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European Solar Market

In 2016, Europe became the first region of the world to achieve 100GW of cumulative installed solar. With a forecast of nearly 1TW of total installed solar power possible by 2021 (according to the Global Market Outlook for Solar Power 2017-2021), one might think that a lot of it would be in Europe, but that is likely not going to be the case. China is currently number one, and expected to remain so. And to put into perspective the difference between solar in China and solar in Europe, in 2016 China installed about one-third of Europe’s entire capacity in one year. China is expected to add more than 100GW through 2021 and the US and India could install over 60GW in that time period. In fact, the solar market in Europe shrank 22% with only 6.7GW of new PV capacity. IHS Markit’s Solar Deal Tracker estimated the decline to be closer to 40% in 2016, but expects recovery after 2018.

2016 Top European Solar Markets               Total Capacity 

1.       Germany                                               41,111MW

2.       Italy                                                       18,983MW

3.       UK                                                         11,547MW

4.       France                                                     7,134MW

5.       Spain                                                       5,491MW

Solar as part of the energy mix

Solar is currently supplying approximately 4% of the European Union’s power mix annually, as reported by SolarPower Europe. In some countries and regions, the solar percentage is much higher. In Italy, for example, it’s almost 8% and in some areas of Germany it’s over 10%. In fact, on a sunny and windswept day in May of last year, Germany’s clean energy installations generated more energy than was being consumed.

Policy push

Following the 2015 Paris Agreement, the European Council developed the plan called Clean Energy for All Europeans, which call for a reduction of greenhouse gas emissions by at least 40% and a renewables target of 27% by 2030. The Commission estimates that this package can generate up to a 1% increase in GDP over the next decade and create 900,000 new jobs. James Watson, CEO of SolarPower Europe said that while it is important that the proposals in this Clean Energy plan are maintained there are other areas that need improvement. Most notably, SolarPower Europe calls for a 35% target rather than 27%. He also stated that we need to keep “priority dispatch and access for renewables in a generation scheme still dominated by inflexible power sources.”

While setting a target for all of the EU is a laudable goal, how each country gets there is a matter of policy and regulations. The fact is that Europe is not just one solar market, but is made up of markets in each country. This is similar to the way the United States is chopped up into 50 distinct solar markets, each driven by a confusing variety of policies. Where strong incentives are in place, solar has boomed. Germany is the perfect example, as it led the world in solar installations up until 2012 when feed-in tariffs were cut. Today it has a tender scheme for ground-mounted solar above 1MW, which has stimulated demand. The UK is another example, where it was the number one solar market in Europe in 2015, holding nearly 45% of the market, but is forecast to shrink to just 6.7% in 2020 (according to SolarPower Europe’s Global Market Outlook for Solar Power 2016-2020). The reason for the market contraction in the UK is because the UK government slashed support for solar.

France has set a target of 23% renewable power by 2020 and 40% by 2030, which is ambitious, but with the French Energy Transition for Green Growth Act in place, they just might make it. In the past year, France has had three rounds of tenders for rooftop installations—awarding contracts for 353 projects in the third round. According to the medium scenario in the Global Market Outlook, France is expected to be the third largest solar market in Europe by 2020, following Germany and Turkey.

The solar future

Despite continued decline in the UK solar market in 2017, the overall European PV market is forecast to grow to 8.8GW and this is expected to continue, according to the GMO. The main reasons for this growth are costs, tender schemes, EU 2020 renewable energy targets, new emerging markets. As in many areas of the world, the growth of solar depends on strong and steady governmental policy. If EU nations encourage self-consumption, limit or eliminate trade barriers and set their sights on achieving clean energy targets, then the European solar could reach an annual level of nearly 30GW by 2021. If not, the low-scenario in the GMO would see additional PV at just over 8GW a year. By 2021, according to the medium scenario in the GMO, Germany will continue to be Europe’s largest solar market, with France, Turkey, the Netherlands and Italy following.

Offshoots of the solar power market are energy storage and photovoltaic manufacturing equipment--two areas in particular that are doing well. According to a forecast by the German Solar Association, 60,000 solar storage systems are expected to be installed before mid-2017 in Germany alone and 170,000 new systems to be installed by 2020.  Germany, known for its manufacturing expertise, is faring well on the PV manufacturing front. Incoming orders for production equipment was up 36% in 2016 and sales were up 20%, with Chinese companies the lead investors in new equipment.

Written by Anne Fischer, Managing Editor, Solar Novus Today

Labels: Europe,solar market,policy,feed-in tariffs,solar costs,SolarPower Europe

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