2020 has been a surprising year for the european solar industry. The solar industry just had it’s second best year in history. Michael Schmela, Executive Advisor, head of market intelligence and a member of the leadership team of SolarPower Europe explains why.
In the beginning of 2020, when the pandemic hit off and predicted that it would be a tough year for the solar technology industry. Now with hindsight, and I think you will see some numbers in just a moment, we can say it's been the second best year in history. So how did this happen?
In fact, the newly installed solar power in the European Union increased by 11 percent to 18.2 gigawatt in 2020. That means not only the demand for solar PV systems in the EU grew at all - over the course of a year - that was defined by the pandemic. And I think this is noteworthy. But even more surprising is that it increased by double digits to a level that, as you mentioned before, marks the second best ever in european solar history.
What do you think were the defining factors to support this resilience in this double digit growth? Are these factors still in place for 2021?
Actually, it's even getting better. Solar is showing a steep cost reduction curve already. Last year we had reached levels in most European countries where solar was cheaper than that other power generation sources. And so it made simple sense to invest and obviously also for bigger power plants and larger commercial industrial scale rooftop systems. These are investment decisions that were taken. And if you can, you simply go ahead and actually it really simply shows that a lot of people, investors are counting on solar, and seeing its attractiveness and are simply going ahead. What also played into the hands of solar that despite partial lockdown's or even severe lockdown's for a certain amount of time, is that the markets still continued. So in Germany, for example, craftsmen continued to work over the course of the whole year and then other markets where work actually completely stopped on building power plants for a while and continued then later. Obviously, as I mentioned, solar didn't grow as much as we had anticipated, but much more than we feared. And that's simply due to the reasons that installers continued doing their job.
What are the forecasts for the coming years? Will further years of growth follow?
So far in our new market outlook, we forecasted a market of 22.4 gigawatts in 2021, so significantly bigger than last year. This would be then also an all time high for the European Union meeting the decade old 21.3 gigawatt record from 2011.
So you're very confident that in this year we will surpass the all time high? And what do you think then will be the market going forward?
Yes, actually, we are even more upbeat because 2021, we hope to have overcome the pandemic completely. So we project even over 27 gigawatts in 2022 and even exceed the 30 gigawatt level in 2023 with close to thirty one gigawatt. This would mean a 15 to 18 percent higher deployment and than we originally thought in the 2019 five year market outlook. If we go to the last year of this five year outlook that we just published, we see Europe crossing the 35 gigawatt level. So that means we would really see that over 115 gigawatt will be installed by 2024.
Germany is considered one of the most important countries in the European PV market. Is that also the case this year?
As we forecasted Germany would become in 2020 again the largest solar market in Europe. And that's a position that has been held for, I think, three quarters of the last two decades. I think in the last 20 years or so, Germany was for 14 times the largest market, which is interesting when you consider the climate in Germany. On the other hand, it's the strongest economy and also the country with the largest population. I think what we will see if you look at Germany, we are pretty upbeat that Germany will also stay at the top for the coming years. Recently, the EEG, the renewable energy law, was revised. So it's not all great that's in there. I think there could have been a lot of things done much better. But in the end, actually, there were some changes done accordingly to what the sector had asked for. And we believe that the market will also be Europe's number one in 2020.
What's the situation like if you look at the countries following up countries? Have there been any changes in the dynamic and the growth rates?
Holland moved up one rank to the second place after installing 2.8 gigawatts, or considerably smaller than the 4.8 in Germany. But still impressive if you look at the size of the country. Number three was the 2019 market leader, Spain, which added around 2.8 gigawatt. So that was also to be expected simply because Spain in 2019, when they had been market leader after a long time profited from tender based systems that had to be installed. There was a clear deadline. There was no other deadline in 2020 for any new tenders. So that's why the market went down again. But still, I think it's very positive what we've seen in Spain simply because much of this growth was from subsidy free solar systems. And that also shows once again, the attractiveness of solar power. I think the most surprising country was Poland. They were the fourth largest market and have installed over two gigawatts, so that's more than double than the year before, and we see Poland to stay a very attractive market. So if you kind of look at the top five, then the last in this group is France, which installed around 900 megawatts. That was pretty disappointing. France has actually pretty big plans, but somehow they have mostly administrative barriers that's preventing it from this plants becoming reality.
One could get the impression that really all is well in the world of solar power. Double digit growth, an amazing outlook. So what's the effect of this positive news? And are there still some issues left, that the industry needs to overcome?
Well, I think the positive thing is that we are realizing at Solar Power Europe that solar is increasingly getting on the radar of European policymakers. So when you look back in 2020, 22 of the 27 EU member states have installed more solar than the year before. What's also encouraging is that in 2019, more solar capacity was installed than for any other power generation source in the EU. It's also great that basically all EU member states have recognized solar in the national energy and climate plans, the so-called NECPs. That's where they outline how they want to reach the EU 2030 targets. Now comes the big but. But the ambitions are much too low and we need much more solar and we need much faster growth. So if you look at these NECPs there that the member states have outlined they want to install in average close to 20 gigawatts a year. So there needs to be much, much higher ambition with solar power.