The objective of this article is to examine the consequences of technological developments on the market diffusion of different renewable electricity technologies in the EU-25 until 2020, using a market simulation model (ADMIRE REBUS). It is assumed that from 2012 a harmonized trading system will be implemented, and a target of 24% renewable electricity (RES-E) in 2020 is set and met. By comparing optimistic and pessimistic endogenous technological learning scenarios, it is found that diffusion of onshore wind energy is relatively robust, regardless of technological development, but diffusion rates of offshore wind energy and biomass gasification greatly depend on their technological development. Competition between these two options and (existing) biomass combustion options largely determines the overall costs of electricity from renewables and the choice of technologies for the individual member countries. In the optimistic scenario, in 2020 the market price for RES-E is 1 euroct/kWh lower than in the pessimistic scenario (about 7 vs. 8 euroct/kWh). As a result, total RES-E production costs are 19% lower, and total governmental expenditures for RES-market stimulation are 30% lower in the optimistic scenario. (c) 2007 Elsevier Ltd. All rights reserved.