Urban scaling studies have gained popularity in the last two decades, summarising urban attributes’ variation with population. Recent research, however, highlights scaling exponents’ sensitivity to industry-specific dynamics, population cut-offs, and data distribution. Despite this, few studies systematically examine industry scaling using plant-level data while accounting for sector-specific externalities. This study addresses that gap by analysing longitudinal data on green electricity firms across 968 NUTS (Nomenclature of Territorial Units for Statistics)-3 regions in 14 European countries (1985–2023). We assess how scaling exponents for firm entry and concentration vary across population cutoffs, both with and without controls for agglomeration externalities. Our findings reveal predominantly sublinear scaling, suggesting that population size alone does not drive green energy growth. Concentration consistently scales more strongly than entry, indicating that large cities are more conducive to firm survival than to the creation of new firms. When agglomeration externalities are not controlled for, scaling exponents are systematically underestimated. While variability is observed in regions at population extremes, results remain robust across cutoffs, especially when using inverse thresholds. Comparative analysis with high-tech service and manufacturing sectors confirms sublinear scaling in entry across all sectors, with green electricity showing the lowest exponent, reinforcing its maturity and low innovation intensity. These findings align with the Smart Specialization framework, emphasizing the importance of targeted institutional support, supplier networks, and sector-specific strategies. They also highlight the potential for smaller or lagging regions to take a more active role in the green transition, particularly within cohesion policy efforts.