In July, solar panels supplied 19% of Portugal’s electricity, making sunlight the country’s single largest power source for the first time on record. Renewable sources overall met 53% of national demand that month, with hydropower, wind and biomass filling most of the remainder.
The milestone follows a similar one in Germany, where wind and solar plants overtook coal, gas and oil in annual generation during 2025.
The timing invites a tempting but incomplete explanation. Germany’s turn away from fossil fuels coincided with the loss of cheap Russian gas after 2022, so commentators have rushed to credit the Ukraine war, or blame it, for the renewable surge.
Portugal imported little Russian gas before the war and faced no comparable pipeline shock. Its solar sector still expanded on a nearly identical curve, propelled by falling panel costs and national plans drafted years before 2022.
A German Milestone With German Roots
Germany’s 2025 data show wind and solar together generated 225 terawatt-hours of electricity last year, 44% of the total, against 217 terawatt-hours from fossil sources.
This is an outcome that traces back to the Erneuerbare-Energien-Gesetz, the renewable energy law passed in 2000, and to targets written long before the Nord Stream pipelines were damaged.
Berlin aims for an 80% renewable share of consumption by 2030 and a largely climate-neutral grid by 2035, goals set out well ahead of the gas disruption.
Germany’s coal use has fallen for two decades under the 2000 law, dropping from more than half of generation to roughly a fifth today. Solar capacity additions hit a record in 2025, and grid operators logged the country’s highest ever solar feed-in that June.
None of this required a war to set it in motion – the war mostly removed a cheap alternative that had been propping up fossil generation.
Testing the Deindustrialisation Theory
Some observers credit Germany’s high renewable share to industrial decline suppressing demand, treating the clean-power growth itself as secondary. Energy-intensive sectors such as chemicals and steel have indeed suffered under industrial electricity prices that reached roughly €0.19 per kilowatt-hour in 2023, among the highest in Europe.
Economists at the Centre for Economic Policy Research examined this claim directly and concluded that fears of broad deindustrialisation were overstated, despite certain energy-intensive producers losing market share to more efficient rivals. Manufacturing output continued growing through the worst of the price spike.
Germany’s renewable share grew chiefly because installed wind and solar capacity expanded, making industrial retreat a minor contributor at most.
Price of Rapid Growth
The progress carries a practical toll that Lisbon and Berlin are only beginning to manage in earnest. Rapid solar growth has pushed each grid toward periods of oversupply. Germany’s commercial curtailment rose by 20% in the first half of 2026, as operators switched off panels instead of selling electricity at a loss.
Under the country’s Solar Peak Act, new renewable projects lose their subsidy top-up the moment wholesale prices turn negative, sharpening the incentive to curtail output during sunny afternoons.
Portugal carries a gentler version of the same pressure. It imported over a third of its electricity in July despite the solar record, a sign that storage and interconnection have not kept pace with generation.
Adding more panels alone cannot solve the problem. Batteries, transmission upgrades and demand able to absorb midday abundance need equal attention.
Three Forces Behind One Outcome
Climate awareness, war and industrial hardship have all played walk-on parts in the transition, without any one of them writing the whole script. Falling technology costs made solar the cheapest new power source in most of Europe well before 2022, a trend that predates and will outlast the current gas dispute.
Germany’s coalition under Chancellor Friedrich Merz has simultaneously pursued gas-fired plants as a bridge technology, converting eventually to green hydrogen, showing that Berlin still hedges against pure renewable dependence.
The more defensible reading treats 2025 and 2026 as the payoff of choices made over twenty years. An energy shock at the margins made fossil alternatives temporarily more painful to buy, accelerating a trend already under way.
Germany’s government is due to publish a review of its coal-phaseout timeline in August, a test of whether Berlin’s resolve holds. Portugal must make its own decision, over how much battery capacity to fund, so its new solar crown does not become a liability on cloudy days.
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