Renewable energy policies in the EU aim to meet targets at low cost and promote technology improvement. Subsidies based on capacity installation may reduce technology costs in the long term compared to energy output subsidies. By analyzing the impact of different subsidy mechanisms on renewable investments, electricity costs, renewable share, subsidies, and consumer prices in the EU power market in 2030, it was found that capacity-oriented policies could be more effective in the long run. This study considers various renewable resources, fossil-fuel generators, and network constraints to provide insights into the most cost-effective approach for achieving renewable energy goals.