If it wasn’t for the U.K., Europe’s solar power market would have flat-lined last year, according to new industry figures that reveal the world’s biggest market for the technology is struggling to retain its scale.
On Friday, the continent’s largest solar market will end generous subsidies for solar farms, undermining growth in one of the region’s few bright spots. The European solar market will start contracting next year as a result, according to SolarPower Europe, a trade group that is publishing a report on the industry this week. The industry has been in decline in recent years as Germany, Italy and Spain slashed subsidies and shifted to market-based support mechanisms for renewables.
European solar grew by 15 percent last year, mainly because the U.K. market grew by about half. “Without the enormous growth in the U.K., the European solar market would have remained roughly at the 2014 level,” the report said.
The findings suggest more pain ahead for the continent’s solar industry, since U.K. Prime Minister David Cameron said he would close the Renewable Obligation Certificate subsidy program on April 1 for solar farms smaller than 5 MW. Germany, for years the biggest PV market in the world, is moving to a system of auctions where support for renewable power is subject to strict limits.
The U.K. will install 2,000 MW to 2,500 MW in 2016 because many projects will remain eligible for a grace period for the subsidy, said James Watson, chief executive of SolarPower Europe in an interview. As a result, the European market is likely to contract slightly in 2016 to about 7,000 MW, or by 7 GW, he said.
“We will see a very large reduction in growth in the rate of installation in the U.K. in 2017 to about half a gigawatt,” Watson said. “2017 is a wild card because Turkey has set a target to have 5 GW by 2022 so could be installing as much as 1.5 GW a year in 2017.”
With almost 100 GW of installed capacity, Europe remains the biggest user of solar technologies, which on average delivers 4 percent of electricity demand. Growth peaked in 2011 and declined for the next three years as governments took an ax to some subsidy schemes and moved toward tendering systems in others.
The U.K. was among just a handful of countries to record market growth in Europe, scaling up by 50 percent as developers rushed to beat the end of higher subsidies this month. The Netherlands grew by about 25 percent to 400 MW after it introduced net metering, where consumers who generate their own power can sell surplus to the grid.
© 2016 Bloomberg
Lead image: Solar farm in Spain. Credit: Shutterstock.