European solar slows again, but next chapter looms

Solar photovoltaic demand from Europe is forecast to reach 10 gigawatts during 2014, down 7 per cent year-on-year, according to the NPD Solarbuzz's European PV Markets Quarterly report.

This will be the third consecutive year that European solar PV demand has declined, after reaching a peak of 19.2 GW in 2011. During this period, Europe’s contribution to global PV demand has fallen rapidly from 70 per cent in 2011 to just 22 per cent in 2014.

Germany, Italy, and Greece had 71 per cent of European demand in 2012, but these countries are now just 37 per cent of the European market.

“The decline in PV demand from Europe in 2014 is due mainly to the effects of major funding reductions in Germany, Italy, Greece, and Romania” NPD Solarbuzz Susanne von Aichberger analyst said.

“In fact, for Europe to reach 10 gigawatts of demand in 2014, the United Kingdom would need to meet expectations of doubling in size.”

During the first quarter of calendar 2014, European PV demand was up 10 per cent quarter-on-quarter, but down 8 per cent year-on-year.

“Historically, the first quarter has been a weak period in Europe, but planned reductions in the UK’s incentive rates in April 2014 boosted final first quarter figures,” Aichberger said.

The UK had 43 per cent of European demand in the quarter, its highest quarterly share yet; however, in the past few weeks, the UK market has been struck by new policy uncertainty that is likely to have an immediate effect on demand from the UK and Europe.

“2014 PV demand is expected to grow in France, the Netherlands, Austria, Portugal, and Switzerland, and Turkey is forecast to become a significant PV market this year,” said von Aichberger.

“Belgium, Denmark, Romania, and Ukraine are forecast to experience annual declines.”

Figure: European solar PV demand from 2009-14

Source: NPD Solarbuzz European PV Markets Quarterly

During 2014, Europe’s most mature PV markets (Germany, Italy, and France) will transition away from feed-in-tariff incentives, which were widely adopted within Europe to stimulate initial PV market adoption.

The new driver for PV growth in Europe is coming directly from the energy markets in each country, where PV is now competing with other forms of traditional and renewable energies. This increased competition is creating new PV opportunities, but requires overcoming regulatory and funding challenges.

“Within Europe’s established PV countries, policy makers in Italy have taken the most radical steps to transition away from FITs. The Conto Energia funding scheme was discontinued in July 2013, with the final projects completed in May 2014,” said von Aichberger.

“In the future, demand will be driven by installations based on net-metering, power purchase agreements, direct marketing, and tax benefits.”

Originally published by NPD Solarbuzz. Reproduced with permission.