renewable generation. Storage capacity, essential for grid stability, is also scaling dramatically with both pumped hydro and battery systems playing critical roles.

During this period, Europe's renewable generation capacity will increase by almost two-thirds by 2030. Countries like Spain and the UK are experiencing particularly dramatic shifts, with renewable shares jumping by over 20 percentage points. This infrastructure represents hundreds of billions of euros in investment and forms the backbone of Europe's economic decarbonisation strategy.

Climate risks threaten the stability and security of renewable infrastructure, leaving Europe vulnerable to cascading energy disruptions

Physical climate risks are intensifying across Europe, with extreme weather events becoming more frequent and severe. Economic losses from weather and climate-related events have climbed from €8.5 billion annually in the 1980s to €16 billion in the 2000s, reaching approximately €45 billion in the 2020s - a clear indication of escalating financial exposure.

Recent extreme weather events have provided stark warnings of renewable infrastructure vulnerability. Hailstorms in Northern Italy in 2023 caused severe damage to solar installations, ranging from microcracks to complete panel destruction, and the 2021 European floods forced multiple hydropower plants offline for weeks.

These events highlight a critical paradox: as Europe transitions to renewable energy to combat climate change, the infrastructure essential for this transition becomes increasingly exposed to climate impacts. Solar panels face damage from hail, wind gusts, and extreme temperatures. Wind turbines are vulnerable to storms exceeding design parameters. Hydropower faces the dual threat of devastating floods and severe droughts that can eliminate generation entirely.

Zurich Resilience Solutions provides insights and modelling to help organisations proactively manage climate risks to energy infrastructure

Using proprietary geospatial climate modelling and risk engineering expertise, Zurich Resilience Solutions worked with Mandala Partners to analyse over 25,000 existing and planned energy generation and storage assets across France, Germany, Italy, Spain, and the UK. This analysis maps physical climate risks to 2030 and 2050 under IPCC-aligned scenarios, providing unprecedented granular insights into Europe's energy vulnerability. The findings reveal that renewable generation and storage assets are disproportionately more exposed to physical climate risks compared to conventional fossil fuel infrastructure.

Renewable infrastructure faces unprecedented climate vulnerability across Europe

The risk assessment reveals that 83% of operating renewable capacity and 92% of storage assets face elevated climate risks by 2030. A large proportion of this vulnerable capacity consists of solar assets, which are particularly exposed to hail damage, wind gusts and wildfires.

Onshore wind faces vulnerabilities from severe storms and wind events that can break rotor blades, while hydropower confronts the dual threat of devastating floods and severe droughts. Batteries face particularly acute exposure, large amounts of storage capacity vulnerable to storm surges and floods that can trigger system failures.

More work must be done to ensure Europe's energy infrastructure is resilient to climate realities

Without action to enhance resilience, projected losses from climate damage to renewable infrastructure could exceed €270 billion by 2050. However, the analysis demonstrates that targeted resilience investments could reduce these losses by up to 50%, representing a potential saving of over €135 billion.

The challenge extends beyond individual asset protection to systemic energy security. As renewable assets become increasingly central to European electricity generation, climate-related disruptions pose risks of broader grid instability and economic disruption. Events like the Iberian Peninsula blackout in early 2025 demonstrate the potential cascading effects when energy infrastructure fails, regardless of the underlying cause.

Successful resilience enhancement requires coordinated action across five key areas: improving climate resilience of existing assets, adopting climate stress testing for new infrastructure, embedding resilience in planning processes, improving data access and quality, and unlocking investment in resilience measures.

Read the full report here.