4. Energy Generation and Economic Efficiencies of Renewable Energy Technologies in EU-27

European countries are having challenging times with rising electricity prices and energy security on one side and the immediate need to react to climate change risks on the other side. Renewable energy power plants with no greenhouse gases (GHG) emissions and no fuel dependency can be a solution to this challenge. It is crucial to know their energy generation and economic efficiencies to prioritize the support policies. This chapter analyzes three mostly utilized renewable sources (hydro, wind, and solar), using the Super Efficiency Model of Data Envelopment Analysis (DEA). EU-27 countries were grouped into two, in line with their capacity factors, and studied under two models. The first model focused on the generation efficiencies of each technology. According to DEA results, both groups of countries have higher super efficiency levels in 2020 when compared to 2019 based on wind and solar technologies, with the highest average efficiency belonging to South and Balkan countries concerning solar resources. The reason can be traced back to richer natural resources and decreasing costs of technologies. However, Nordic and Baltic hydro generation efficiency has decreased in 2020 which shows the effects of the higher investment costs per MW because of the higher number of plants with smaller sizes. The economic efficiency (Model 2) was studied with gross value added as output. The solar energy economic efficiency is the only element where both groups of countries have increased their scores. Both the efficiency of Group 2 in terms of wind and the economic efficiency of Group 1 for the hydro sector were decreasing. It can be argued that with higher generation efficiency combined with economic efficiency, European countries would become more competitive in solar technology if the current efficiency trend continues. However, it is important to map the economic potential of resources in light of the climate change effects on the resources and the cost trends for future policy decisions.