According to research by Rystad Energy, the cost of operating gas-fired power plants in Europe will be 10 times higher than the cost of building new solar PV projects in the next few years.

High gas prices, market challenges and falling renewable energy costs all suggest that, in the medium to long term, Europe's main source of electricity will no longer be gas, the research firm said.

Its research is based on a comparison of the levelized cost of electricity (LCOE) of natural gas to solar PV and wind. The study shows that gas will struggle to remain competitive in the European electricity landscape even if natural gas prices retreat from recent abnormal highs.

Rystad Energy says high gas prices, market challenges and falling renewable energy costs all suggest that gas will no longer be the main source of electricity in Europe

Natural gas prices have risen from an average price of €46/MWh ($45.8/MWh) in 2021 to €134/MWh ($134/MWh) in 2022, a surge of 189%. Still, gas-fired power generation rose 4% in the first seven months of the year, in part due to a 100TWh drop in nuclear and hydropower generation in 2022. Conditions are not expected to improve this winter, with natural gas needed to maintain power supply through 2023.

However, next year will see the return of nuclear power plants. EDF hopes to bring 30GW of capacity back into operation after the shutdown for repairs, in addition to more than 50GW of solar PV and wind projects in the pipeline. Natural gas prices are expected to stabilize, with LCOEs of around €150/MWh for existing plants by 2030 and around one-third of that for new solar PV projects, cementing solar as the most expensive in most parts of the world. The status of an inexpensive way to generate electricity.

Carlos Diaz Torres, head of power at Rystad Energy, said: "Gas will continue to play an important role in Europe's energy mix for some time to come, but unless there is a fundamental change, mere economic performance and climate issues will tip the balance in favour of renewables. "

European countries have been accelerating the development of renewable energy projects in light of recent price increases and the market trying to adjust to the loss of Russian gas. In fact, according to forecasts, there will be a "significant" increase in solar PV development in Europe following the Russian invasion of Ukraine.

Rystad predicts that more than 100GW of renewable energy capacity could be developed if funds used to maintain gas-fired power generation are repurposed, and 333GW of capacity by 2028 if funds originally used for gas-fired power generation are available. Such a high capacity is enough to generate 663TWh of electricity.

The forecasts are based on repurposing funds originally planned for natural gas, and build on Rystad Energy's forecast of more than 2TW of solar and wind installed by 2050, and 520GW of large-scale project batteries.

Rystad said gas was still needed to support the intermittent nature of renewable electricity generation and remained vital to Europe's electricity mix until adequate infrastructure was in place.

However, in the face of an uncertain and expensive future of natural gas, it is important for European power companies to rapidly develop renewable energy. While the European Commission has approved solar manufacturing measures and instituted energy security policies, economic and market forces can drive development faster.