Solar Energy Market in Europe
The solar PV market in Europe saw a 36% growth to reach 11 GW in 2018.
European countries together have emerged as one of the new and prominent solar growth markets in the world.
The binding national target that the European Union (EU) has set drove the continent to add 11.3 GW in 2018, which was a 21% increase over the 9.3 GW installed in 2017.
In 2019, the forecast for demand surge will be by more than 80% (20.4 GW).
Subsequently, in 2020, the growth is likely to be 18% (24.1 GW), which will be a new record in solar PV installation, surpassing 22.5 GW added in 2011.
The anticipated growth rate for 2020 will be 36% year-on-year spike of more than 5.9 GW connected to the grid in 2017.
Fig.1: Solar Energy Market in Europe 2018 (Source: solarpowereurope.org)
In 2018, the biggest solar market in Europe was Germany with 2.96 GW of new grid-connected capacity, which was 68% from 1.76 GW capacity installed in 2017.
The second-biggest solar energy market is Turkey, which was leading in the European solar market in 2017. Last year (2018), the country installed 1.64 GW, down by 37%, after a drop in demand due to the recession in the country.
The Netherlands has been a rising star in the European market and ranked as the 3rd largest solar market in 2018. The country added nearly 1.4 GW, a significant increase from the 0.77 GW it added in 2017.
The combined solar installation by Turkey and Russia reached 11 GW, up 20% from the 9.2 GW added capacity in 2017.
At the end of 2018, a demand-pull from China resulted in a shortage of supply for high-quality panels in Europe. The situation forced many developers to delay their projects and rolled into 2019. However, 2019, is expected to be even better for the EU solar energy market.
Leading European States in Solar Energy in 2019
In 2018, there was a demand spike for solar energy in the European Union, and it rose by 37% or 8.2 GW, an increase from 6.0 GW capacity installed in 2017.
Even though 36% growth rate of the EU solar market in 2018 was impressive, the number could have been better. It was below par due to the market decline and financial crisis in Turkey.
Fig.2: European Annual Solar PV Installed Capacity 2000-2018 (Source: (Source: solarpowereurope.org)
Here are the leading European solar markets
- Germany:
Germany was the leading solar PV market in Europe in 2018. The country restored its top position four years after losing it to the United Kingdom in 2014.
The country added 2.95 GW of solar capacity, and the market grew 67% year-on-year compared to 1.76 GW added in 2017. It was the first time since 2013 that Germany hit 2.5 GW capacity.
The major driving factor for the German solar market in 2018 were self-consumption or feed-in premiums for medium to large commercial systems between 40 kW and 750 kW.
The mentioned factor contributed more than 50% of the new capacity, whereas residential systems up to 10 kW contributed nearly 400 MW.
Also, ground-mounted solar systems above 750 kW contributed to nearly 550 MW.
- Turkey:
Turkey is the second-largest solar market in Europe. However, it went through a tough phase in 2018 due to the financial downturn and fell short of its target.
In 2017, the solar market growth was up by almost 4.5 times (2.6 GW), and then in the following year got hit by a financial crisis.
In 2018, the country could only install 1.64 GW, which was a year-on-year decrease of 37%.
- Netherlands:
The Netherlands is an emerging solar market in Europe. However, to become one of the leading and sustained markets in the region, the country’s solar energy needs to be cost-competitive.
In 2018, the Dutch solar market reached GW-scale for the first time. It was one of the three markets to have achieved that feat in Europe.
The country added 1.5 GW of installed capacity in 2018, nearly double growth from 770 MW it added in 2017.
The factors that drove the growth was incentives for net-metering residential installations, which contributed nearly 40% in 2018.
The bulk of these installations came from commercial and utility-scale systems that were given to in technology-neutral tenders under the Dutch SDE+ scheme.
- France:
The solar market in France could not live up to expectations in 2018. The country did not reach the GW-scale, and even worse, its solar market even contracted marginally by 4% to 873 MW.
The complex incentive scheme in the country that requires solar systems with a minimum capacity of 100 kW to participate in tenders did not work out well.
In addition, even regulatory changes and plans to tender more capacities in 2018 had no positive impact so far.
France fell short of its 10 GW total solar target in 2018 by more than 1 GW.
- Ukraine:
In 2018, Ukraine made it to the top five solar markets in Europe with the help of its generous feed-in tariffs or Euro 15 cents/kWh for large-scale PV systems.
The country added a total of 803 MW capacity, which was 228% higher than the 245 MW capacity added to the grid in 2017.
Besides large-scale solar PV systems, a net metering scheme for PV installations up to 30 kW also generated interest in 2018.
Overall, there is a surge in the solar energy market in the European Union and Europe.
Out of the 28 EU member states, 22 added more solar capacity to the grid than the previous year. In the entire continent, less than a dozen countries experienced lower demand for solar power technology.
Solar Growth Statistics in Europe
The European Union installed nearly 8.0 GW of solar power systems in 2018.
Overall, total solar installations in the continent grew by nearly 20% to 11.0 GW in 2018, an increase from 9.2 GW from 2017.
Fig 3: Global Annual Solar PV Installed Capacity 2000-2018 (Source: solarpowereurope.org)
Subsequently, the solar PV market scenario in Europe between 2019 and 2023 is likely to show a consistent two-digit annual growth rate.
The medium phase during the mentioned period is anticipated to have a total installed capacity of 255 GW in 2023.
On the other hand, during the peak period, the solar capacity will be exceeding the 200 GW mark in 2021 and 300 GW in 2023, and subsequently to reach 318 GW by the end of 2023.
Fig.4: Top European Solar PV Markets’ Prospects (Source: (Source: solarpowereurope.org)
Even in the low scenario, the continent could very well add 200 GW of solar power plants in 2023.
A further forecast shows that the region is to add 16.5 GW by 2025 and grow at a CAGR of 8.4%.
The major driving factors in the market have been continuously reducing solar PV costs, re-modeled support schemes, regulations, and energy storage options.
Also, power purchase agreements (PPAs), funding arrangements, and leasing will remain the major financing models in EU countries.
Although installed renewable capacity has constantly grown in Europe, the proportion of energy from renewable sources has dropped, as there is more energy consumption from non-renewable sources.
What are the reasons behind the surge of the solar industry?
In the next two years, there is a huge prospect of having a strong demand for solar energy.
Already, countries such as Germany, Turkey, the Netherlands, France, and Ukraine are making their presence felt in the global market.
So, what the EU did right?
The answer is it has removed the trade measures on solar panels and made sure that a positive framework is available by rolling out the Clean Energy Package legislation. Now, the region is ready for accelerated solar growth.
In 2019, for example, the European market may have more significant growth. It is due to a series of subsidy-free projects in southern Iberia along with low equipment prices that will probably put Spain ahead in the European solar market.
Also, France has made a commitment to implement a high-profile renewable energy development plan and aims to add nearly 3 GW annually for the next six years.
Now, let us look at the main reasons behind the surge in the European solar market:
- Setting EU 2020 targets: The deadline set by the European Union for the member states to meet their national renewable energy targets for 2020.
A recent update from Eurostat shows that 11 out of 28 countries have already met their target by the end of 2017.
- Using Tenders: Not so long ago, many European countries began implementing solar tenders, which have played a crucial role in reducing solar power prices. It made solar energy more accessible for residential as well as commercial consumers.
- Energy consumption & storage: The cost of solar power and battery storage are considerably cheaper than retail electricity in most of the European countries. The price will continue to go down, which will be driving more people and companies to invest in on-site solar installations.
- Emerging Markets: The low cost of solar is generating interest among the European countries that have not been very active in the solar market.
Countries like Spain have put the focus on generating low-cost solar energy, which might give the country a competitive edge in the solar PV market.
- Corporate Investments: Investment by corporates in solar energy is playing a critical role in the future sustainability of the industry.
Many leading companies are making investments to provide cost-competitive solar energy in the market in the wake of declining solar costs.
- Power Purchase Agreements (PPAs): There are increasing instances of direct bilateral power purchase agreements (PPAs) in a number of European solar markets.
In Spain, for example, there was a huge pipeline of PPAs of more than 30 GW in 2018. Also, earlier in 2019, the largest PPA in the world was signed for a 708 MW solar project Portugal and Spain.
- Clean Energy Package: The implementation and result of “Clean Energy for All Europeans” legislation have been quite positive for the European solar market.
The region has now set a higher target of 32% renewables by 2030, which ensures the rights for self-consumption.
Now, 2019 is expected to be even better for solar power in Europe. This year, we see the surge in demand is expected to go up by 81% (20.4 GW), and on course, to meet the 2020 target.
The Economic Index of the Solar Industry
These days solar energy plays a crucial role in the national economic development, and it also has an effect on economic growth.
The increase in solar energy production and utilization in European countries depend on the well-being of their population and standard of living.
The EU countries with higher GDP have been able to make progress in producing and utilizing solar energy. It is because higher economic development ensures more financial resources and investment opportunities in new renewable energy technologies.
Also, the European countries have rolled out a number of tax credits, subsidies, financial assistance, and rebates as driving factors for the energy sector.
Relatively new countries in Europe with lower GDP per capita and less developed energy markets have weaker support systems and policy frameworks. It results in a lack of momentum to make solar energy a prominent resource.
When it comes to creating solar jobs and wealth, European countries are likely to create nearly 175,000 full-time jobs and 9,500M value additions by 2021, an EY report states.
Fig.5: Direct & Indirect Job Creations by European Countries from 2008-2021 (Source: solarbusinesshub.com)
The EY report also reveals that an increase in renewable energy target from 27% to 35% for EU 2030 will create more than 120,000 new solar jobs.
Also, the European Directive has implemented a policy that at a minimum of 20% of the total energy should come from renewable energy sources by 2020.
In countries such as Spain and the Netherlands, current have a high installation rate, a massive project pipeline, and strong political support. All of these factors will lead to a strong demand pull in the solar market until 2023.
Luxembourg will have the highest values of the GDP per capita during the entire period.
Adding more solar installed capacity will create more jobs and foster economic growth in the European market.
To increase the solar market growth, the EU needs to remove all the obstacles by withdrawing the existing trade measures on solar panels and cells. This step will create a favorable regulatory environment for PV in Europe.
Solar Energy Production Statistics in Europe
In 2018, solar energy production across Europe broke all records, particularly during the summer when the mercury soared.
Fig.7: Solar Energy Generation in Top 10 European Solar PV Markets: 2018-2023 (Source: solarpowereurope.org)
In the U.K., solar energy broke the weekly output record output in June 2018, between June 21 and 28, producing 533 GW.
The same year in July, solar energy production recorded 6.17 TW in Germany.
In northern Europe, Denmark had 361 hours of sunlight in May. This resulted in a 33% increase in solar electricity production, breaking all the previous records.
In the Netherlands, consistent sunlight throughout in July led to a 75% spike in solar power generation than the year earlier.
In 2019, the estimated solar energy production will be 20.4 GW across the EU region.
Final thoughts on solar energy in Europe
The European solar energy market is more diverse compared with other regions.
The major driving factors behind the solar industry growth in the European countries has been the increased low-cost unsubsidized solar systems and the carbon tax. These have made solar energy an attractive proposition for consumption and investment.
The European solar generation is still undergoing a transition phase toward becoming a mainstream energy source. However, the progress is already rapid to reduce dependence on traditional energies and government subsidies/incentives.