As the platform for the European solar technology community from its early days, EU PVSEC is very glad to see that solar in Europe is starting to see a new growth phase. With our upcoming 35th event taking place from 24-28. September 2018 in Brussels – the heart of the European Union – several presentations in the EU PVSEC programme’s Topic 7 on ‘PV Economics, Markets and Policies’ will look at the drivers of solar demand. This is accompanied by several side events that deal with market demand related themes as well.
As of 2018, solar power demand will grow very strong in Europe over the next few years – and as SolarPower Europe outlines in its new Global Market Outlook 2018 – 2022, there are several reasons for this next PV growth phase:
EU 2020 targets: A number of EU governments, which still have some way to go to meet their individual RES targets, have been strengthening their support for solar as they have realized that the technology is very popular and one of the lowest- cost means to increase their renewables share and reduce CO2 emissions. Germany’s new government, for example, has announced to issue additional ‘special’ tenders for both solar and wind (2 x 2 GW each) in 2019/20.
Tenders: Solar tender tools have shown to the public the low cost of solar power and have been embraced by several European countries, substituting traditional uncapped feed-in tariff schemes. Moreover, solar has proven that it can win technology-neutral tenders even against on-shore wind power when the boundary conditions are properly set. While solar was awarded nearly 3/4 of the tender volume in the second Spanish renewables tender in 2017, a pilot solar/wind tender in Germany was won 100% by solar bidders in 2018.
Self-consumption: Solar is much cheaper than retail electricity in most European markets and will quickly continue to reduce in cost, which will be a key driver for people and companies to invest in on-site power generation. Moreover, in developed European PV markets consumers are more and more starting to understand that solar often makes economic sense even without high feed-in tariffs or other subsidy programmes. The quickly falling cost of battery energy storage combined with the benefits of digital and smart energy products supports the sales case for solar, as many consumers prefer to have better control over their energy bill.
Emerging & Re-awakening Markets: The low cost of solar is attracting European countries that haven’t been very active in the field in the past, like Belarus and Russia. European solar pioneers are turning to low-cost solar again, such as Spain.
Corporate sourcing: In a number of European markets, we are now starting to see direct bilateral PPAs with solar increasingly competing with wholesale power markets. This development will be seen primarily in those European countries with the widest spreads between solar and wholesale power prices. While there has been talk about pure PPA based projects for a while in Spain, in 2018 the first are being built. However, the pipeline for these projects has quickly ballooned to over 30 GW.
Regulation: The European Commission and national governments have been addressing the needs for a flexible renewable energy system, working on a new electricity market design framework and implementing new tools and regulations to overcome barriers that have inhibited solar’s growth possibilities in recent years.
How big will be the European Solar Market?
SolarPower Europe’s Medium Scenario expects strong growth for the EU-28 until 2020, as mentioned above, driven primarily by the 2020 EU renewables targets and the recent tender announcements. The drivers in non-EU countries are support programmes as well as the low cost of solar power. For 2018, SolarPower Europe sees in Europe (including Turkey) 34% annual solar growth to 12.3 GW; for 2019, it expects demand to surge by 45% to 17.8 GW (see graph).
If Europe fully embraces the enticing business case of low-cost solar, according to SolarPower Europe’s High Scenario, the European annual solar market could reach 39.1 GW in 2022, which would be nearly twice as big as in the record year of 2011 with 22.4 GW.